How Matthews™ Benchmarked Rent Stabilized Value in North Brooklyn

We are pleased to announce the sale of 1104 Bushwick Avenue in Bushwick, Brooklyn. The asset was 83% occupied when going under contract and traded at 90% of the asking price. This was achievable by generating 13 offers in a controlled timeframe to create a market around the building. The sale price reflects a 7.7% return on cost, positioning it competitively in today’s market for rent stabilized products.

 

If you are an owners, investor, or appraiser, this comp should be a benchmark for underwriting rent stabilized products.

 

The key difference was our marketing process, my hyper-focus in North Brooklyn multifamily, and the Matthews™ refined database and network. This enabled us to drive demand, secure strong terms, and achieve top-of-market pricing for our client from an out-of-state buyer.

 

The seller was a private owner looking to liquidate a property in his portfolio. The buyer was an out-ofstate private capital investor attracted to the low basis offered in today’s market and the long-term upside of owning in NYC.

 

1. Understand how these buildings truly operate. Know what operating expenses investors apply and what NOI the building will realistically produce once maximum rents have been established. No two buyers will arrive at the same NOI, but there are standard principles they will follow.
2. Not every building will stabilize at a 3% vacancy and credit loss. Certain neighborhoods and building profiles will naturally experience higher turnover or collection challenges. Be accurate on operating expenses and realistic, not optimistic, on maximum collection rates.
3. Know the comps. We saw 19 transactions year to date for fully rent stabilized assets, with a median price of $680,000 and an average price of $733,342.

 

 

Solution & Strategy

Strategic Marketing & Network Reach: By leveraging the extensive Matthews™ investor network, we created a competitive bidding environment, yielding 13 offers. This provided both leverage and momentum to secure terms at the top of the market.

 

Managing Momentum: Speed was key. We engaged qualified, aggressive buyers early, ensuring a contract was signed while momentum was still on our side of the table.

 

DHCR Due Diligence: Whenever selling a rent stabilized building, it is critical to build the right team. We bring in consultants who specialize in this process and are designed to solve problems, not create them. As brokers, we know the rules around rent regulation, can answer buyers’ questions to the best of our abilities, and ultimately give buyers the comfort to move forward. Brokers are not DHCR attorneys, leave that to the right professionals.

 

 

Outcome

The culmination of these efforts resulted in the successful sale of 1104 Bushwick Avenue for $985,000 to an out-of-state buyer. Our two backup buyers were private owners in the neighborhood looking to expand their portfolios; they understood the regulations but were firm on their underwriting and terms. The buyer will be selectively purchasing other properties throughout the year. Please reach out to learn more about this transaction and available inventory.

 

We complete 500+ property audits annually for our clients. If you would like an accurate and transparent analysis of your asset, please do not hesitate to reach out.