SROs or single room occupancies have a wide range of value in Harlem. SROs are typically set up as rooming houses where there might be several rooms per floor with a common bathroom or kitchen. The most valuable SRO will have a certificate of no harassment and be delivered vacant. The least valuable will have non-paying tenants and be delivered without the CONH. What is a CONH and why would having it add at least $100k to the value of your SRO?
A CONH is granted after an investigation or look back by NYC’s Housing Preservation and Development of approximately 3 years. They are looking at your history of tenants to see if any tenants were forced out or harassed. Some of the questions on the application ask if you have had a discontinuation of service like heat, hot water or electricity, a potential sign that the tenants might have left due to poor living conditions. It takes approximately 7 months according to reps at HPD to get a CONH assuming the application is in order. You can have an experienced lawyer do this for you and they will charge $3k-$5k depending on how complicated the case is. So if you have some advance notice you might want to apply for this prior to putting your house on the market. If you are a DIY’er then you can fill in the application yourself and can visit the HPD during the week between 9-11am with your walk in questions. Make sure your property is registered with HPD. The CONH is valuable because the purchaser of your property will not be granted building permits to alter the SRO without a CONH. Also, while it may be difficult for you to come up with the names of all the tenants who lived in the property, it is impossible for the buyer so in some cases they may even just decide to sit on the house for 3 years before applying for the CONH. For that, they will expect a severe discount.
As you are arranging your future plans to sell, you will want to maintain an excellent relationship with your tenants so they vouch for you if contacted by the City. Also, if they are not a rent stabilized tenant then you might not want to renew their lease which will give you the option to ask them to vacate with a 30 day notice. If you can get by without the income, vacating the house just prior to listing will make it easier to show and sell, but certainly ethically empty out the house prior to closing. If the tenants are rent stabilized then you may need to offer them a buyout or leave that up to the next purchaser. If you must deliver the house occupied make sure that your tenants are current. A building full of non-paying tenants will be only taken on by investors if the price is very low.
As this sale is a complicated one, you will need a team to insure the most lucrative sale including an experienced and knowledgeable real estate broker, a real estate attorney plus perhaps even an architect or expediter. Even though it may seems like a burdensome effort, it will be worth it in the end especially if you know that you have lead time. If you have even only a few months before you will sell, it makes a lot of sense to plan ahead and get a CONH and get the house vacant for closing.
The Author- Brian Silvestry , a licensed real estate broker, has been selling SROs and Harlem townhouses for more than 12 years and has helped owners to apply and obtain the certificate of no harassment.
Make my Cake will close their location on West 116th street and St.Nicholas avenue after 22 years due to rising rents. However, they will open a new location on Manhattan’s Upper West side at 795 Columbus avenue in the Columbus Square shopping center. They will take over the space that was occupied by Crumb’s.
An 8 family home has entered the market just outside the Striver’s Row historic district. The building is 17.5 wide by 51 and has a lot that runs just shy of 100′ deep. There are 5 studios and 3-1 bedroom apartments. The cap rate is 5.1 % for this rent stabilized building located around the corner from St.Nicholas Park and the B,C subway stops. There is plenty of upside as nearly every tenant has been in place for at least 4 years. One apartment will be delivered vacant.
If you are considering renovating a NYC brownstone in Harlem, Brooklyn or anywhere in the city, take a look at this article from Brick Underground. Granted it is a little bit of an adverticle but it does give you the basics as far as timelines, potential costs and pitfalls.
Not that long ago, I came into contact with a contractor who renovates Harlem brownstones and he told me that $175 per square foot would be a very middle of the road renovation. A property that I sold in Hamilton Heights achieved a full renovation for $400,000 and it had about 3200 square foot but she was a seasoned investor and was very hands on in the project.
Another investor that I am dealing with from out of state hired contractors and each succeeding one had to redo the mistakes of the previous one and that ended up being costly. So, I would say if you are seasoned investor you are obviously going to spend less and if you are rookie might be better to pay more and have the process managed by someone that you can trust.
In a 100 year old brownstone on West 126th street, entrepreneur, philanthropist and living legend Vy Higgensen produces here latest success Mama’s One Sauce. Through the joint efforts of Harlem non for profits, Whole Foods, Columbia and lots of sweat equity of Higgensen, Mama’s One Sauce is flying off the shelves at Harlem’s Whole Foods location according to CNBC.
The Mt Morris landmarked townhouse has now entered contract. The asking price was $2.2 million for this home which needs a complete renovation. The current status of SRO will likely undergo a change by the buyers who will convert to 1 or 2 family most likely.
The sale price was over the asking price and occurred quickly despite the typical seasonal slowdown.
146 West 121st street, which is in the middle of the Mt. Morris Park Historic district has entered the market. It is an 18′ wide, 5 story townhouse with a cellar. The home which has many original details still intact, has been in the same family for more than 70 years. It is located 1 block away from the Marcus Garvey Park and right in between the A,B,C,D and 2,3 subway stations as well as very close to the recently opened Whole Foods. In addition, Restaurant Row is nearby. The home will be delivered vacant with the certificate of no harassment .