Foreign Investors Buying Up Crown Heights Housing
A report in the Daily Mail, a UK newspaper, says that foreign investors from Europe, Australia and Israel are buying up houses in the Brooklyn neighborhoods of Crown Heights, Bed-Stuy and Bushwick almost as soon as they are put up for sale.
This buying frenzy is believed to be main culprit behind the skyrocketing cost of home-ownership in the area, which is quickly becoming an unaffordable luxury to all but the very wealthiest families.
From the Daily Mail:
If you’re in the market to buy a brownstone in Brooklyn, good luck – according to a new report, investors are swiping up brownstones in some of Brooklyn’s emerging neighborhoods before they are ever put on the market.
The run on brownstones is only adding to the lack of inventory and price increases for would-be buyers.
These investors are paying cash for the buildings – primarily in the borough’s Crown Heights, Bed-Stuy and Bushwick neighborhoods – and leasing the properties to renters rather than flipping them and re-selling them.
“They come to all the open houses, they see every property,” a ‘tipster’ told the blog Brownstoner.
According to the blog, these investors ‘go after everything’ – foreclosures, houses that would normally sit on the market such as SROs (single-room occupancy) and wrecks, and regular properties that qualify for a mortgage.
‘They are focusing on one- to three-families, the same types of houses would-be homeowners are looking to purchase to occupy — not groups of houses or large apartment buildings, although occasionally they pick up single-family houses that have been subdivided into more than four units,’ the blog explains.
According to the ‘tipster,’ she has encountered five investment firms, each of which is trying to buy five to 10 houses a month, all with cash.
Some of the purchases, the tipster says, ‘make no sense,’ like SROs without certificates of non-harassment and properties with stop work orders on them.
‘Everyone’s talking about there not being any inventory,’ she said. ‘There’s plenty of inventory, it’s just not being offered anymore…there’s so much money around. A lot is getting bought out quickly. They’re not end users.”
The blog spoke with a man who has been ‘aggressively’ looking to purchase a brownstone in Bed-Stuy, Bushwick or Crown Heights for the last two months, but says he keeps getting beat out by investors.
‘It seems that I’m being outbid left and right by investors who are coming to the table with cash in hand as soon as (or before) the house lists,’ he says.
Realtors say that many of the investment groups are foreign, hailing mainly from Europe and Israel.
One group, with the operating name of Newtown Jets, has scooped up 24 properties in Brooklyn since March. According to the blog, ‘the transactions were all over the map geographically and pricewise, from Park Slope ($2,675,000) and Carroll Gardens ($1,699,000) to Bushwick ($662,500 and $599,000).’
Newtown Jets is a subsidiary of US Masters Residential Property Fund, Alan Dixon, Managing Director and CEO of Dixon Leasing, told the blog.
‘The fund has purchased a total of 47 properties in Brooklyn since December 2012 and has 22 under contract. (Each of its buying groups is named after an Australian football team.) The fund has paid an average of $1,200,000 per property,’ the blog says. ‘The fund buys to hold and rent for at least five years, as required by the tax agreement between Australia and the U.S.’
‘You buy a property, renovate it, and the bank advances funds against a group of property,” Dixon said.
The upside to investors buying up in many cases dilapidated, old buildings is that they fix them up and renovate them. But in doing so, they drive up the cost and make living in Brooklyn nearly as expensive as living in Manhattan.
‘Do you think investor groups snapping up property in Brooklyn could be good, on the one hand, because they are fixing up and renting out problem properties,’ the blogger asks, ‘or is it making Brooklyn unaffordable and creating another unsustainable real estate bubble?’
Oy!
It’s a Gezeira Min Hashamyim on Crown Heights.
Evil
Anyone who is contributing to this insane housing problem- is sick! That includes ppl who try to outbid others, flippers, and brokers who jack up the price to crazy amounts. To make $ by ripping off others and causing countless large families to have to raise their children in teeny living quarters is unforgivable.
Anonymous
What your seeing is speculation and deep pocket equity (shell) firms driving up the market.
Capitalism
That’s how the system works.
48 yr in the hood,
now yr crying ?
well were was yr crying face 35 yr ago when the REBBA said buy ?
you were scarred because of the riots ?
well its to late , u snooz u looz
Capitalism
Correction, that is how the NON-JEWISH world works!
We are supposed to maintain a higher standard. No overcharging, price gouging, dubious deals etc.
Didn’t we just read parshat Kedoshim? Also, it is part of our namesake that we are Gomlei Chasadim.
We in CH are facing a tremendous housing crisis and no-one is helping.
When was the last time a low income apartment unit was built here? (Ans. Over TWENTY years ago!)
Where are our leaders? Where is the CHJCC? What are they doing with all the money?
But just as important, if CH is such a good investment , why aren’t the gevirim of Chabad investing for the sake of the Rebbe’s Shechuna?
realistically unsustainable
As fast as it goes up… Much faster it comes down. Thanks to DeBlasio, are there that many wealthy people who are that crazy to want to live in Brooklyn neighborhoods with gangs roaming the streets again?
Jacob
What’s the big deal? Do you want a dilapidated wreck on your block, sitting there like an eyesore?
The new landlord can’t raise the rents on rent controlled or rent stabilized apartments anyway, and he can’t kick out the tenant unless he’s going to occupy the apartment. Even then, he might not be able to end the lease.
This is what we call investment, business, or as the president calls it, “hope and change.”
חיים
הגיע הזמן להקים שכונה חבדי”ת מחוץ לניו יארק כמו סקווער וסאטמער. המחירים לדירות חדשות הם כמעט רבע מהמחירים כאן