New Yorkers making fortunes off $250 apartments
Think selling your New York City apartment for twice what you paid for it is a steal? How about 1,000 times the purchase price?
It’s happening in pockets of Gotham, though these real estate blockbusters are coming at the expense of the city, which has invested millions of dollars since 1979 into a program to preserve affordable housing and to address the problem of dilapidated buildings.
In some cases, people who bought their apartments under the program for as little as $250 are selling them on the open market for hundreds of thousands, adding to the growing concern from elected officials and others that the units are no longer considered affordable.
“The main harm is that we have a unit that should be affordable on into the future . . . and it becomes unaffordable,” said Andrew Reicher, head of the Urban Homesteading Assistance Board, a city partner in the program. “When the program was started, no one could conceive of the prices that you now can get.”
The Tenant Interim Lease Apartment Purchase Program involves buildings that are either in disrepair or whose owners are delinquent in taxes or fines. The city takes them over, renovates them at $175,000 per unit, and sells the apartments back to the existing tenants for as little as $250. The units come with restrictions on who they can be re-sold to, which is usually based on income level, resulting in sales below market value. Also, often a portion of the profits may have to be given back to the city or the co-op board.
Bill Ortiz, 32, inherited a two-bedroom Williamsburg apartment from his mother, an original owner who bought it for $250. In 2008, he sold it for $272,000 and was able to buy his family a six-bedroom house in Montrose, N.Y. “I got about $100,000 more than I thought I would,” Ortiz said.
City Councilwomen Diane Reyna (D-Brooklyn) and Gale Brewer (D-Manhattan), both expressed concern that the city is not keeping close enough tabs on the program and owners may be flouting the restriction requirements. Reyna is proposing a bill that would place caps on resale values and beef up city monitoring.
The city Department of Housing, Preservation and Development, which is responsible for overseeing the program’s roughly 20,000 co-op units spread from the Upper West Side and Hell’s Kitchen to Williamsburg and parts of the Bronx, said it is working to address Reyna’s concerns. Over the last decade, the number of new units in the program has generally ranged from 200 to 400 annually, indicating that the program has slowed in recent years.
Beatriz Rodriguez, who bought a one-bedroom in Williamsburg from an original owner five years ago and is now trying to sell it for $227,000, said she would have been priced out of her neighborhood without the program.
“It gives people an opportunity they would never have had,” said Rodriguez, who declined to say what she paid for her place.