Discounted Brooklyn Foreclosed Homes in Brownstone Buildings
November 25th, 2009 by 
jfoxx
Discounted Brooklyn foreclosed homes in lower-income brownstone neighborhoods are rising in number as more two- to eight-unit residential buildings are going into foreclosure, based on reports from real estate companies in Brooklyn including TerraCRG Commercial.
Over the past 12 months, 51 percent of foreclosure actions on non-residential mortgage loans in the Brooklyn area were for three-unit to four-unit brownstones and 80 percent of filings were for mortgage loans under $1 million.
Ofer Cohen, director of TerraCRG, also said that most of the foreclosure filings occurred in lower-priced communities like Bedford-Stuyvesant and East New York. He added that because of the rise in foreclosures in brownstones, prices have fallen substantially.
A lot of three-unit and four-unit brownstones in the Bedford-Stuyvesant area can now be purchased at prices below $300,000. He said he has recently sold a foreclosed eight-unit residential property in Crown Heights for only $400,000, equivalent to 50 percent of its market price.
The report from TerraCRG also showed that 21 percent of recent foreclosure filings involved walk-up apartment structures, 14 percent involved mixed-use buildings and less than five percent involved elevator apartment buildings, vacant land, office buildings and retail complexes.
It also showed that foreclosure filings over the 12-month period ended September 2009 involved more than 1,000 commercial buildings. Included are multi-unit residential buildings, adding more units to lists of Brooklyn foreclosed homes.
According to Cohen, more distressed multi-unit residential properties and commercial buildings will go into foreclosure in the next 20 months. Robert Knakal, chairperson of real estate firm Massey Knakal, affirmed Cohen’s forecast by saying that foreclosures will be part of the New York marketplace in the next several years.
According to New York housing analysts, foreclosures involving small multi-unit residential buildings are largely caused by the failure of amateur investors who entered the rental market during the boom with rosy rental projections.
Kenneth Krasnow, director of the Brooklyn unit of Massey Knakal, explained that in the year 2000, a lot of new individual investors purchased three-unit and four-unit buildings at inflated prices. They were able to buy the buildings because mortgage lenders offered and approved loans easily and accepted low down payments.
The buildings were mostly located in moderate-income neighborhoods such as Bushwick and Bedford-Stuyvesant, where four-unit properties were then sold below $1 million.
But when the downturn came, renters lost their jobs and failed to pay their rents and these small investors failed to pay their loans.
