Brooklyn Investors Pay $15.1M for Three Asylum Hill Apartment Buildings

A group of investors from Brooklyn just bought three apartment buildings on Asylum Avenue in Hartford for $15.1 million, picking up 180 units in a single deal that closed in September.

If you've driven down Asylum Avenue, you've probably passed them. They're three-story red-brick buildings from the mid-1960s, the kind that went up all over New England back then and are still standing because nobody built them to be anything other than solid. The biggest of the three has 82 units. The neighborhood around them is home to The Hartford's headquarters and the Mark Twain House, and it has always had a steady supply of renters.

The seller was an ownership group out of Bronxville, New York. Capituro wasn't involved in the sale.

What jumps out about this deal is the price. The buyers paid about $84,000 per apartment. In a lot of markets, that wouldn't cover the cost of building a parking garage space, let alone a unit. That low basis is exactly why out-of-state investors keep showing up in cities like Hartford. The buildings are old, but the rents are real, and there isn't much new housing coming along to compete with them.

The harder part with buildings like these is keeping enough cash coming in to take care of them. Sixty-year-old buildings always need something, whether it's a boiler, a roof, or a stack of tired kitchens. So the question of how the loan is set up ends up mattering almost as much as what the buyer paid.

This is where an interest-only loan makes a real difference. With a regular loan, part of every payment goes toward paying down the balance. With interest-only, it doesn't, so the payment is smaller. On a purchase this size, that difference works out to about $9,000 a month that stays with the owner instead of going to the bank. Over a year, that's enough to redo a good number of units.

Own an older building and curious what interest-only would do for your monthly cash flow? Send the numbers, and we'll come back with a quote.

It also sets the owner up well for later. Once those renovated units are leased at higher rents, the building is worth more, and the owner can refinance and pull some of that equity back out without selling. For a lot of people who own buildings like these, that's the whole plan: buy at a good price, fix it up with the cash the building throws off, then take money out once the rents catch up.

There is one condition, which is that the building has to earn enough to cover the payment comfortably. Older buildings bought at a good price usually can, and that's something we look at closely on every scenario.

Thinking about what your building could do? Send the numbers, and we'll come back with a quote.

The $9,000-a-month figure assumes a 75% loan at a 7% rate and is for illustration only. It isn't a quote and doesn't reflect the financing on this sale.