“This is the best apartment deal in NYC”
“We hired a top-notch design team, they designed the Barclays Center.”
“These are the same buildings we build for people right across the river, for which we receive ridiculous rents”
Frank Monterisi, SVP of Related Companies and Head of HPS Phase I
I have a saying, “The lottery is for losers.” Think of it, in a typical lottery it goes like this, two million people each pay $1, for a total of $2,000,000, so that one of them wins $1,000,000. In other words, you put down a dollar with the expected probability of getting back 50 cents. Hmm, not sure how Warren Buffett would feel about those returns, but I personally find the whole concept despicable, and quite frankly, un-American.
Then there is the Hunters Point South Lottery. In this game of chance they are giving away between $128,000 and $1,275,000 in cash prizes to 925 people, and the cost to play is uhh -zero, …if you qualify. Furthermore, the odds of winning are better than 20 to 1 if you live in the Community Board 2 district, as opposed to 2,000,000 to 1.
How did we arrive at the “prize” math?1 The first thing we did was take the average rents in LIC from Modern Spaces 2Q 2014 report (see link below). Then we compared it to the midpoint rent range for each apartment type in HPS, as provided by Related Cos. The discounts for Moderate Income apartments ranged from 29% – 39% as compared to those paying current market rates. The discounts for Low Income apartments were an eye-popping 78% to 85%.
Those discounts are where most reporters stop, and readers sit or stand agape. Not LICtalk, we recognize the importance of a very valuable option embedded in getting an HPS apartment: that of not having your rent go up dramatically.
The power of compounding is the most powerful force in the universe according to Albert Einstein, and the monetary effect of it might only be eclipsed by the psychological one. Whether it be in your favor or not. Thus, we took the percentage discounts cited above, and applied them to the average LIC condo sale prices also found in the Modern Spaces report2, in order to realize what that option is worth.
That is how we arrived at the cash prize values, and based on the throngs that showed up for the affordable housing powwow last night in Hunters Point, I think many others have similarly calculated this bonanza. Trying to squeeze the SRO crowd into the auditorium was like [Read more…] about THE AFFORDABLE HOUSING SHOW COMES TO HUNTERS POINT
- for a detailed version of the math, were you so inclined, email me at firstname.lastname@example.org, and I’d be happy to oblige [↩]
- the one exception being 3-bdrm sales, where we used a figure of $1.5 million based on the very recent sale of a new 3-bdrm in a walk-up in Hunters Point, off the water, and w/ no view or amenities. My guess is that were a 3-bdrm condo hypothetically be available at HPS, it would go for between 1.5 and 2.5 million depending on the view. What do you think? [↩]