Diary of a Motivated Seller (Britney Edition)

1.

Assuming she walked away with $500K to $600K after closings costs, that's 16% to 20% profit on her $3 million investment. Not bad...

2.

Considering that it costs approximately $66,000 a year in common charges and taxes, it's not such a great profit. But I'm sure someone's getting rich off her!

3.

I think that 4m is a great deal for a 4-5 bedroom doorman apt with significant outdoor space in that location. No, I'm not a broker - but goes to show you that layout is everything. If it was a single floor or even a duplex with bedrooms upstairs & outdoor space + living down, it would have sold for 5m a long, long time ago.

4.

20% profit over four years is terrible; she could have done better in a good savings account. And, as #2 points out, when you account for common charges and taxes, it's even worse than that.

5.

Love the suburban decor.

6.

but she's still fat! haha!

7.

Central Harlem Anonymous, I'd love to know what financial instituion offers 20% returns on your savings.

8.

At least she didn't sink her 4 million into some half assed theme restaurant that goes under in two years. Take the 500k and buy your self some extra nannies.

9.

citibank regular savings, for one, #7. lol.

10.

#7. She got the 20% over four years. 20% over four years is a compound rate of about 4.7% per year.

Be sure to let us know if you have any other math problems you need help with.

11.

ok Central Harlem math teacher. Supposed she put 20% down ($600k) + closing expenses + expenses for 4 years. And figure in some tax deductions and
some use and occupancy.
Then compare what she ended up with after 4 years
versus putting that money (not $3m), taxes on interest, etc.

12.

Please give Central Harlem a break ok? People who live in Harlem have little or no education anyway. Rat infested villages with overpriced condos and sketchy people.

I've had it with Harlem whiners.

Move to Dumbo and live the rich and sexy life!

hugs and kisses

Love my manolos!

The Bitch is back and better than ever

13.

#7 / #11:

You're kidding, right? You know that if you take an investment that returns less than the prevailing interest rates, and lever it up, you lose *more* money, right?

Anyway, to help you understand, I have detailed some of the expenses that Ms. Spears paid, assuming she borrowed 80% as you suggest. I further assumed that she paid 5.75% for a 30 year mortgage with no points.

On purchase: 1.875% of borrowed amount mortgage recording tax, .45% of purchase price for title insurance, .2% of purchase price for mortgage title insurance, 1% of purchase price for mansion tax.

On sale: 6% brokerage fee, 1.425% NYC transfer tax, 0.4% NYS transfer tax

Carrying charges: mortgage expense using the assumptions above would have been about $14,000 per month. I never saw the original listing, so assume about $2500 per month in taxes and $2500 per month in common charges, which seems reasonable for a property of this size and location.

Total costs for 48 months? $1,319,500.

Given that her "profit" on the property was only $1, this leaves her $319,500 in the hole.

Note that I left out attorneys fees and other minor expenses that would have made the actual picture somewhat worse.

14.

#7 / #11:

You're kidding, right? You know that if you take an investment that returns less than the prevailing interest rates, and lever it up, you lose *more* money, right?

Anyway, to help you understand, I have detailed some of the expenses that Ms. Spears paid, assuming she borrowed 80% as you suggest. I further assumed that she paid 5.75% for a 30 year mortgage with no points.

On purchase: 1.875% of borrowed amount mortgage recording tax, .45% of purchase price for title insurance, .2% of purchase price for mortgage title insurance, 1% of purchase price for mansion tax.

On sale: 6% brokerage fee, 1.425% NYC transfer tax, 0.4% NYS transfer tax

Carrying charges: mortgage expense using the assumptions above would have been about $14,000 per month. I never saw the original listing, so assume about $2500 per month in taxes and $2500 per month in common charges, which seems reasonable for a property of this size and location.

Total costs for 48 months? $1,319,500.

Given that her "profit" on the property was only $1,000,000 this leaves her $319,500 in the hole.

Note that I left out attorneys fees and other minor expenses that would have made the actual picture somewhat worse.

15.

"ok Central Harlem math teacher. Supposed she put 20% down ($600k) + closing expenses + expenses for 4 years. And figure in some tax deductions and
some use and occupancy.
Then compare what she ended up with after 4 years"

mortgage isn't tax deductable, it isn't her primary residence.

cc/maint - 66k x 4 years = $240k EXPENSE
lost interest on 600k = $50k (after tax)
Mortgage int on 2.4 million 4yrs = $500k
Selling costs (6%) and buying costs (4%) = $400k

Total paper profit from sale: $1m
Total expenses for this exercise: about 1.2m

Answer: $200k in the red, although she had keys to a pad for a few years, so she paid $200k for 2 years of "little use", but then had to keep it clean and empty for the last 2 years.

If you had a lazy $3m, do better by walking into a high net worth banking outfit and get shown how to make a minimum 10% return in hedge funds instead. Just IMHO.

16.

2nd home interest is tax deductible - but all mortgages together only up to $500k single person/$1m married/ and she married twice so she get up to $2m?).
But maybe she could have used some business expense deduction here.

17.

#13 - you counting the downpayment as a cost? you get that back at close.

18.

know what's funnier than architects arguing about finance. nothing!

ps, harlem f'ing rocks! (turnover = x(70k in 8mo), nough said)

dumb* and manolos hun. you spelled it wrong. manhattan wannabe. oh and a bitch is a dog, and well, pretty much explanatory.

19.

Central Harlem, can I hire you? Nice slam dunk on these bozos.

20.

#19, you can't afford me.

21.

do i smell and indecent proposal?

22.

The funny part is everyone assuming she had a mortgage

23.

Common charges and taxes yes, buy don't forget lost income from having it sit empty for 4 years. The entire "investment" was crap.