Family Building Dillema
What would monkey's here do? I would appreciate anyone putting on their creative deal hat.
Let's say you have a building your family owned for 40+ years. There is no mortgage, it is in NYC, in one of the top 5 neighborhoods. The building does not cash flow great, very low rents 60% rent stabilized. Buildings tenants are below market, even the Free Market ones, but this is in an area where on a cash flow basis as-is one could get maybe $5-$6.5mm. For perspective, NOI is like 150k. Because of the location and special type of building vacant it would fetch $8-$12mm. (It could sell tomorrow for ~$5mm and maybe in a year for ~$11mm)
Would you try do the tenant buyouts, family has very good rapport with tenants, most have very good jobs, and the rents they are paying are very close to what they would pay for a mortgage for a 1-bedroom in this neighborhood. And then do the renovations yourself, because A+ neighborhood and building(bones and unique building). Or would you sell, then 1031x take on 50-60% debt and double your NOI without doing much work.
My proforma would get the NOI to maybe 450k on the current property. My experience is such that I am not really questioning its accuracy.
What would YOU do.
Bonus points, there is no more depreciation on the current building. Are we in the 9th or 11th inning in NYC?