So what do you do if you’re a developer and the credit crunch is keeping your potential customers away? Well, how about giving buyers the loan yourself!
That’s precisely what the developers of a posh Harlem condo building are doing. Yup, they’re going to personally finance your loan, or, in other words, essentially lend themselves the money so that you can buy one of their condos.
The building is the Fitzgerald, “a completely renovated and converted development in Harlem,” according to the press release. It’s at 257 West 117th street, right by Columbia University and right in the heart of one of the hottest neighborhoods in Manhattan (President Clinton set up shop in Harlem if you all remember).
I spoke with one of the developers this morning who claims that despite a slight slowing in the Manhattan market, he doesn’t see any risk to this venture. Buyers have to put 10 percent down, but there are no closing costs. “Qualified buyers are offered a seven year loan on a 30-year amortization schedule at half a percent less that the interest rate Citibank is offering currently.” There are no prepayment penalties and no processing fees.
The developers think it’s a great way to get buyers into the building fast, buyers who will later refi into different loans or sell to third parties, so the developers will see the full value of the properties. And these are not low-income housing deals, no no. The units range in price from $665,000 to $1.85m.
It makes me wonder though. Manhattan isn’t really the type of market that relies heavily on financing (many co-ops reject financing), and the prices are so high that really everyone needs to be able to get a jumbo. This says to me that folks in the know about Manhattan real estate know things are starting to get dicey. They want to get buyers in fast, give them the loans if they have to. Perhaps all the bleeding on Wall Street is finally beginning to bleed uptown.
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