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YOU’VE HEARD OF THE TINY HOUSE MOVEMENT? They invented that in Philadelphia a couple of centuries ago. The compact ‘trinity houses’ of the late 18th and 19th centuries are now much-coveted for their coziness, charm, and economy. And a dollhouse can be quite livable for 1 or 2, once you get used to the stairs.
This c.1830 trinity, set off the street behind a larger row house, is new to market and very well-priced. It’s in Queen Village, one of the city’s quietest and most attractive neighborhoods. I happen to own a building just around the corner from this one, so I know the area well.
There are actually four floors of usable space: kitchen/dining on the basement level; a living room with fireplace on the ground level; a hall, ‘dressing room,’ and full bath (with fireplace!) on the 2nd floor; and a large open bedroom with a sloping ceiling at the top of the house, for a grand total of about 600 square feet.
The taxes are $1,300/year. For the official listing, go here. To learn more about Philadelphia trinities, click here and here.
I’M NORMALLY EXTREMELY SUSPICIOUS of financial ‘gurus’ and of people who have their heads swayed by their often-dubious advice. But a new book by Greg Rand, a real estate entrepreneur who contributes to Fox News (maybe that’s why I hadn’t heard of him) and has a radio show on WABC, has come to my attention. Crash Boom! Make a Fortune in Today’s Volatile Real Estate Market speaks to me. Naturally I like what Rand has to say: he validates my own experience and makes me think I’ve been on the right track by investing in rental property and clinging to it for dear life.
I’ve bought six properties, but never sold one. I’m an accidental real-estate investor. It started in 1979 with a Brooklyn row house that has three units, then a re-finance and the purchase of another Brooklyn townhouse in the mid-’80s, with two units. Both were bought primarily as homes; they just happened to have these extra apartments, which we rented out. We then let years go by — years when we could have swept up brownstones for a song — without investing in any other NYC property. But let’s not go there; my blood pressure numbers have been good lately.
It wasn’t until 2005, when my son went to college in Philly, that my attention turned purposefully toward investing in rental real estate, and I bought two early 19th century Philadelphia row houses with a total of five rental units. One is in a solidly upscale area (Queen Village), the other in a fringe neighborhood (Old Kensington) that nevertheless seems to be improving at breakneck speed. Both buildings have had positive cash flow from the beginning — not hugely so, but most definitely in the black, while I build equity month by month. Perhaps most important, I enjoy owning them. For me, it’s like collecting antiques — very large ones.
Buy, Improve, Hold is Rand’s prescription for building real estate wealth. Of all types of investment properties, he’s most partial to two-to-four family homes. “An incredibly appealing property type,” he says, and I concur. More tenants paying rent. And desirable: people want a backyard, Rand points out (most of my tenants have them, either shared or private). Though Rand doesn’t specifically mention vintage properties, many of the examples he gives, including a Victorian mansion in Tarrytown, N.Y., with commercial space on the ground floor and residential units above, resonate with me much more than if he was solely discussing condos or suburban homes.
Almost everything Rand says rings true to my ears. Here are some of his main points:
- It’s a great time to be a landlord. The current economic climate is providing investors with the opportunity to get a ‘deeply corrected’ price, and it also comes with a wave of new renters (800,000 new rental households in 2009 alone).
- The ‘technical drivers’ of real estate wealth — appreciation, leverage, amortization and income — do not exist together in any other form of investment. He likens these elements to a mixing board in a sound studio, calling them ‘the four dials.’ “As you push each of them up a little bit, the volume gets exponentially louder. You don’t need any of them to perform off the charts to get off-the-charts results.”
- Re appreciation, Rand points out that home prices are still above where they were ten years ago and the market is almost done ‘correcting.’ “In other words, the entire bubble has been erased. Poof! Gone.” In the long view, the historical upward trajectory is intact.
- Leverage steepens the return as a percentage of investment. Because most people buy real estate by taking out a mortgage, the cash invested initially is smaller in real estate than in the financial markets, compared to the eventual return.
- Amortization (paying off a mortgage) lowers the amount you owe as time passes.
- Rental income is icing on the cake.
The book also delves into what, for me, is the most seductive, creative aspect of the whole real-estate game: fixing up an ‘ugly duckling.’ Rand advocates finding properties in need of upgrading, not turn-key ones. He loves long-languishing properties that have become stigmatized, as in “Something must be wrong with it if it’s been on the market so long.” Let others pass it up. That’s where you can often find bargains, he says — something I’ve intuitively understood for a long time, but am still heartened to see in black and white.
Mind you, Rand’s book doesn’t say you’ll get rich quick. “A good buy on a house means you set yourself up for even greater returns as you ride the cycle forward and mature the investment over time.” The biggest mistake people make in real estate, he says, is selling in order to realize the profit, adding “Don’t do that!” He views equity in real estate as liquid, which is refreshing. True, it takes a few months to get to it, but it’s still a good place for your money. Let it stay where it is “until you have another real estate play to make or your objective has been met” (say, when it’s time to send a child to college).
There’s lots more — from how to find a neighborhood on the upswing (“Home Depot and Lowes don’t open stores on a whim”), to owning near where you live and work, to buying distressed and foreclosed property. And there are quite a few surprises (Rand thinks Florida is still a great place to invest, for instance).
My one disappointment is that Rand is not terribly helpful when it comes to how to get the money for a down payment in the first place. I hope that’s the subject of his next book.
To see my archive of blog posts on Rental Property Management, go here.
WHEN I WAS ABOUT 9, my uncle taught me this ditty:
No birds No bees No flowers No trees
No wonder…November.
I still find it amusing, even though it’s not true. The goldfinches are still at the thistle feeder. I saw bees burrowing in the catmint just the other day. My cimicifuga sent up about a dozen white bottle-brush flowers, and even the rhododendrons, below — which I thought didn’t bloom this year because the deer had eaten all the buds — have a few stunted magenta flowers on them, months behind schedule. The trees are still pretty leafy, and seem particularly brilliant this autumn.
Perhaps because I’m leaving? Tomorrow I’m heading to Brooklyn to start my experiment in leading a double life — the Hamptons/New York City circuit that so many take for granted, but for me is a whole new chapter.
On Monday morning I’ll be in my Prospect Heights pied-a-terre, awaiting delivery of most of the furniture I put into storage a year-and-a-half ago, when I came out to live in East Hampton full-time. That was by default, as some of you may remember, when the Brooklyn place I was to have moved into around the same time I closed on this Hamptons cottage fell through at the last minute.
Above: Awesome sarcococca, male of the species
I feel like I have unfinished business back in Brooklyn. I’m getting excited about volunteering at the Brooklyn Botanic Garden, taking $10 yoga classes at Shambala, going to BAM more often, hearing some klezmer music, shopping at Sahadi. But most of all, having a city home again, furnished with city stuff. The orange Ligne Roset chairs, the steel and glass coffee table, the Nakashima-esque side table my son made, the inlaid 1950s Italian cabinet we bought in Tuscany and had shipped home, the 8-foot-long beige chenille sofa with cat-scratched arms. Maybe inanimate objects shouldn’t matter so much, but somehow they do. Even more than memories, I think, they’re about identity. It’s been hard sometimes, these past 18 months, to remember who I am in a new place, new house, surrounded by new (pre-owned, of course, but new to me) stuff.
November will not be boring. After settling into Brooklyn, I’m off to Maui for a week (yes, I know, too bad). I’ll be exploring the island with my daughter, who lives there. I’ve got our itinerary planned out. No modern resorts; we’ll be staying in vintage B&Bs. I’ll visit some botanic gardens and flower farms and historic houses and maybe even go to the beach. Then I’m heading down to Philly to cut a hole in a wall that should make one of the apartments in my Queen Village building much pleasanter and more livable. Thanksgiving will be upstate with lots of cousins.
It won’t be until December that I begin to figure out how this pied-a-terre thing really works.
Photos by Debre DeMers
FIRST DIBS, DEAR READERS. This 1-bedroom garden apartment, available for rent as of January 1, has not even made it to Craigslist yet. It’s in one of my two Philadelphia buildings — the one in Queen Village, which is probably the best neighborhood in the city after Rittenhouse Square and Society Hill.
It’s convenient to Center City and the bars, stores, and restaurants of South Street, yet far enough away to be quiet and peaceful.
The building, on a lovely residential street, dates from 1810. There’s a private entrance (red door on left, top) and a 300-square-foot outdoor space that’s not exactly a garden — a concrete patio, more like (think containers!)
The apartment was totally renovated in 2006. It has central air, a washer-dryer, and a walk-in closet, rarities for those of us used to New York City apartment living.
The bedroom, below, is huge, with two windows and a French door leading to the garden.
The rent:$1,150/month, plus heat. For more info: caramia447@gmail.com
The brand-new LeMeridien in Center City
TODAY BEGAN WITH COFFEE AND A CROISSANT at the Reading Terminal Market, an indoor foodie paradise the likes of which no city should be without (though I know of no other such place anywhere) — scores of stalls, from butchers and bakers to candlestick makers, literally. There are outposts of old-school Italian bakeries, Amish cheese makers, stalls selling Provençal linens and beeswax scented candles, handmade chocolates and unusual flowers — everything varied and fresh and reasonably priced.
We stopped in to the Wood Turning Center in Old City, a unique gallery whose current exhibition, “Magical Realism,” features a major work, above, by Randall Rosenthal, my neighbor in Springs – one of Randy’s extraordinary, carved-from-one-piece sculptures. This one is a creative jumble of pads and notebooks, so realistically carved and handpainted you could well mistake it for the real thing.
Then Nancy and I drove 30 miles south into Delaware’s Brandywine River Valley and spent the afternoon at Winterthur, above, the well-known 200-acre estate belonging to Henry Francis DuPont. His 175-room mansion is crammed with important American furniture and antiques. It’s more museum than historic home (H.F. removed bathrooms and kitchens to make more room for the display of objects). The interior of the house, which was built in the late 1800s and twice added on to before H.F.’s death in 1969, is intentionally a pastiche of styles, with little architectural integrity of its own. A fanatic collector, DuPont salvaged moldings and paneling and floorboards, even staircases, from various sources, composing some rooms in Federal style, others in Colonial fashion, and so on.
For me, the highlights of our hour-long intro tour of just two of the seven floors were the rooms with wraparound scenic wallpaper – one with Chinese vernacular scenes of the 1700s, above — and the big blowsy flower arrangements, specifically required by H.F. in his will.
We took a tram tour of the grounds, which are gorgeous — all rolling hills and meadows with grazing sheep and ancient cherry trees and sycamores. As an arboretum, Winterthur is unsurpassed, but overall, the experience paled in comparison to yesterday’s exhilarating visit to Chanticleer.
Returning to Philly in the late afternoon, we drove up to Fishtown for a look around, and had a beer at Standard Tap (I’m not much of a beer drinker, but the beers at this place are all local and on draft). We had dinner, on my son Max’s recommendation, at Southwark in Queen Village, a civilized change from the noise and madness we encountered the night before at El Vez, Steve Starr’s gimmicky, wildly popular Mexican restaurant in Center City.
We’re camped at Le Meridien, a sleek two-week-old hotel in a 10-story Georgian Revival building that has been done up by the Starwood chain in mod Eurostyle, top, above, and below. It’s fun walking into the lively lobby bar and reception area, where the building’s original carved decoration is set off by crisp 21st century furnishings, dramatic lighting, and abstract art. The hotel’s location couldn’t be more central – it’s right behind City Hall and next to the park with Robert Indiana’s famous LOVE sculpture.
I’m looking forward to tomorrow: a visit to several small private gardens in the Mt. Airy section, where I’ve never been (participants in the Garden Conservancy’s Open Days program), and a final stop at Greensgrow Farms in Kensington on the way back up 95, where I hope to find some out-of-the-ordinary annuals.
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