Non-Profit Struggling with 24 Vacant Buildings, No Buyers

One of the 24 properties Neighborhood Housing Services have completely gut-renovated and now cannot sell in the housing crisis that has rendered much of their target market unable to obtain bank loans. (Charlotte Cuthbertson/The Epoch Times)

NEW YORK—Inside the housing crisis is an agency buckling under the weight of 24 empty properties in the New York City area.

Neighborhood Housing Services (NHS) has recently gut-renovated the properties in Brooklyn, the Bronx, and Queens, as part of their mission to bring affordable housing and responsible lending to these neighborhoods.

“Our traditional audience and people who know us are usually first time buyers, small business owners, and immigrants,” said Sarah Gerecke, CEO of NHS. Banks are calling for larger deposits and the housing market is in a glut. “Our target market has lost its financing and they don’t have 30-35 percent down payment,” she said.

NHS, a non-profit organization, has just been granted permission to sell on the open market—a last resort for the team, who have always sold to locals and owners who will reside in the building.

“The equity we’ve built up is going down the drain … We don’t want these sitting vacant,” Gerecke said.

The vacancies are also holding up the progression of the neighborhoods, which are in core commercial strips “that really need some help,” she said.

The buildings are small mixed-use buildings with ground floor commercial and one to two residential units above. Many are located in Brooklyn around Fulton Street, Saratoga Avenue, and Ralph Avenue. The renovations include energy efficient boilers and windows, new flooring, and energy star appliances. The buildings range from single studios of 457 sq. ft., to three-bedroomed apartments of 981 sq. ft., and commercial spaces ranging from 419 sq. ft. to 1543 sq. ft.

NHS buys dilapidated buildings from the city for $1 through its Department of Housing and Preservation and Development unit. With some city funding, NHS are able to get a bank loan to make the renovations. During the renovations, applicants are accepted through a lottery system. Community residents receive a 50-percent preference for purchasing the space. Five percent preference will be given to municipal workers, and the remaining 45 percent will be a direct lottery. Now, it is different and investor/owners will be given the option to buy.

Four years ago NHS received more than 300 applicants per building, said Gerecke. Now they are lucky to receive 20. And dropping their prices has wiped out their equity, she said.

Director of Housing at NHS, Byron Todman, said the properties are not high-investor properties at an average of $500,000, but they are a good deal. “There’s been a price drop per building of at least 10-15 percent,” he said. “If an investor wants to buy—provided they’re responsible, not with a history of slumming—we are exploring every option.”

The buildings are also an option for other non-profit organizations to obtain affordable housing, Gerecke said.

But other non-profits are in the same situation, said Bob Knakal, chairman of real estate brokerage firm Massey Knakal. “This organization is not unique in its position. There are several non-profit groups that are real estate rich and cashflow poor,” he said. Knakal has stepped in to help the beleaguered organization transit into the wider real estate market.

“Initially we’re analyzing all the properties,” he said. The firm will value each property and recommend the “highest and best use” of each, he said. “Everything is a function of price. Properly priced, there should be substantial demand for them.”

Gerecke said the help from Knakal has been invaluable. “Reaching out to private industry for help has been a silver lining for us.”

NHS has four major areas of business, with education around home ownership, repair, and how to avoid foreclosure, all top priorities. The organization also provides mortgages for affordable housing home repairs, but are having trouble accessing private capital. Real estate development, and resident leadership and community improvement round out the functions of NHS.

“We have sold 150 homes since 1998 and 149 still have the original owner. No one has ever experienced mortgage default on our properties,” Gerecke said, explaining the importance of their education services. “We only advise our clients to take out 30-year fixed rate prime loans,” she said. “We were considered fuddy-duddies two years ago.”

The NHS buildings can be viewed at nhsnyc.org and the info line number is: 212-519-2528