McMansion on my block (Belmont: real estate, rental, houses)

[Noc]

I live in the western end of Nassua county near Belmont race track. A small village of about 8x4 blocks. Most of the homes on my block are ranch style older homes. My house sits on the corner of a 3 way inter section, high ranch on a big lot (no basement) 2100sqft built in 94. Most homes in the area are about this sqft in size or a bit less with a basement.

About three years ago a family (I think he is a contractor) bought one of these low ranches in the middle of my block and completely renovated it into a mini McMansion. It has to be at the very least 4000sqft. It's a very nice home and looks great for the neighborhood. Here is my question, if there are price caps in areas why would anyone chance and over build in this manner? I'm not sure what his intension's are he isn't flipping it b/c it's over 3 years now. So after time passes what does his house do for the rest of the neighboring house on the block? His house looks like 1million plus on a block or neighborhood for that matter of houses in the 400-600K rage.

He did spark a renovation trend in the area through. So how does this work? I've been hearing about neighborhood caps and houses like his devaluing housing that are right next to them that are still the original low ranches.

[TomMoser]

In a situation like this, your neighbor's house will not appreciate as much as the homes around it. The problem is that most people who want to buy million dollar + homes do not want to live in a neighborhood of 500,000 dollar homes. There really is no such thing as an absolute cap on a neighborhood. It's just that the home will not be worth nearly as much as if it were in an area that had similar homes.

[nbres]

I would take it as a positive, it shows that people are willing to invest a great deal of money in your neighborhood. Maybe your neighborhood has become very desirable. But....

Be wary. Is it going to be used as a single family residence or is it destined to become a rental complex with multiple families and/or individuals.

[Noc]

@ Tom
I don't think this guy is selling any time soon. But I see your point IF he wanted to sell it would be hard being that the homes around him are not up to par with his. What about the other homes around his do they increase in value a great deal or not by much?

@nbres
It definitely is a positive for the neighborhood b/c since he has arrived three houses on my block have undergone complete renovations. Low ranches now have dormers/huge second floors, stucco, pillars etc.

His house is definitely a single family.

[TomMoser]

Originally Posted by Noc

@ Tom
I don't think this guy is selling any time soon. But I see your point IF he wanted to sell it would be hard being that the homes around him are not up to par with his. What about the other homes around his do they increase in value a great deal or not by much?

I don't think that one house is going to increase the value of all of those around it. Maybe if a couple of more went up it might have a positive impact.

[VTP]

I was told by a realtor pal that flips are way down in popularity now, because of the real estate bust and the consequence that the "flippers" are not reaping the profits they sought. In addition, because the houses are taking so long to sell, they are sitting empty for long periods of time, causing the flippers to absorb all the expenses associated with utilities, tax, etc. Does anyone know if this is so? Seems to make sense, and it would be unfortunate, because in most cases the flip houses look a lot better than what preceded them.

[TomMoser]

Originally Posted by VTP

I was told by a realtor pal that flips are way down in popularity now, because of the real estate bust and the consequence that the "flippers" are not reaping the profits they sought. In addition, because the houses are taking so long to sell, they are sitting empty for long periods of time, causing the flippers to absorb all the expenses associated with utilities, tax, etc. Does anyone know if this is so? Seems to make sense, and it would be unfortunate, because in most cases the flip houses look a lot better than what preceded them.

Absolutely true. Many of the flippers have been baked in the squat, so to speak.

[sirtiger]

Originally Posted by TomMoser

Absolutely true. Many of the flippers have been baked in the squat, so to speak.

that makes me quite happy.

[TristansMommy]

Originally Posted by TomMoser

Absolutely true. Many of the flippers have been baked in the squat, so to speak.

I wanted to add though, that you can still make a profit on the flip.. BUT you must know the market that you're in. For instance, if you get a home at a really low price, can fix it for a reasonable amount of money , and competitively price the home (take all others like it and put the lowest price tag on your house compared to similar homes) you'll sell and sell it fairly quickly. I know that price is selling homes faster now than anything else. BUT>> it's not so easy to get a house cheap enough to do that. if you know what I mean.

And..if you do it for a reasonable price and your payments do not exceed the rent you can get, you can hold on to it and rent it to cover your mortgage, wait until the market levels and eventually goes back on the rise and then sell..

But alas.home prices on LI .. no matter what, are high andm ortgage payments exceed what a house rents for on LI. So this too is hard..