Due Diligence Report

230 Union Street, Brooklyn, NY 11231 2015

(Google Maps)

230 Union Street: Preliminary Due Diligence ReportProfessor Hallenborg, Real Estate Principles

Juan Migone

November 19, 2015

Case Study #1

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EXECUTIVE SUMMARY The following report is written to provide information to potential buyers interested in

investing in 230 Union Street, Brooklyn, NY 11231. The report is divided into four components:

Property Description, Title & Ownership Issues, Property Condition, and Zoning and Land-Use

constraints. In these sections investors can hope to find the following information: legal

boundary details, neighborhood background information, market and sub-market analyses,

demographics, research on the property’s school district, deed and legal document specifications,

mortgages and liens, property conditions, recorded violations, zoning conditions, and unused

development opportunities. These sections are then followed by a variety of exhibits that show

images depicting these various specifications. After reading this report, investors will have a

better knowledge of whether or not to invest in 230 Union St.

Location (ZoLa: nyc.gov)

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I. Property Description

230 Union St. is located in Carroll Gardens, Brooklyn between Henry and Clinton streets.

The property occupies block 344, lot 27, in Brooklyn Community District 6. The lot itself is

16ft. 8in. x 100ft. with a 1,667 sq. footage. The building on the lot is a 2,551 sq. ft., three story

brownstone that is 16ft. 8in. x 81ft. The home was built in 1900 (Property Shark, 2015; ZoLa:

nyc.gov). It is composed of 3 residential units, the first being a triplex, the second being a one

bedroom apartment on the second floor, and the third being full floor apartment at the top

(Exhibit A) (Foley, 2015).

The property is conveniently located as it is well serviced by public and private

transportation alternatives. It is approximately 0.3 miles from the Carroll St. subway stop which

services the G and F lines (Google Maps). Via subway, Lower Manhattan is a 20 minute

commute while Midtown is 30 minutes. Without traffic, Lower Manhattan is a ten minute drive

via I-478 and the Brooklyn-Battery Tunnel (The New York Times, 2014).

Along with its convenient location, 230 Union Street is situated in Carroll Gardens, a

neighborhood with a calm and cozy atmosphere away from the hustle and bustle of the city but

not too far to seem isolated. Its spacious, tree-lined streets, handsome brownstones, deep-front

gardens, and wrought-iron fences give the area an “urban-small-town atmosphere” appealing to

families, seniors, and young professionals alike (Brooklyn Library; The New York Times, 2014)

Adding to the small-town charm is the neighborhood’s Italian flair. Carroll Gardens was first

populated by Irish immigrants in the late 19th century but were overcome by Italian immigrants

in the early 20th century (Brooklyn Library). Walking down main commercial strips, residents

and visitors can see old-time Italian delis, cheese shops, and restaurants, now alongside “hip

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boutiques”, trendy restaurants, and organic markets (The New York Times, 2014). The mix of

history, culture, social classes, and transportation alternatives, as well as its laid back

environment makes Carroll Gardens an ideal place for many to call home.

Housing values in Carroll Gardens have seen a 67.5% increase on average for the past

five years with a 31.5% increase just this past quarter (trulia.com, 2015). Property Shark

currently values 230 Union Street at $3.08 million, a 434% increase from the last sale price,

$578 thousand in 1998 (Property Shark, 2025; ZoLa: nyc.gov). The valuation is based on the

sale of comparable multi-family walk-ups of similar size within a 0.5 mile radius and sold within

the past 18 months (Property Shark, 2015). However, in Carroll Garden’s volatile market

(Exhibit B) a significant price drop can be expected in the near future. Currently though sales

have had a downward trend since 2014 encouraging average sales prices the past year to remain

101.54% higher than the average sales price in Brooklyn (trulia.com, 2015). The area’s annual

residential turnover remains high at 18% which further strengthens the current housing market

(Douglas Elliman, 2015).

Carroll Gardens is slowly being populated by a middle-aged professional class, many of

whom are seeking a quiet haven to raise a family while still enjoying the charms of city life.

Exhibit C displays this trend but also show the neighborhood’s continued diversity. The area’s

median income sits at $103 thousand, the median age at 37.72 years old, and the average

household size at 2.08. 21% of households in the area have children. The majority of residents

are also well-educated: 41.5% having attained a Bachelors Degree and 27.9% having received a

Graduate Degree (Douglas Elliman, 2015).

Carroll Garden’s school district, District #15, was given a “Great School’s” rating of 6

out of 10. The rating is based on standardized test results, student academic growth, and college

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readiness. A score of 1-3 signifies “below average”, 4-7 “average”, and 8-10 “above average”.

The best rated schools in the district are as follows: The Carroll (Pre-K to 5th) scored 10, the New

Voices School of Academic and Creative Arts (6th-8th) scored a 9, the Math and Science

Exploratory School (6th-8th) scored a 9, and the Millennium Brooklyn High School (9th-11th)

scored a 7 (Great Schools!).

II. Title and Ownership Issues

230 Union Street is jointly owned by two independent property owners, John Foley and

his wife, Martina McGuiness-Foley. According to the deed and the correction deed (Exhibits D

& E) the property was purchased on January 15, 1998 from Carmello Modica and his wife,

Phyllis Modica. The reason for the correction deed, which came into effect February 3rd, 2004,

was “to correct the name of the grantee, Martina McGuinness-Foley and to correct the legal

description of the premises.” The original deed stated McGuiness-Foley instead of McGuinness-

Foley, and also confused the directions and parallels of the metes and bounds for the property

(NYC Department of Finance). Since the property was built before 1938, the Certificate of

Insurance is unavailable through the New York City Department of Buildings (Building

Information Systems, 2015). The deed also states that the estate is a fee simple estate, conveyed

through a Bargain and Sale Deed with a covenant against Grantor’s Acts - i.e. a Special

Warranty Deed (NYC Department of Finance).

Since the 1998 purchase there have been a number of mortgages recorded against the

property; however, a Subordination of Mortgage (Exhibit F) was recorded on November 11,

2012 and a Satisfaction of Mortgage (Exhibit G) was recorded on December 26, 2012 (NYC

Department of Finance). The property’s total mortgage came out to be $578 thousand (ZoLa:

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nyc.gov) Also, there are no recorded liens against the property nor easements or restrictive

covenants (Property Shark, 2015; ZoLa: nyc.gov). The owners currently lease out the

apartments within the building, but a thorough search of the NYC Department of Buildings

database shows no leasehold agreements for the property (Foley, 2015; Building Information

Systems, 2015).

III. Property Condition

(Google Maps)

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230 Union Street is in very good physical condition as the property does not sit on or near

a toxic site and is not in a FEMA flood zone. The nearest 100 year flood zone is 771 ft. away

(Property Shark, 2015). There are also no environmental restrictions or Department of Building

or ECB violations recorded on the address. The last alterations to the structure were done in

1955 (Building Information System, 2015). Only minor improvements, such as painting or

redoing the floors, have been done to the structure by the present owners (Foley, 2015).

In all the structure is very elegant, and like most brownstones in the neighborhood, gives

off that Carroll Gardens charm with its ornate façade. This front is composed of what appears to

be a brown stucco covering. The façade is flanked at the bottom with a grand staircase leading

up to a narrow stoop with wooden double doors and covered by an ornate aedicule. The roof

line, even with adjacent properties, is topped with a dark brown cornice. To avoid a flat texture

on the façade, each window has individual cornices held up by two brackets.

IV. Zoning and Land Use Constraints

230 Union Street is zoned R6B (Exhibit H). The zoning map (Exhibit I) delineates this

zone in proportion to the property. This zoning is meant for traditional row houses as it

preserves their scale, stoop, front yards, and the iconic streetscape they create. The zoning limits

building height to 50 ft. but base height may only be 30-40ft. Space above base height must be

set back 10 feet from wide streets and 15 feet from narrow streets. This zoning mandates off-

street (i.e. side streets or within the lot) parking for 50% of dwelling units within the structure.

Maximum FAR is 2.0, and maximum lot coverage for corner lots is 80% whereas for inside lots

it’s is 60%. Since the structure is part of the Quality Housing Program it must provide interior

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amenities for residents. R6B also allows apartment construction that follows the above

guidelines (Department of City Planning).

R6B apartments (Department of City Planning) R6B-zoned brownstones (BK to the Fullest)

Buildings in R6B zones allow single-family and multi-family dwellings (Department of

City Planning). 230 Union Street land use allows accommodation for four families but currently

only caters to three families (Department of City Planning; Foley, 2015). Since the structure is

an interior lot its lot coverage cannot exceed 60%; however, it sits at 81% lot coverage and

cannot be built outward. The structure can be built up though for since its total floor area is at

2,551sq.ft. and the lot area is 1667 sq. ft. there are 783 sq. ft. of unused space – or air rights).

There is also unused FAR as the current FAR is 1.53. The structure does not lie in a historic

district (Exhibit I) and is not landmarked (ZoLa: nyc.gov; Department of Finance).

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EXHIBIT A (Douglas Elliman, 2015)

EXHIBIT B (trulia.com)

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EXHIBIT C: Carroll Gardens Demographics and Statistics (Douglas Elliman, 2015)

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EXHIBIT D: Deed (Department of Finance)

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EXHIBIT E: Correction Deed (Department of Finance)

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EXHIBIT F: Subordination of Mortgage (Department of Finance)

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EXHIBIT G: Satisfaction of Mortgage (Department of Finance)

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EXHIBIT H: R6B Zoning Guidelines (Department of City Planning)

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EXHIBIT I: Zoning Map/Historic District (ZoLa: nyc.gov)

230 Union St.

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EXHIBIT H: Certificate of Occupancy (ZoLa: nyc.gov)

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Bibliography

"Carroll Gardens." Our Brooklyn. Brooklyn Public Library, n.d. Web. 17 Nov. 2015.

Coulton, Claudia J. "Using Data to Understand Residential Mobility and Neighborhood Change."

What Counts. N.p., n.d. Web. 17 Nov. 2015.

Foley, Hannah. Personal interview. 16 Nov. 2015.

"Google Maps." Google Maps. N.p., n.d. Web. 15 Nov. 2015.

Gill, John Freeman. "New Roots in Carroll Gardens." The New York Times. N.p., 11 Mar. 2014.

Web. 17 Nov. 2015.

Jonathonne. "Closings of Note: What's Surprising to You?" Web log post. BK to the Fullest.

N.p., 2 Nov. 2012. Web. 19 Nov. 2015.

"New York Geographic District #15." Great Schools! N.p., June 2015. Web. 17 Nov. 2015.

"NYC Zoning - Zoning Districts." NYC Zoning - Zoning Districts. Department of City Planning,

n.d. Web. 19 Nov. 2015.

"Real Estate Data for Carroll Gardens." Trulia. N.p., n.d. Web. 15 Nov. 2015.

"230 Union St, Brooklyn, NY 11231." Property Shark. N.p., n.d. Web. 16 Nov. 2015.

"230 Union Street, 1." 230 Union Street Unit 1 Brooklyn NY. Douglas Elliman, n.d. Web. 16

Nov. 2015.

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United States of America. The City of New York. Department of Buildings. Property Profile

Overview. New York: City of New York, n.d. Building Information Systems. Web. 14

Nov. 2015.

United States of America. The City of New York. City Planning Commission.Zoning

Resolution; Article II: Residence District Regulations. New York: City of New York,

2014. Print.

United States of America. The City of New York. Department of Finance. N.p.: n.p., n.d. Office

of the City Register. Web. 15 Nov. 2015.

ZoLa: Zoning & Land Use. Computer software. Nyc.gov. NYC Planning, n.d. Web. 13 Nov.

2015.

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Due Diligence Report

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