By Phelan Wolf, Esq.
10 Quarty Circle, Unincorporated East Hampton, $1,295,000
Record low interest rates have caused a rush of buyers interested in reasonably priced rental properties in East Hampton’s Northwest Woods and other similar neighborhoods on the East End for two reasons. First, the price of money is cheap and residential buyers can lock in rates for decades. Second, low interest rates mean that competing investments, such as bonds, offer smaller returns than the income generated on many rental properties.
The intentions of the buyer of this property are unknown, but this property fits the mold and there’s a good chance that inexpensive money, and a decent rental return figured into the buyer’s thinking.
This house is a contemporary, with four bedrooms and four baths. The fourth bedroom is important, as many tenants want at least that many rooms.
At just under 3,000 square feet, it’s a substantial house but not so big that the price of maintenance would be exorbitant. It’s in good condition, having been recently renovated, which should help keep carrying costs down.
Many tenants and buyers crave privacy. This property is larger than 1 acre, with a substantial yard and an all-important swimming pool which is an absolute necessity for a summer rental property.
Transfer records show that this lot sold as vacant land in 1990 for $126,000. The house was sold new in 1992 for $455,000 and then again in 2001 for $735,000.
The current owner purchased it at the bottom of the most recent market cycle, in 2009, for $1,075,000. The renovation costs are unknown, and they might be substantial, but given the timing of that purchase, this was probably a profitable flip, especially if the property generated rental income during the last few seasons.
While transaction volume in Northwest Woods has greatly accelerated, prices have not risen much yet. Given overall market conditions and the very low interest rates, this buyer’s timing will probably look good in five years as well.