Tenants Fear More Of The Same As They Struggle To Hang On In Dilapidated Bronx Building Sold For 3rd Time In Four Years

In The Bronx, New York, Crain's New York Business reports:

• [Martha] Castro has called Apartment B on the ground floor of 1585 E. 172nd Street home for 22 years. Conditions were never perfect, but rats, leaking pipes and frigid, heatless winter nights turned into chronic problems around four years ago, not coincidentally just as the real estate bubble swelled.

• That's when a new business model emerged in city real estate, especially in the Bronx. Investors looking for big returns swooped in to buy Ms. Castro's apartment building and others just like it, taking over from traditional landlords who had been content with the steady income produced by the apartments' stabilized rents. Focused on raising rents and making a quick killing, these speculators badly miscalculated. They overpaid, leaving nothing on the table to pay for maintenance and repairs.

• Ms. Castro's building has had the misfortune of cycling through two such owners in four-plus years. Now, the little-known Bluestone Group has stepped forward to buy the debt on the building and five others in the same portfolio, forking over an estimated $10 million. The question on tenants' minds: Will Bluestone prove their savior, or are they destined for another excruciating cycle of neglect? Early indications have them worried.(1)

For more, see The new guys (Bronx slum gets third owner in four years. Can this one succeed where others failed?) (if link expires, try here, then click link for the story).

(1) According to the story, among those who have invested with Bluestone are Joseph Friedman and Sol Gross, executives whose extensive Pilgrim Icahn network of transitional homeless housing was cited by Comptroller John Liu earlier this year for hazardous conditions and for reaping $4.3 million in fiscal 2008 to house clients longer than they were supposed to stay in their facilities. Among the hazardous conditions were rodent droppings and roach infestation, leaking pipes, moldy walls and entrance doors without locks, the story states. The tenants worry that Bluestone's ties to Mr. Friedman could mean the firm wants to turn the properties into homeless housing, which can produce more income than stabilized rents, according to the story. “There is no way they can make their money on these units with anything short of a homeless voucher,” one prominent real estate executive reportedly said.