Category Archives: Buying tips for your NYC apartment

Buying tips for your NYC apartment

Thinking of buying? What do you need to start?

If you are thinking of buying a Manhattan property,  the most important items you need to have when starting out are a pre approval and a financial statement. You want to have a pre approval or even better a pre commitment in place so that if you make an offer you can show the seller that you already have financing in place. In addition, for your own knowledge, the loan officer or mortgage broker will give you an idea of what your monthly payments will be. In some cases, you may be able to afford more than you want to spend monthly. So this will help to define your price range.

You can get an industry standard blank financial statement from your real estate broker. Having that filled in with a pre approval will give the seller a good idea of your qualifications. Going through the under-writing process can yield a pre commitment which will be only subject to finding a property and a satisfactory appraisal. So if you are really serious ask your lender about that option as well.

Buying tips for your NYC apartment, Upperwestside

What does $4 million buy you on the Upper West side?

Let’s say you are ready to purchase an apartment on the Upper West side with at least 3 bedrooms. Inventory is still on the low side. After doing a few searches on listing site streeteasy.com I came up with the below numbers. All of the below numbers indicate at least 3 bedrooms except where noted and the price range selected was between $3 – $4.5 million.

19 condos in the Lincoln Square section of the Upper West side
11 more listings in the UWS

8 listings with at least 4 bedrooms on the UWS

15 co-ops in Lincoln Square
9 co-ops UWS
5 co-ops on the UWS of which have at least 4 bedrooms

The range of offerings was from the luxury buildings on Riverside boulevard in Lincoln Square with tons of amenities to the Lincoln Towers co-op complex where your dollar goes further.

Only about 25% of the apartments in either co-op or condo segment up to $4.5 million had at least 4 bedrooms. Most new construction or recent conversions starts a little bit above this range.

Buying tips for your NYC apartment

Thinking of buying a Manhattan apartment? What does a buyer agent do for you?

Whether you are thinking of buying a Manhattan apartment for $300k or $100 million, a buyer’s agent is essential to your success. When you venture out to open houses, the agents that you meet are seller’s agents meaning that they negotiate for the seller and are responsible to be honest with you. The seller and his agent are looking for the highest possible price and anything that you say can tip them off to your urgency or desire to complete the purchase. A buyer’s agent among other things can advise you if and how much you can negotiate based on their market knowledge and recent sales. He or she can arrange an attorney for you and refer you a lender if needed.

A buyer’s agent is your advocate. He can look into neighboring developments to see if there are any plans for a future building that will wipe out your wonderful views. He can also advise you throughout the transactions when you have questions so that you have someone that you trust to decide if what you hearing from various sources is normal and fair.

A buyer agent can also preview properties like new developments for you and save you time to see if there are offerings that match your needs. You might not want or be able to make a visit to a new development sales office but your buyer agent can do it for you and send your photos and relay information.

There are many things that a buyer agent can do for you regardless of how much you want to spend on your Manhattan pad.  Best of all,  there is no additional cost to you as both the seller’s agent and your buyer agent are paid out of the proceeds of the sale.  In short, just like you have a lawyer to represent you, make sure you have a good agent that you can trust to protect your interests as well.

 

Buying tips for your NYC apartment

How much money did you need to buy your first Manhattan apartment?

Very often, I am asked by first time buyers what are the guidelines that banks use to determine how the bank determines how much they will lend. In generally, let’s take a look at a scenario where you are interested in buying a Manhattan condo for $1,000,000.

$1,000,000 purchase price
$200,000 down payment
$40,000 closing costs
?                   post closing reserves

In this scenario you need about $250,000 liquid plus post closing reserves which depend on the bank but let’s say 6 months of payments which can be in a 401k or non-liquid account.

In this case, your monthly mortgage is about $4,000 based on a 4.25 interest rate on a 30 year mortgage, add in about $1400 for common charges and taxes and you end up at $5,400. In order for the bank to make a loan you would need to have at least 2.5 to 3 times that in monthly income assuming little or no debt and very good credit. So you would need a minimum of $13,500 in monthly income or $162k annual. In many neighborhoods this will buy you a  1bedroom condo or even a  2 bedroom north of 110th street.

If you purchase a co-op, the co-op will require a minimum of 20% and in some cases more plus they will require 2 years of monthly payments in reserves so the cash outlay will be higher. So you may need close to $400k in assets to make the purchase. However, you will have a much larger choice of apartments with a co-op in this price range- 102 listings with at least 1 bedroom on the Upper west side under $1 million on the listing site streeteasy compared with 17 condos under $1 million. Co-ops are less expensive than condos but have more restrictions and higher monthly charges. More on that another time.

Buying tips for your NYC apartment, Foreign Investment

What should foreign investors look for in Manhattan property? Tip 2

As a foreign investor looking for a Manhattan property to purchase and rent out, you need to find an international tax consultant who can help you navigate the complicated tax code here in the United States.

Here is a crash course but please consult an accountant or your attorney before making any purchase. Let’s say you buy an investment apartment for $2.75 million and you collect $9,000 per month in rent with $3,000 in condo charges including your common charges and taxes.

$2,750,000 Purchase

$9,000 per month income
$3,000 per month building charges
$6,000 profit per month or $72,000 per year

So you make $72,000 per year in profit and have to pay US taxes on that correct? Not so fast. In the US, you are required to take something called depreciation on your property which is based on 27.5 years. So the apt cost $2.75 million and you depreciate $100k each year. ($2,750,000 divided by 27.5 years is $100k)
So guess what? The $100k in depreciation wipes out the $72,000 gain from rental income and you do not owe anything in taxes here in the US. What’s the catch?

The catch is that when you sell in 10 years, your original cost was $2.75 million but in 10 years you depreciated the property a total of $1,000,000 so as a result your cost is actually only $1,750,000 not $2,750,000. So any amount above that will be taxable. End of the story? Not quite. Most investors who sell a property like this purchase another one and through a vehicle called 1031 exchange you can rollover(defer) the taxes to the next property!

So please make sure if you are purchasing an investment property in Manhattan as a foreign national, you find an experienced international tax consultant who can help you to minimize your tax liability. Usually, an experienced real estate broker can recommend someone to you.

Buying tips for your NYC apartment, Real estate

Is now the time to buy your first Manhattan apartment?

Very often, I am asked if now is the right time to buy.My answer is always the same. Maybe. Obviously everyone’s situation is different and if you are in 2 bedroom West Village rent stabilized apartment ala Monica and Rachel of Friends then now is probably NOT the right time to buy a Manhattan condo or co-op. But assuming you are renting a market rate apartment, making your first purchase of a Manhattan pad makes perfect sense. Here are a couple of reasons to pull the trigger now.

Reason 1- As far as interest rates, they will rise.  The cost of financing is not getting any lower then it is right now. A $1 million mortgage at 4% will cost you $4800 but when that rate goes up 1%, now you will pay over $5,400 just for the mortgage.

Reason 2- In the last boom there were almost zero starter apartments built. Developers went after the super luxury buyer and larger ignored the first time buyer. So as a result, inventory under $2 million still remains low. So while the super luxury market is over supplied and likely to not appreciate until the excess is absorbed,  starter homes are in a totally different category.

Reason 3- When you rent you lose money, whereas when you purchase you build equity and it is a forced savings. If you took out a $1 million mortgage today, by Feb 2027 you will have paid down $215,000 of it. In addition, the property will appreciate. Conservatively, let’s say a $1,250,000 property goes up 2.5% per year, that means the property will be worth $1.6 million in 10 years. So conservatively, you will have $565k in appreciation plus mortgage paid down. Not bad. If you rent that same apartment, you will pay approximately $3500 today and even if you paid that same amount for the entire 10 years (which you will not) then you will waste $420,000. That gives a net difference of nearly $1 million! ($565k positive if you buy $420k negative if you rent)

Reason 4- There is an interest deduction as well. Most of you what you pay in the beginning is interest so as a result, you get a deduction. When you rent you get zip.

Having said all of that, some purchases may more sense than others, so do your homework. Get a streeteasy account so you can see not only current listings but selling prices. Generally, streeteasy is more reliable than other listing sites especially for Manhattan. Find a skilled broker who can advise you on apartments and help navigate a process that can be very confusing at times.

There is certainly a lot to do when you are arranging your first purchase of a Manhattan condo or co-op but long term it will be worth it !

 

Billionaire'sRow, Buying tips for your NYC apartment, Real estate

What should foreign investors look for in Manhattan real estate? Tip # 1

Many foreign investors have been purchasing apartments for investments in the last several years in Manhattan. Part of the reason that the latest condo boom saw so many large apartments over 2000 sqft (185m2) be built was to satisfy the thirst of overseas high net worth individuals. Now with the super luxury market in the throes of a buyer market, headlines are being made by sellers who bought only a few short years ago and are selling at a loss. So what went wrong and how can a foreign investor now take advantage?

Take for example 432 Park avenue, the Macklowe developed building between 55th and 56th street with helicopter views of Central and 10′ by 10′ windows. Right now, it is the tallest building in the Western Hemisphere but will be passed next year by other buildings in the Billionaire’s Row corridor. Prices range from $6000 per sqft to over $10,000 per sqft. The old adage in real estate is that you do not want to have the most expensive house in the neighborhood and I think that applies here too. Wouldn’t it make more sense if you had $20 million to invest to buy 3 to 4 smaller apartments or one large an expensive one? Well, if you bought several you would be buying in the sweet spot of the market and at a price point that many people can afford. So when you try to resell you are not searching for the needle in the haystack and also the rent would be at a price that many more can afford. How many clients are there for $55,000 per month rentals and how long does it take to rent one out? However a $12,000 per month has much more potential clients.

According to the listing site, streeteasy, there are 40 monthly rental listings in Manhattan with asking prices between $40,000 and $60,000. Half of those listings have been on the market for more than 4 months. So at the upper echelons, you may wait quite a while to get that super luxury pad rented. On the contrary, betweeen $8,000 to $20,000, the rental market has 978 listings! This is clearly the meat of the market.

So today’s tip in a nutshell is that unless you are getting a very good price, it may makes to buy a few apartments instead of parking a concentrated amount of funds in only one.

 

Buying tips for your NYC apartment, Upperwestside

Thinking of buying a 3 bedroom on the Upper west side?

With more families than ever looking to stay in Manhattan instead of relocating to the suburbs, family size apartments are in demand. Despite the luxury market being glutted, prices have not substantially come down in Manhattan’s real estate market as a whole. Assuming you do not want to subject your entire financial history to the scrutiny of a co-op board, your first choice is probably going to be a condo. A quick search on streeteasy finds only nine 3 bedroom and 3 bathroom condos on the upper west under $4 mm. Between $4-5mm, you have another 11 listings to look at including a couple in newly constructed buildings.

Compare that with co-ops, there are 18 co-ops for sale under $4 million with at least 3 bdrm/3baths and another 7 offered between $4 million and $5 million.

So altogether on the Upper west side under $ 5 million you would 45 apartments to choose from which is not many.

Buying tips for your NYC apartment, Luxury

Thinking of buying a luxury Manhattan property?

Last week there were 10 contracts signed at $10 million or above according to the Olshan Report. This is the highest total of the year. So is now the time to jump in the market considering many luxury Manhattan apartments have seen their original asking price chopped?

Manhattan market downturns do not last long at least of late. So where is the bottom? Well that is like trying to pick or guess what the Stock market will do next. What we do know is that the amount of permits pulled and amount of luxury properties that are in the pipeline has diminished tremendously and will continue to do so over the next couple years. This will give the current glut of luxury properties a chance to be absorbed into the market. Developers who can sit on their sites will do so and those who can not, will sell or lose them to the next guy. Financing is very difficult now for new construction developments and EB-5 visas is not the panacea that it once was due to pending reform.

Now can be the right time to negotiate a prime Manhattan luxury property but you need to do an analysis of the price per square foot as well as what the neighborhood has to offer. Sellers’ expectations are coming down to reality so if you can find a luxury property and negotiate a fair market price, now may very well be the best time to purchase.

 

Buying tips for your NYC apartment

Is now the right time to buy a Manhattan apartment?

Periodically, we ask the same question that maybe many buyers ask themselves. Is NOW the right time to buy a Manhattan apartment? So many reports and so much confusing data, broker speak, developers’ spin etc…. How do you interpret it all and make a wise purchase that your family can enjoy without overpaying?

Let’s start with the obvious and state the market is a dichotomy right now. Over $5mm, you need to be patient as a buyer and make sure you find value. A 2500 sqft apartment with a view of Central Park on Manhattan’s upper west side in a recent conversion that is selling well is value. See 360 CPW for example. According to streeteasy.com, 26 active listings and all 26 properties in contract. Look for higher prices on the next round of listings. Take a look at 50 Riverside boulevard, aka One Riverside Park, the amenity rich building at the southern tip of Riverside boulevard. A 3 bedroom/3 bathroom there that sold for $4.1 million is up for sale for $4.35 million. At a price under $2000 per sqft. That’s pretty reasonable if that word can be used to describe Manhattan real estate.

Abover the $5mm mark, it gets dicey, above $10 mm even more so. In this range,  the market has slowed and it really warrants a careful analysis to see if you are actually getting value to avoid buying something that will be worth 20% less in 1 year. But in some cases, when you shop for a unique property(let’s say over $20mm), it might just be that you want a specific location, amount of outdoor space or a certain building. At that price points, if you found that needle in the haystack you probably will need to pay for it.

Where do you need to be very careful if you are searching for a value or solid investment under $3 million? Watch out for walk ups or first floor units. These type of apartments sell well when the market is hot. Let’s say you want to sell in 5 years in a tepid market ,you might take a hit. Also, watch out for buildings with higher than normal monthly charges. Ask why are they so high. Generally speaking, you will pay about $2 to $2.5 per sqft in monthly charges depending on the building. Above that, you are in the higher end of the range and may end up with even higher charges in the coming years. The higher your common charges go up beyond the norm, the harder it will be for your apartment to appreciate.

In summary, it might be the exact time to buy right now with interest rates low, and if you find either an apartment that has built in value due to price or the amount of space that you will need long term.