Tag Archives: Investment

Buying tips for your NYC apartment, Investment, Luxury, New Developments, Real estate

Thinking of buying a Manhattan luxury property for investment?

This is 3rd part of the series focusing on the purchase of Manhattan properties for investment. In this part, we take a look at the luxury market and it’s opportunities.

According to the latest study from streeteasy.com 2018 is the year of the discount for luxury property, roughly defined as $4mm and up by the study. 59% of the properties that closed were discounted and median discount was $980,000. This is up from 36% of the properties in 2016 and also up from 2017’s number of 54%.

One way to take advantage of the Manhattan luxury market is to buy and hold the property. Right now, the luxury market is in the 3rd year of buyer’s market. Less product is coming on the market, and land sales have slowed. Once this inventory is absorbed, then we will again see a shortage of inventory in the luxury market and the prices will rise again.

Also, luxury rentals will be more and more in demand. Take for example 1 Hudson Yards. It is a building with luxury amenities, liklap pool, salt water pool for children, cold plunge pool plus a bowling alley and lounge with kitchen, penthouse party room, and tons of outdoor space. In addition, there is an gym similar to an Equinox, a basketball court, and plenty of outdoor grills for barbecuing. In a neighborhood that is developing with construction everywhere, take a guess how many rentals are available in this 178 unit building. Zero! All rented. 1 bedrooms were $4800, 2 bedrooms $9,000 + and 3 bedrooms $15k and up. The rental market also for the last 2 years, has been oversupplied and this will change in the next 1-2 years. In 20 years of real estate brokerage, I have seen several cycles.

Take an apartment in Waterline square as an example. A 3bd/3ba in 1 Waterline Square aka 10 Riverside boulevard is asking just over $5 million. Due to the tax abatement, the monthlies for this 1824 sqft (169.4m2) apartment is $3,642 including the taxes.  A 3 bedroom/3bath of about the same size rented for $14,000 in 50 Riverside boulevard back in June of this year. Let’s do the numbers on this purchase assuming an asking price purchase.

$5,000,000 purchase
$14,000 rent monthly
$3,642 monthly charges
$10,358 net or $124,296 annually
2.5% return 

The 2.5% return does not take into account the market price of this apartment in the future as well as tax benefits such as depreciation. Let’s say in 5 years, the apartment is worth $6 million. Your rate of return then would be 5.6%.

Additionally, the monthly net income could support approximately $2 million in mortgage which could lower your necessary cash outlay to $3 million from $5 million. This would raise your rate of return in 5 years to 15%!

The luxury market is full of these type of deals where you can take advantage of the slowdown in demand and get in on the market before the market turns up again. If you understand that the tech and finance sectors are not going anywhere and also understand that Millenials might find it harder to purchase and many may decide to rent luxury instead of buying then you can take advantage of the opportunity that not everyone sees.

 

Part 1 of the Manhattan investment buying series

Mansion Global coverage

The Author-  Brian Silvestry , a licensed real estate broker, has been selling residential and commercial real estate since 1999. He has sold in every neighborhood from Battery Park City to Washington Heights.

 

Harlem, Investment, multifamily, Rentals

Average 1 bedroom rental in Harlem just under $2,000

The average rental price for a 1 bedroom apartment in Harlem above 125th street is $1994 per month according to a study of rental listings. The average price for a studio is $1784 and the average days on the market is 22 day for active listings.

In the last couple of years the rental market has been in a down cycle but likely this will be coming to an end in the next year as excess inventory is absorbed and a new cycle of increases begins.

The Author-  Brian Silvestry , a licensed real estate broker, has been selling residential and commercial real estate since 1999. He has sold in every neighborhood from Battery Park City to Washington Heights.

Real estate

What type of Manhattan apartment is the best investment in the current market?

This is the 2nd in a series of articles for buyers who are considering buying a Manhattan apartment as an investment. 

According to the latest data, Manhattan apartments with the least price vulnerability continue to be affordable luxury. Depending on what market segment and neighborhood you look in, the price range is different. On the Upper west side, where I live, that would amount to $3 million and below. In the townhouse market on the Upper West side, it’s roughly $6 million and below where sales still occur. Above $10 million is a different story. In Harlem, affordable luxury is probably closer to $1.5 million and down for apartments and about $2.3 million and below for townhouses.

Mansion Global takes a look at the Manhattan market as a whole and asserts that the affordable luxury market makes up a large portion of Manhattan apartments. Year by year, property at $5mm and below accounts for more than 90% of the sales. The eight figure deals are the outliers but tend to get the headlines. One interesting point that they bring up is that larger apartments change hands less frequently so are more difficult to price, remain on the market longer, and eventually discount their prices more.

More from Mansion Global

The Author-  Brian Silvestry , a licensed real estate broker, has been selling residential and commercial real estate since 1999. He has sold in every neighborhood from Battery Park City to Washington Heights.

 

Harlem, Investment, Listings, multifamily

49 East 129th street Coming soon to the market

A 9000 sqft 12 family will be coming soon to the market. The property was built in 2007 and has a 25 year tax abatement. There are 11- 1 bedroom apartments and 1 studio. All apartments are in very good condition and the building is fully rented. Rents range from about $1500 to $1900. Nearly all tenants are being charged a preferential rent.

The asking price will be $6 million.

The building has huge upside potential as a potential condo conversion or a turnkey investment in the East Harlem area.

More details coming soon.

The Author-  Brian Silvestry , a licensed real estate broker, has been selling residential and commercial real estate since 1999. He has sold in every neighborhood from Battery Park City to Washington Heights.

Buying tips for your NYC apartment, BuyingtipsforManhattanproperty, Investment

Thinking of buying a Manhattan apartment for investment?

1 Comment

This is the 1st in a series of articles for buyers who are considering buying a Manhattan apartment as an investment. 

I  once read an article where someone commented that NYC property is like a Swiss bank account for investors because it’s considered so low risk and certainly will go up in the future. But where do you buy and for how much? Should you get a loan or pay CASH? Here’s some advice that may help you to decide.

So let’s say you have $1 million just as an example and you want to invest. What are your options assuming you will not live there? Click through for guidelines.

Continue reading Thinking of buying a Manhattan apartment for investment? →

BuyingtipsforManhattanproperty, Investment, Luxury, Marketreports

Top Manhattan buildings outperformed stock market over the last decade according to report

According to a recent report by City Realty, buildings such as 15 Central Park west out performed the stock market over the last decade. Buildings with tons of amenities, famous architects(starchitects) and celebrity residents certainly do get lots of attention but are they truly worth the investment? According to the report, the compound annual growth rate at 15 CPW was 6.84% compared to stock market which was -2% and gold which was 3.2%.

Recently, I had a client that sold their Manhattan townhouse for $15 million to an investor. Is this a good investment for the buyer? According to most experienced Manhattan real estate brokers, 2016 was more or less the peak of the ultra luxury market and since then we are in a buyer’s market. There are certainly a fair amount of coverage in the press of buyers who are liquidating investments in ultra luxury, new development buildings that are being sold for less than they paid.

One strategy to increase liquidity,  would be to split that investment up to smaller investments. The 2 bedroom/2 bathroom market continues to be a sweet spot as it’s the family sized apartment that is within reach of many buyers. Also, performing really well now is the multi-family market. Would it have made more sense to buy a 1-2 buildings with anywhere from 6-40 units? With professional management, these properties have been performing well and continue to perform well right now as there is a shortage of inventory.

The Author-  Brian Silvestry , a licensed real estate broker, has been selling residential and commercial real estate since 1999. He has sold in every neighborhood from Battery Park City to Washington Heights.

 

BuyingtipsforManhattanproperty, Investment, Propertytaxes, Real estate, Townhouse

Manhattan townhouse owners-understanding your property tax bill

NYC puts out a guide of how to understand your real estate tax bill of your property. It’s amazing how many NYC property owners do not understand their real estate property tax bill. In fairness, the system is very complicated and you might see two identical Manhattan townhouses with the same number of units yet radically different tax bills.

It is always advisable to consult with a real estate tax attorney before making any changes to your tax classification, and doing renovations especially alterations.

Generally speaking, your real estate tax bills will go up when you do an alteration to your building like changing the number of units or adding gross square footage. If you do not make a change to your building, there are caps on your assessed value which is the amount that your real estate tax bill is derived. For class 1 properties which are 1-3 family homes, it is 6% per year or 20% for 5 years. For tax class 2A (4-6 units), class 2B (7-10 units) the cap is 8% per year or 30% over 5 years. For properties that are class 2 (11 units or more) no cap exists which is one of the reasons a SRO building as classified by Department of Finance with 11 rooms(units) could see taxes climb steadily per year without cap.

The Author-  Brian Silvestry , a licensed real estate broker, has been selling residential and commercial real estate since 1999. He has sold in every neighborhood from Battery Park City to Washington Heights.

 

multifamily, Rentals, rentstabilization

NYC landlords score victory in courts in rent stabilization case

The New York Appeals court has confirmed that a landlord who deregulated an apartment back in 2004 did so correctly. The case had to do with the 20% vacancy allowance and how it is applied. The apartment was deregulated after applying the 20% vacancy allowance but a lower court had said the rent paid by the previous tenant needs to exceed the rent stabilization threshold. Previously, the court system had awarded the tenant over $100k in overcharged rent and that decision was vacated.

Real Deal coverage

The Author-  Brian Silvestry , a licensed real estate broker, has been selling residential and commercial real estate since 1999. He has sold in every neighborhood from Battery Park City to Washington Heights.

Investment, Upperwestside

How does a rent stabilized tenant affect a Manhattan townhouse’s value?

In an ideal setting,  a Manhattan townhouse will be delivered vacant and sold to a buyer who can convert it to a single family mansion, condos or a rental building. However, when a Manhattan building is conveyed with a rent stabilized tenant or a few rent stabilized tenants, then the buyer pool will narrow but it still has tremendous value. The factors that impact the value will be size of the apartment, likelihood of accepting a buyout, and what percentage of square footage, the RS tenants occupy within the building. The calculation of value is going to be based on the net operating income.(NOI). The NOI and cap rate will dictate the value, but the upside which the buyer/investor will evaluate will have to do the likelihood that the tenant might be bought out now or in the near future, the age of the tenant, and how likely they might have immediate family who will succeed them within the apartment.

For example, on a recent tour of Upper west side townhouses with an investor we looked a one building that was asking $5.4 million with 6 units 2 of which were rent stabilized. Within the same neighborhood, a 7 unit building was asking nearly $1 million more with all free market tenants. Both were both offered at an approximate 3% cap rate.

Now what happens when the majority or all of the building is occupied by rent stabilized tenants and the cap rate is extremely low or the income is not even covering the expenses, now you will see an even more narrow pool of buyers whose expectations for a discount go up as the rents paid by the tenants goes down as does the likelihood of a buyout. In this situation, a more thorough analysis based on current market conditions will need to be done by a Manhattan real estate broker experienced in the transfer of townhouses and multifamily properties.

The Author-  Brian Silvestry , a licensed real estate broker, has been selling residential and commercial real estate since 1999. He has sold in every neighborhood from Battery Park City to Washington Heights.

 

Harlem, Listings

313 West 138 street Harlem townhouse enters the market

by  Brian Silvestry

An 8 family home has entered the market just outside the Striver’s Row historic district. The building is 17.5 wide by 51 and has a lot that runs just shy of 100′ deep. There are 5 studios and 3-1 bedroom apartments. The cap rate is 5.1 % for this rent stabilized building located around the corner from St.Nicholas Park and the B,C subway stops. There is plenty of upside as nearly every tenant has been in place for at least 4 years. One apartment will be delivered vacant.

 

Full listing details