Over New York
Pronounced Ova NaYawk. The title and image imply an overhead view of NYC, but it really is homage to my Grandfather, who passed on his love of NYC. A longshoreman on the docks in Bklyn, every day he looked at the city's skyline. After retirement he would go into the city at least 4 or 5 times a week from our home in Windsor Terrace. He'd say to me in his thick Brooklyn accent, "C'mon kid, we're goin over NaYawk", which meant the city. And he passed on that love of NaYawk to me. Thanks Gramps!
Monday, December 15, 2014
Thursday, July 10, 2014
Keller Williams NYC Quarterly Report for Qtr. II 2014
Keller Williams NYC Quarterly Report for Qtr. II 2014
The 2nd edition of Keller Williams NYC Quarterly Report has hit the stands. If you are looking for a comprehensive look at the state of real estate here in NYC, this is a must read!. Key points are:
* Inventory is still very tight.
* Upwards of 40% of deals are all-cash.
* Foreign money is still pouring in.
* Buyer demand continues to outpace supply.
* Smartly priced properties continue to generate feeding frenzy's.
* "Buyer Fatigue" from a lack of inventory and lost bidding wars is becoming a concern.
* Mortgage rates remain historically low while equities hit all time highs.
* Brooklyn is on fire and not offering Manhattan buyers a discounted alternative.
* Building permits are up 80% year over year in Manhattan.
* Land acquisition prices for new development have skyrocketed.
* Inventory is still very tight.
* Upwards of 40% of deals are all-cash.
* Foreign money is still pouring in.
* Buyer demand continues to outpace supply.
* Smartly priced properties continue to generate feeding frenzy's.
* "Buyer Fatigue" from a lack of inventory and lost bidding wars is becoming a concern.
* Mortgage rates remain historically low while equities hit all time highs.
* Brooklyn is on fire and not offering Manhattan buyers a discounted alternative.
* Building permits are up 80% year over year in Manhattan.
* Land acquisition prices for new development have skyrocketed.
Bottom Line: As long as mortgage rates remain low. equity markets remain robust, and international money continues to flow inbound, the real estate market will continue to thrive throughout the second half of 2014.
If you'd like a copy, some clarification on some of the details, or if you have a real estate need, give me a ring at 917-435-4870 or drop me an email at rreis@kwnyc.com
#NYCreal estate #nycapts #newyorkapts #newyorkrealestate #manhattnrealestate #brooklynrealestate
Saturday, May 3, 2014
Fee’s, No Fee’s, & Free Rent
Or
Lies, Damn Lies, & Statistics
Thinking about renting an apartment in NYC? I’m here to set
the record straight about this whole commission issue when it comes to renting
an apartment. Why does a renter have to pay a fee? Why do they get it without a
fee sometimes and what’s wrong with free rent?
Well I’m going to
start off with another cliche. “There ain't no such thing as a free lunch”.
When I worked on the trading floor of the AMEX, a fellow member actually named
his company after that statement, well the initials anyway. His company was
called TANSTAFL LLC. And he named it that because he didn't want to forget that
there is a price to be paid for everything, even if that’s not apparent on the
surface.
Let’s start out with the three players in the transaction:
1 1)
Real
Estate Agents are going to get paid a fee when they find you and apartment.
Otherwise, their children would go hungry, their mortgage unpaid and they would
have to find jobs where they only worked 8 hours a day.
2 2)
NYC
Landlords are among the shrewdest investors on the planet. They do NOT give
away money…… ever! As such they would rather cut off their left leg….above the
knee than reduce the rent on an apartment.
3 3)
Renters want
to spend as little as possible for their apartments, both in monthly rent and
in upfront expense.
Let’s face it upfront
expense IS expensive. Take a $3,000 per month apartment, and a renter with
excellent income and excellent credit. There is 1st month’s rent, 1
month security deposit, and a commission (usually 15% of the yearly rent). That’s
$3,000 + $3,000 +$5400….$11,400. A lot of moolah!
So the landlords
have had all the control over the last few years as the vacancy rate in the
city has been running somewhere between 1 & 2%, but now demand has been
softening a bit. Let say the last tenant was paying $3,000 monthly and they are
moving out. The landlord, had the tenant stayed might have raised the rent 4%
or so to, let’s say $3,100, knowing that the tenant would rather pay the extra
$100 per month than go through the expense and hassle of moving. But if the
tenant moves out, he must take a look at what the current market price would be
for that apartment. Maybe it’s $2800 or $2900. He needs to find a way to fill
that vacancy at$3,000. When the statistics are tallied, landlords don’t want
average rents to be shown as falling, that would cause more renters to demand
lower prices. So he will offer a “concession”. Essentially he concedes that the
apartment is not worth the rent he is charging. In return for a renter taking
an overpriced apartment he will give back some of the overpricing by offering
an “OP” (owner pays), paying the fee, or by offering a free month of rent.
All well and good
right, landlord and tenant are even…. Well not really. You see the value of
that concession is spread out throughout the term of the lease, usually 1 year. In
this case a free month’s rent or an OP is worth $3,000/12 or $250. If you take
a free month your prorated rent will be $2750 or your fee will be taken care of
by the landlord, which if deducted from the rent gives you the same yearly
expenditure. But most people stay longer than one year. So the next year when
the increase comes (and it always does), your increase will come from the
$3,000 level, not $2750. So a 3% increase will raise the rent to almost $3,100
not $2,860. You are screwed if you took that free rent and chose to stay longer
than one year. And if you took the no fee option? Well if you stayed 2 years
before moving, that $3,000 benefit becomes worth only $125 per month as it is
now spread out over 24 month. If you stay longer, the benefit decreases even
further.
Now there are good
reasons for looking for an apartment with a concession. Well…… there are two of
them. For instance, many people simply do not have that big lump sum available
to take an apartment. So in that case a No Fee apartment is not only desired,
it’s imperative. And the second reason is if you know you are only going to be
there for a short period of time, like one year. Then you will receive the
maximum benefit form that concession. Your rent, in the case above will, on a
yearly basis is $2750, not $3,000. In all other cases you are better off paying
the fee and renting an apartment that isn’t overpriced, because your actual
rent will be lower the entire time you reside in the apartment.
Hope that helps.
Sunday, April 13, 2014
Mortgages... Pre Approved vs. Pre Qualified. What the Difference?
Pre-Approved or Pre-Qualified?
Which Way to Go!
Pre Approved vs. Pre Qualified. |
Getting
approval on a mortgage is a process with no shortage of moving parts.
That’s
why residential mortgage consumers need to leave no stone unturned in figuring
out where tripwires lie on the mortgage-approval landscape.
No
question, the stakes are high, particularly given the lackluster U.S. economy.
Before
the Great Recession, mortgage approvals were like ice cream flavors at
Baskin-Robbins – numerous and easy to get. But in the last five years
mortgage lenders have significantly restricted their offerings, and borrowers
need to be prepared for the tougher requirements or risk being turned down by
banks and other lenders.
One
area where homebuyers run into problems is failing to make the proper
distinction between being qualified for a mortgage and being approved for one.
In
short, just because you are prequalified for a mortgage doesn’t mean you will
get one. But when you are preapproved your chances for a green light from a
lender are greatly increased.
What’s
the difference between the two and how will it affect your hunt for the perfect
mortgage?
Realtor.com
reached out to several mortgage experts to clear the air:
The Definition
“In
general, a lender who prequalifies a buyer discusses a buyer’s credit, income
and assets with them,” said Michael Minervini, a real estate agent for Re/Max in Red Bank,
N.J. “A lender who preapproves a buyer runs their actual credit and verifies
their income and assets. That’s a major difference since agents and sellers
view a preapproval as a more firm start to the home-buying process.”
Cal Haupt, president and chief executive officer at Southeast
Mortgage, explained what the preapproval process means to homebuyers once it
starts rolling.
“Your
loan would be submitted for preliminary underwriting, which normally takes no
longer than 24 hours,” Haupt said. “Your mortgage consultant would then
provide you with a preapproval letter that defines the loan amount you are
approved to receive.”
“Preapprovals
are normally good for a 120-day period, so it’s important to begin your home
search with your real estate professional as soon as possible after receiving
your preapproval letter,” he said.
The Distinction
According
to David Hall, president of Michigan-based Shore Mortgage, a mortgage
prequalification is an initial assessment of a potential buyer, and often it’s
not worth the paper it’s written on.
But
a preapproval goes deeper and involves a more thorough look into your income
and expenses, including a look at your credit score.
“Let’s
think in terms of the view from a plane,” Hall said. “The prequalification is a
250,000-foot view, and a preapproval is a closer-up, 30,000-foot assessment of
the eligibility of a client to secure a loan.”
The Driver for Mortgage Borrowers
There’s
no harm in getting pre qualified – it’s a good gateway to buying a home. But to
lock down that home, focus on getting preapproved, Minervini said.
“Buyers
should always get preapproved only,” he said, “And here’s why: First, a buyer
can confirm the sample monthly payment that they may own when they close, and
they can get an idea of the home’s price range. Then, they can determine if
there are any potential unknown credit issues that may need to be addressed
prior to purchasing.”
The Domino Effect
Getting
square on prequalified versus preapproved streamlines the entire home-purchase
process.
“If
all parties involved are aware of the distinction, it helps everyone play their
role to the best of their ability,” said Ted Rood, a senior mortgage consultant
with Wintrust Mortgage and a contributor to Mortgage News
Daily. “The listing agent who calls the mortgage originator to ask
if the buyer’s income and asset docs have been examined clearly understands the
differences between prequalifications and preapprovals.”
On
the other hand, the mortgage loan originator who deals with the real estate
agent has a better grip on the entire process, by providing clarity on the
firm’s prequalification or preapproval process, he said.
Even
homebuyers can leverage the distinction between the two processes to help their
own cause.
“Clients
armed with this information can request a thorough preapproval rather than a
cursory prequalification, and play a role in ensuring the best possible
handling of their transaction,” Rood said.
The Deal
The
takeaway for homebuyers? Know the difference between being prequalified and pre
approved, and focus your energy on accepting the former, but aggressively
seeking the latter.
Do
that and you’ve taken a huge step in buying the home of your dreams.
From
Realtor.com
Saturday, December 28, 2013
Interested in New York Investment Real Estate?
Interested in New York Investment Real Estate?
New York Investment Real Estate |
Are you interested in Investment Real Estate? The choice of
investing in real estate verses other financial assets like stocks and bonds
can be a difficult one. It is easy to have your broker buy a stock, a mutual
fund or an ETF today, and easy to liquidate if you think that the market is
not so promising. And there are a lot of other differences too. Your tolerance for risk, your ability to borrow funds, to bring in investors if need be. All of these are considerations when choosing between a real estate and a more conventional investment. But there is one major difference in my view, and thinking of the investment in this manner might make one stand above the rest…..That diffierence is that: No one NEEDS those
instruments. There are over 7 billion people living on the planet today with 8.3 million of them living in NYC. Approximately
300,000 people will be born today and less than ½ of that amount will die
today. (A really cool website with running totals is Worldometers http://www.worldometers.info/world-population/
) None of those people need to own a stock or a bond to exist. However, people do need a place to live and
until we colonize outer space, earth is all we have. So while a stock or a bond
can and in some cases will go to zero, the odds of that happening to your real
estate are much less likely.Which makes an investment in real property, properly structured, the safest investment you can make.
OK, real estate
investing can be complicated, but it also can be understood by breaking the
process down. In my experience as both a real estate agent and more importantly
as a real estate investor, there are a few factors that rise above others in
importance. Here’s my take:
1) Location.
Location, location, location! |
2 2)
Price.
How much?
There is a price that can make any real estate investment a good one.
And conversely a price that also can make it a poor one. I will go into the
different methods of valuation in a separate post but a simple way to look at
it is purely value. If it would cost $500 per square foot to build a structure
and you can buy it for $400 then you are buying an undervalued asset. And since
you usually will be purchasing your real estate with a long term view in mind,
that will allow time for that value to become apparent.
3 3) Leverage (Debt):
Real estate can be purchased with cash but
usually there will be debt attached to the transaction. Debt in and of itself
magnifies both the rick and the reward attributed to an investment, and the
amount of the debt raises or lowers both respectfully. A typical real estate
deal might be structured like this: Equity of developers and/or investors 35%
Debt $65%. So a lender would normally be willing to provide about $2 in a loan
for every $1 of capital that is invested. Sometimes (think 2002-2006) lenders
throw caution into the wind and at lend higher ratios. Let’s look at some
different ratios:
75% financed = $3 loaned for every $1 invested
80%
financed = $4 loaned for every $1 invested
90% financed = $5 loaned for every $1 invested
If you had $1 million to invest you
could purchase a $3 million property with 65% being financed. Or a $4 million
property with 75% financed, a %5 million property with 80% financed or a $10
million property with 90% financing. Without looking at income or debt service,
a 10% rise in property values would give your investment returns of:
65% financed = $300K or 30% profit on equity
75% financed = $400K or 40% profit on equity
80% financed = $500K or 50% profit on equity
90% financed = $1 million or 100% profit on equity
You can see that applying leverage is like applying a steroid crème on A-Rod’s
biceps. The production literally flies out of the park. Unfortunately, leverage
is a double edged sword. It cuts both ways and it can hurt even more that it
helps. Let’s look at the same results if the market hits a downturn and the
value of our investment property declines by 10%.
65% financed = -$300K
or 30% loss of equity
75% financed = -$400K or 40% loss of equity
80% financed = -$500K or 50% loss of equity
90%
financed = -$1 million or 100% loss of equity
So
you can see that excess leverage can wipe you out on just a 10% decline in
value. That is unacceptable risk. In fact, in my humble opinion a real estate
investment with more than 80% financing is acting like a gunslinger. You may
win a few gunfights but sooner or later you will be faced with the inevitable
loss and they will carry you out of the arena. There is absolutely no way that
you should allow yourself to be put in that position. Back on Wall St. we used
to say “Risk not thy whole wad”. The same holds true in real estate.
4 4) Quality of the Housing Stock.
This is almost as
important as location. You want to make sure that the building you invest in
does not make you regret investing in it. High quality buildings are well
constructed and this will pay dividends over time (you are investing for the
long haul, right) as inferior construction will require ongoing maintenance and
expense. They also tend to rent out faster and bring in higher rents.
In Summary.
This
is far from an exhaustive look at the investment process. It was a look at some
of the major concerns when considering a real estate investment. Other concerns
like financing terms, investor payouts, vacancy rates, inflation and others
were not even touched on. But don’t worry, I’ll get to them in future posts.
And if you need to know the answers before them just give me a call and we can
discuss anything you like.
Disclaimer: This is not a recommendation to invest in any instrument. It is only the opinions of the writer. Any and all investments should be analyzed by your own financial professional.
Disclaimer: This is not a recommendation to invest in any instrument. It is only the opinions of the writer. Any and all investments should be analyzed by your own financial professional.
Thursday, December 26, 2013
Mayor Elect DeBlasio is about to institute some major changes and the real estate community is a target. If you or someone you know owns an empty lot in the boroughs, you may soon see your lot zoned "commercial" as opposed to residential. That means a huge increase in tax. You have 3 choices: 1) pay the tax (possibly 3 to 7 times what you are currently paying right now) 2) Build a structure on the lot capable of creating enough income to pay whatever tax is due, or 3) Sell the lot. I can't help you pay the tax, but I can help you find a builder and then tenants and I can help you find a buyer. In fact I am working with a number of them right now. Please pass on my # to anyone you know with a vacant lot in any of the boroughs. 347.878.KWNY(5969) http://www.crainsnewyork.com/article/20131124/REAL_ESTATE/311249973
Thursday, December 19, 2013
Upper East Side Investment Properties
Upper East Side Investment Properties
The Philanna Group has just produced a comprehensive investment analysis report for the Upper East Side of Manhattan. We analyzed the almost 200 condos available for sale above $300K and under $2M. Then we did an exhaustive analysis of the rental market in the neighborhood. Stirred in some proprietary analysis (We don't need no stinking cap rates, lol) and came up with a ranking of each property. If you're interested in a Manhattan as a real estate investment, this is an invaluable report for you. We will be expanding the report to include all neighborhoods in the city soon. If you'd like more info, send me an email at KWinManhattan@gmail.comUpper East Side Investment Properties |
Monday, December 16, 2013
Looking for an Investment Property in Manhattan?
If you are looking for an investment property in Manhattan, you are running out of areas where you can find a bargain. No longer are there many neighborhoods that are considered downtrodden? Harlem, the East Village and others are now considered destinations instead of areas to stay away from. One way to find properties that are undervalued is to look for a major infrastructure change. That change can cause two things: 1) a lowering of prices (relative to neighboring areas) while the construction is in progress and 2) An increase in those same values after the project is complete as the benefits of that project are realized. The 2nd avenue Subway is one such project underway, with the end date now finally in sight. The Real Deal details its progress here http://therealdeal.com/blog/2013/12/14/inside-nycs-newest-subway-line/ .If you are interested in an investment property in Manhattan or the outer boroughs, give me a ring at 347.878.KWNY(5969) or shoot me an email at KWinMAnhattan@gmail.com
Looking for an Investment Property in Manhattan? |
Thursday, September 12, 2013
Saturday, September 7, 2013
The Manhattan Inventory Report for 9/7/2013.
The Manhattan Inventory Report for 9/7/2013
I'm sorry to have been absent from this blog the last few months. Unfortunately I had a major medical issue to deal with which made staying on top of this impossible. Fortunately, it seems that all of those issues are behind me and I can resume working and hopefully putting a different light on the NYC real estate market than your typical real estate agent. Going forward,I won't be updating the Inventory and Mortgage Reports on a daily basis unless there are major changes. The data just doesn't change enough and it seems like I am close to repeating myself each post. Weekly, probably Mondays seem to be the best choice ( I wanted to get this one out immediately though). So with that said, this post will recap the last two months.
State of the Market
The
Manhattan Inventory Report for 7/2/2013. The first chart is a one year
chart. Take a look at inventory. It's the red line and it shows the
number of "real" available apartments and townhouses in Manhattan. You
may see differing #'s in other data. The data shown here is scrubbed,
listings that are over a year old are not included as for various
reasons that is usually not an active listing. So we can see that one
year ago active units numbered a just under 5400 (5356) and today they amount to 3932, up from a low of 3746 on 9/2/13. And you want to know why prices have risen? There just isn't enough inventory available on the island of Manhattan to satisfy the housing needs of New York. That is being addressed as there are many new projects under construction. They are however mostly due to be completed next year or later.
The Manhattan Inventory Report for 9/7/2013. |
You can also see that pending sales (contracts signed ) soared from January through late June. Since then they have tapered off. Both of these trends are completely in line with normal seasonal trends, however the levels that were reached are what is significant. The second chart is a long term picture, going back to January of 2008 (That is all of the data that we have). From this chart we can see that inventory is at levels lower than at any time that we have data for. You also can see that contracts signed reached a peak that exceeded anything on record. That's a recipe for rising prices and as you can see in the third chart, that is what has occurred. The chart is the www.streeteasy.com Condo Market Index and it tracks condo prices by looking at same apartment sales. A detailed explanation is available on www.streeteasy.com's website. But essentially it gives a very good indication of where the tide of prices is. Whether it has been rising or falling and by how much. The blue line shows that prices are just below the peak set before the real estate crisis. The index in July (there is a lag as it takes time for sales to be recorded) was at 2.15 verses 2.19 in January of 2008, August #'s should be available within a week and should show a continuing rise. Bear in mind that this is an average over the whole city. Neighborhoods can vary dramatically and certainly buildings too, and this doesn't take into account townhouses which have screamed above their previous peak.
Outlook
Is there anything on the horizon that will even out the supply and demand picture? Well yes, first we are about to enter the fall selling season as many who took thir apartments off the market during the summer usually relist them. Also if you look at the pending sales, they dropped in late June. That also is when the rise in mortgage rates that began in May began to steepen and become a factor. As interest rates rose from approximately 3.5% to 4.75%, the cost of servicing mortgages rose by almost 15%. A $1 million dollar mortgage at $3.5% costs $4,490 monthly while that same $1 Million mortgage costs $5,216 monthly at 4.75%. That is significant. I have had a number of customers lower their price point or suspend their search as they no longer could afford to borrow the same amount of money. At some point, the effects of higher rates and rising prices would eventually choke off the ability of enough buyers to continue to afford new purchases. Does that mean prices will fall? Maybe... I'm not into making predictions, but it certainly will slow or stop the price rise should interest rates continue to climb. But that is for another post.