Gea Elika's Blog, page 106

Making Sense of the NYC Commercial Lease Agreement

For many new entrepreneurs, signing a commercial lease seems just like signing any standard residential lease. But this is far from the case. Commercial lease agreements differ in many respects from a residential lease, and if you want your business venture to succeed it is crucial, you understand those differences. Here’s what you need to know about NYC commercial lease agreements and what to consider before signing one.

What is a commercial lease?

A commercial lease is used when renting out a business property from an individual or other business. It has various names such as business lease, commercial property lease, commercial real estate lease, industrial lease or office space lease. Regardless of the name used, it’s the same thing.

The lease gives the renter the rights to use the property for whatever purpose defined in the lease. As with a residential lease, it will set a period by which the rules will apply for that property. There are two types of contracts, a short version, and an extended version. A short version sets out the general lease parameters while the long one is more specific in the terms included.

How does a commercial lease differ from a residential lease?

It is vital that you understand from the beginning how a commercial lease differs from a residential one. The main differences are:

Fewer consumer protection laws – A tenant’s rights are almost all governed by the lease. Meaning you are not subject to the same consumer protection laws that govern residential leases. For instance, unless stated in the lease, the landlord is not required to provide heat or make repairs.
No standard forms – Residential leases come in standardized forms whereas commercial ones do not. Therefore, you should read each one carefully.
Long-term and binding – It is very difficult to break or change a commercial lease once signed. Also, there are no restrictions on how much the landlord can raise the rent by when the lease ends nor are they required by law to renew it.
No privacy protection – Unless outlined in the lease, a tenant has no privacy protection.

In effect, commercial leases offer little to none of the protection and rights that a residential lease does. The first draft you are presented with is likely to heavily favor the landlord in its terms. When negotiating, the tenant should make it clear to the landlord what their business needs are. Landlords will often make special offers for business tenants but make sure that any agreements make it into the lease in writing.

Considerations to make when signing a commercial lease

Before you even think about signing a lease, you have to carefully investigate its terms to see if it meets your business needs. First, consider the rent and whether you’ll be able to pay it. For new businesses, it’s better not to tie yourself down with a 5-10-year lease. You don’t know how fast your business may grow and you could find yourself having to change the location to meet its expanding needs. A short-term renewable lease is always a safer option.

Also, consider possible changes you may need to make to the building as your business grows. Does the lease allow you to make modifications to the property such as installing a rewiring for better communications or converting two adjoining rooms into one? If so then who will pay for them and who will own them once the lease ends?

In addition to your monthly rent, you may also have to pay real estate taxes and maintenance costs. Unless explicitly stated in the lease, the landlord is not responsible for maintaining or repairing the premises. The lease will state who is responsible for paying these as well as utility costs. So make sure you have the financial reserves to deal with potential emergency maintenance costs you could be responsible for.

Other critical terms to understand

Remember, the devil is in the details so pay attention to any terms such as:

The security deposit and the conditions of its return.
Specifications for signs such as were you can put them.
Whether the lease can be assigned or subleased to another tenant.
If and how the lease may be terminated.
Whether you or the landlord is responsible for modifications by the Americans with Disabilities Act (ADA).
Precisely what space you are renting and how the landlord measures that space.

Signing a commercial lease is a big decision that can have huge repercussions for years. Even if you’ve carefully read the lease, you should still consult an experienced real estate attorney before signing. If they spot anything unfavorable, they’ll be able to work with the landlord to come up with terms that are more favorable to you and your business.

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Roundoff: The Top 3 Home Staging Companies in NYC

Anyone who’s trying to sell their NYC apartment could benefit from hiring a home stager. These are the professionals you call when you need to make an empty or outdated home look unique and desirable. Proper staging isn’t just about making a home look good. It’s about telling the properties story and conveying the lifestyle that a buyer could have if they lived there.

If you want to get your NYC apartment sold fast (who doesn’t?) then hiring a staging company for a makeover can not only do that but also lead to a higher selling price. But which staging companies are the best? Based on proven results and high customer satisfaction we’ve chosen what we believe are the best staging companies in NYC. We also reached out to hear their thoughts on what they believe makes them unique in the home staging business. If you’re looking for a home staging company, these are the ones we think are the very best in NYC.

 1. IMG – Interior Marketing Group

Image courtesy of Interior Marketing Group

Founded in 2007 by entrepreneur Cheryl Eisen, IMG is one of the largest home staging companies in Manhattan. Based in Midtown East, the multi-million-dollar business counts some of the biggest celebrities and high-profile names among its clients. Which Includes Danial Craig, Ivanka Trump, Bethany Frankel and Kanye West.

What sets them apart in the staging business is Cheryl’s commitment to speed and efficiency without sacrificing quality. Two hundred and eighty-eight hours. That’s Cheryl’s timeframe for designing and installing multi-million-dollar properties of all sizes. This 12-day turnaround time is made possible through Cheryl’s quick thinking and her list of vendors that always have what she needs in stock.

When they can’t get what’s needed immediately, they make it themselves. Among the company’s departments are included an art department and fabrication department. Rather than wait for custom-designed drapery panels to arrive, they buy the fabric, hem it, clip it and drape it by themselves. The difference in quality between it and a showroom piece is imperceptible.

At any given time, IMG designs can be found in about 120 properties. Most of which are in New York but also a few in the Hamptons. They also have a growing presence in Miami and Connecticut and are currently weighing plans to launch a product line.

“Our goal is to really unlock the potential of any space in a way that is classic and luxurious, yet comfortable. We always work in neutrals, but layer textures to add depth and warmth to our designs.  Our staging practice has really grown over the past few years to evolve with the needs of brokers, developers, and sellers competing in a tough market. It really takes much more than a pretty space to sell a luxury home today, so we’ve added essential marketing tools like photography, events and public relations to our mix. The combination is defying market trends one sale at a time.” – Cheryl Eisen, CEO, and Founder of IMG

2. Studio D

Image courtesy of Studio D

Studio D CEO and founder Gail Dunnett came to the home staging world almost by accident. When recruited by Williams Sonoma, she moved to San Francisco and left her home behind in Old Greenwich, CT. That home sat on the market for months before Gail suggested to her agent that she install furniture. Before then, Gail had never even heard of home staging. But once the apartment was furnished, they received multiple offers in less than a week.

On leaving Williams Sonoma, Gail decided to put her love of real estate and business acumen to the test. In 2003, Studio D was founded. Her goal was to create a leading boutique firm that specializes in home staging within the luxury real estate market. In 2011, she acquired the New York Staging Co. and made Studio D a bi-coastal company.

“We endeavor to stage homes using fresh and beautiful design to create an emotional element that reaches out and grabs the buyer, drawing them into the allure of a property. We take great care to approach each home uniquely, giving it it’s own voice or point of view- and I think this translates well to buyers. As can be seen in our photos below, our stagers can feel the difference from that of a Chelsea penthouse to a Greenwich Village townhouse to an upper east side penthouse, and we make sure to position each with its own personality.” – Gail Dennett, CEO of Studio D

3. ASH NYC

Image courtesy of Studio D

ASH NYC is a company that, in their own words, “seeks to bridge the worlds of interior design and property development.” In 2008, Jonathan Minkoff and Ari Heckman partnered together to form ASH NYC. The two had met while working together at a Brooklyn-based development firm. They started from simple beginnings by investing in a nine-unit collage housing apartment in Providence, Rhode Island and renting a small apartment in Greenpoint where they worked from. At first, it was like two little companies operating side by side. With Minkoff investing in properties while Heckman did work on staging properties.

Things changed when they brought in Will Cooper as their Creative Director. After much discussion, the team decided to create a single company that would have a multi-pronged approach to development. They would seek to not only invest and develop properties throughout the country but also prioritize interior design and staging.

After ten years in the business, ASH will soon move to a new office on the border of Williamsburg and Greenpoint in Brooklyn. They continue to work on real estate development and staging.

“ASH Staging creates one-of-a-kind, designer quality spaces for residential and commercial clients who own and/or represent the highest value properties in national target markets. Our style is multifaceted and carefully tailored for our various projects; we work on everything from starchitect penthouses to seaside shingle style single family homes – using pieces that run the gamut from vintage to contemporary; masculine to feminine. No two of our projects are exactly alike.

When we enter a space, we create an imaginary profile for the future owner or renter, and design a completely unique and specific look replete with personal touches and sensory augmentation — meaning that we select not just the furniture, art, and accessories, but also the music, fragrances, floral arrangements, and more. We are headquartered in New York City and have just expanded to offices in the Hamptons and Los Angeles. We specialize in projects throughout the Northeast and Mid-Atlantic regions, Los Angeles and Orange County, and southern Florida” – Andrew Bowen, Staging Director at ASH NYC

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How to Give Your Living Room a Refresh

When you moved into your cozy (small) New York apartment, you probably just brought along whatever furniture you had. Now, a year later, you’re beginning to feel like the walls are closing in on you. Was your apartment always so dark? Were your windows always so dirty? Why did you buy that TV stand?

It’s not uncommon to want to re-design your space. As trends change and as social media grows, we’re constantly bombarded with new and different design ideas that make us question our own tastes. I personally can’t go a single day without saving a new photo from Instagram of an apartment aesthetic I’m dying to copy. So how can you revitalize your space without breaking the bank? Read on for some great ideas!

When was the last time you threw out everything you own?

Totally kidding…sort of. De-cluttering your space can make a huge difference! If your living room is full of photos from 2011, knick-knacks picked up from various bars (hello plastic alligator from Brother Jimmy’s) and seven candles from Anthropologie, it’s probably time for you to take a hard look at your decorations and think about what you really want to showcase.

Ideally, you want a couple of great pieces that you’re proud to look at every day, not for your television stand to double as a memory book for every bar you visited last year. Focus on some great statement pieces and a couple of photos that really stand out, then get rid of the rest.

Throw in an accent wall

It can be a huge pain to paint your apartment. Especially if you’re renting, most landlords are going to insist that you paint it back to white before you move. But removable wallpaper is a great way to add some personality to your space with minimal effort. If you constantly see artfully arranged photos on walls throughout the Internet but you don’t think you have the artistic vision to create that yourself, wallpaper on the wall behind your couch can be a great way to make a statement.

Go green

Buy a plant. It’s not hard. Having some greenery in your apartment a)makes you seem more adult and b)makes your space looks better and more complete. As an added bonus it’s great for your mindset if you live in a concrete jungle to be able to come home and see something resembling nature at the end of the day.

Pick up one large plant for the corner of your living room and possibly one or two small ones for your living room. Bonus points if you can pick up something like mint or basil which will look great and also help you elevate your cooking.

Don’t change your furniture – change the accessories

I love to tell people to invest in a high-quality neutral colored couch – I personally own grey. But every six months I change out my throw pillows and the blanket that rests over my chaise. This summer I wanted something floral. Last year I wanted royal blues and purples. You can get great throw pillows on places like Target without breaking the bank, and these small changes allow you to feel like your space is being reimagined.

This is also a great way to make your space brighter during times of the year when there is less natural sunlight coming in. When the sun doesn’t set until 7:30 pm, you might not care about having bright throw pillows as much, but in the winter when it starts to get dark at 4:00 pm, coming home to a splash of yellow has the power to instantly brighten your mood.

But know when to say goodbye

Sometimes that giant sectional you bought just isn’t made for your new 600-square-foot home. Know when a piece just isn’t going to work – and when you’re replacing it, think about buying something that can fit into your current space, but also potential future spaces. If you buy a smaller couch, you can always get a loveseat or chairs when you move into a new space, but if you buy something that’s too large from the get-go, your space will always look like it’s bursting at the seams and make you feel like the walls are closing in.

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Should I Sell or Rent Out My NYC Apartment?

At some time or another, usually multiple times, New Yorkers decide to move due to life events. For some, it’s a growing family that needs extra space. For others, such as empty nesters, it’s a decision to downsize for economic reasons or because they no longer need a large apartment. For others still, a new job or desire for a change in scenery sees them move out of NYC or just to a different neighborhood. If you’re a homeowner, the decision to move, for whatever the reason, can leave you asking a big question, should you sell your NYC apartment or rent it out?

Before you sign an exclusive listing agreement with a sales agent, here are some questions you need answers to when deciding whether to sell or rent out.

Will you ever move back in again?

Can you see yourself wanting to move back in one day? If you have a family, it could serve as a retirement home one day. It could also serve as a home for your child if they plan to study and work in NYC after graduation. If for whatever reason you can see yourself or a family member making use of the apartment, then you should consider renting it out for a period. You can always sell at a later time, and there’s also the gains from appreciation to consider.

Can you rent it out?

If you don’t see yourself every using the space, then check that you actually can rent it out. What rules govern the building will decide this. If your apartment is in a co-op building, then you need to check the building’s sublet policy. Most co-ops have strict rules on subletting such as requiring that you have already used it as your primary residence for 2-3 years and then only allowing sub-letting for 1-2 years. Some co-ops don’t allow sub-letting under any circumstances. If your apartment is a co-op, then it’s more likely that you’ll want to sell.

Condos have little to no restrictions on subletting. This flexibility is one reason why condos are more expensive than co-op apartments. That said, you’ll still want to check the political temperature of your building’s board. Are they open to more renters or are they starting to implement fees and review processes designed to discourage subletting?

Can you afford to rent out the apartment?

So you’ve checked the rules and you have the green light to sublet the apartment. Now it’s time to check if it’s a financially viable option. To find out, ask yourself these three questions:

Do you need the money that’s tied up as equity in the apartment for something else?
Will the potential rent be enough to cover expenses and make a profit?
Do you have enough capital reserves to handle unforeseen expenses?

Have a real estate broker with experience in your neighborhood evaluate the property to determine both its resale value and rent potential. In such a crowded market as New York, you’ll have little trouble finding buyers or renters, but you’ll want to determine which option works best for you. When considering selling, you need to think of closing costs and capital gains taxes. When considering subletting you need to think of maintenance costs and potential vacancy costs. Which one do you stand to gain the most from?

You’ll also want to know what the local market is like. Are there other rental properties in your neighborhood that have better amenities and offer better incentives then you can? If the rental competition is too high or profits are almost negligible, then you’ll probably want to talk with a listing agent. But if the potential for profit is there and you have enough savings to cover unexpected costs then move on to the last consideration.

Do you want to be a landlord?

Being a landlord isn’t for everyone, especially if you’re not going to be living locally anymore. You’ll need to interview and screen prospective tenants, organize lease renewals, collect and account for monthly rents and expenses, and, potentially, answer late night phone calls about broken boilers or HVAC systems. You need to be ready for that and if not then be willing to pay the extra costs of hiring a property manager.

When deciding whether to sell your NYC apartment or rent it out, you should first and foremost consult your tax attorney and financial planner. Everyone’s situation will be different so go for what makes

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What is an FHA Loan? The Complete Guide to FHA Loans

An FHA loan is a type of mortgage that is backed by the Federal Housing Administration (FHA), which insures the loan. The FHA is a division of the Housing and Urban Development (HUD). The program’s origins date back to the Great Depression, and it was designed to improve the housing market by backstopping lenders for the banks to feel more comfortable extending loans to those with blemished credit and a low down payment.

Lenders are willing to offer you a loan even though you may have a lower down payment and credit score than they like to see since the loan is essentially insured by the federal government. This lowers the lenders’ risk in cases where the homeowner defaults.

This program, which is popular amongst first-time home buyers, has certain requirements, though.

The requirements

To qualify for a 3.5% down payment on your mortgage, you need a minimum credit score of 580. Home buyers with FICO scores between 500 and 579 need a 10% down payment. You can receive the money via a gift. Generally, those with a credit score below 500 are ineligible for the program.

Although you can qualify for a loan with a lower credit score than a traditional mortgage, you must not have declared bankruptcy within the last two years, not had a foreclosure within the last three years, and your federal student loan payments and income taxes cannot be in arrears.

Other requirements include a solid employment history, the property must be your primary residence, it  needs an appraisal from an FHA-approved appraiser, a maximum 31% ratio of gross monthly income going towards your housing costs (principal, interest, taxes, insurance, maintenance/common charges), and a top 43% income/debt ratio.

There are maximum allowable mortgages under the program. In high-cost areas such as New York City, this is $679.650.

Benefits

You can buy a house with a lower down payment than should you choose a conventional mortgage. Rather than having to save up to 20% of the purchase price, you can make the purchase with as little as a 3.5% down payment.

You may also have a blemished credit history. This program allows you to qualify for a mortgage, providing you have rectified the situation. 

Downsides

Although you do not have to purchase private mortgage insurance (PMI), which lenders typically require for loans extended with less than a 20% down payment, the FHA mandates that you pay for insurance. Rather than a private policy, the government provides the policy.

There are two different types of premiums you need to pay. One is the upfront mortgage insurance premium (UFMIP). As the name suggests, this is a one-time payment due at closing. Your premium is 1.75% of the loan. The second is an ongoing payout, called the annual mortgage insurance premium (annual MIP), although you pay it monthly and it is typically added to your mortgage payment. The amount you are required to pay is a percentage of your loan balance, which varies according to your loan-to-value ratio, whether the term is less than or greater than 15 years, and if the loan size is either more or less than $625,000.

For current mortgage applicants, you are required to pay the annual MIP for the life of the loan if your down payment is less than 10% of the purchase price. For those with a minimum 10% down payment, you will pay your annual MIP for 11 years.

Final thoughts

Remember, the FHA is not directly lending you the money. Consequently, you need to find an FHA-approved lender. Therefore, you need to shop around for a lender, just as you would for a traditional loan since terms, such as the interest rate and closing costs, can vary.

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Open House of Horrors

Let’s just start out by saying not everyone agrees on what is appropriate and some simply do not care. However, that said, whether you care or not, it’s worthy to give it some thought on how one might react with entering an apartment in a particular scenario. It is time to face it: the more people your home appeals to, the better price it will likely sell for or, in some cases, just sell. Unless you want your apartment looking like a “going out of business” sale, taking care of some of the items below just might find you a Buyer.

1. Sex Toys are Us

“Fifty Shades of Grey” displayed in the bedroom can satisfy your taste for exhibitionism and reveal your passionate soul, but you might want to reconsider. Is it necessary to leave your furry handcuffs or feathers on the bedside table and something that resembles a vibrating device for a neck massage? If you are selling a two bedroom, there is a good chance potential buyers with a young child might be coming through. Needless to say, sometimes less is more.

2. Animal House

We love pets, but sometimes it can be a bit much, like three cockatoos, even though they say “Hello!” all together at the same time and are beyond cute. Coupled with a cat you essentially have a “Tom and Jerry” situation. No doubt, unique, but, if possible, better to avoid. How about not leaving the cat or dog food out, or, maybe, just giving the litter a cleaning? Always appreciated!

Image by Dave Womach / Flickr

3. Odors

Light a match, open a window or if you have to, Febreze for the life of g-d. Candles are readily available and elevate your open house. Perhaps, if you want to take it to another level, most of us love chocolate chip cookies baked fresh.

4. Dutch oven

Whether you have taken on the role of the Big Lebowski or decided to rent your place to marijuana enthusiasts, keep in mind that smoke sticks to everything in the apartment, and can be overpowering unless you just rolled one before shopping for a home.

5. Hoarders

Storage is necessary for New York City, and everyone needs more, but turning your living and others rooms into a storage facility usually is not an excellent idea. Space is equally important as storage, so finding a balance might be a great place to start.

6. The Stalker

Maybe you have finished your apartment to the nines, and it’s worthy of a feature in the Architectural Digest, but please please let your agent do his/her job with a little space. Having an owner sitting in a rocking chair or following you around the apartment is creepy, and a great way to alienate a potential buyer.

7. Dirty

All sellers try to maximize their capital upside, but this should not be at the expense of having your place cleaned before opening your doors to the market. There is nothing worse than walking into a dirty bathroom. How about giving the dirty bathroom mat a wash. It doesn’t cost much and cleanliness always goes a long way. Great Green Cleaning is a company we recommend, not the cheapest but the best.

8. Master Chef

Just because you love food doesn’t mean you can cook. Many are finding out the hard way by sending photos of dishes to Gordon Ramsey on Twitter only to get roasted on how shocking the dish may look. Many of us want to be Anthony Bourdain or the next “Master Chef” but in reality – were better off` keeping our day jobs. Keep this in mind, before storing your food experiment in a clear container in the fridge instead of a plastic garbage bag. Many buyers like to open a refrigerator.

9. Bad JuJu

Don’t stuff your pets and animals, taxidermy does not sit well in an apartment. Let go, and let them RIP. Religious symbolism can be a bit much for those of another faith. Antique furniture can also be heavy and cause negative energy, researching on how to rid your home of bad JuJu is recommended.

Have you been looking for a home and walked in on any surprises? Share your stories below.

Image by Jenna Bauer / Flickr

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How Long Does it Take to Buy an Apartment in NYC?

Much like getting a table at the hottest new restaurant, buying an apartment in NYC usually takes longer than almost everywhere else. Those who’ve never purchased property in NYC tend to significantly underestimate how long the process takes, from initial viewing to closing day. Unless you’re buying a condo or townhouse with all cash, you’ll need to cultivate the virtue of patience. But with some proper planning and foresight, you can lessen the many roadblocks ahead. Here’s what to expect as you move towards homeownership.

Finding an apartment: 3 weeks to 3 months on average

If you want things to move fast, you have to know exactly what you want while also being realistic. Your budget will be a significant factor, the more cash you doe a down payment, the more options you’ll have.

Expect a lot of competition from other interested buyers if your budget is below $1.5 million. Other factors that will influence how long your search takes include:

The Neighborhood – The more popular the neighborhood, the longer the search. Neighborhoods with high demand and low inventory include top-market areas like Tribeca, SoHo, Nolita and Greenwich Village. In Brooklyn, people are drawn to the quaint, tree-lined streets of Brooklyn Heights, Carrol Gardens, Fort Greene and Park Slope. The usual workaround is to find apartments in areas that are close to, but not in, these areas.
Your Real Estate Agent – Hiring the right buyer’s agent for the job can mean the difference between success and failure. The right agent is one who knows the neighborhood in question, is familiar with the inventory, understands your needs and wants, and, just as importantly, is someone you can get along with. Be sure to ask the right questions when interviewing potential agents.
Your ability to compromise – It’s very rare for a buyer to find everything they’re looking for in a deal. NYC real estate is all about compromise. Decide early on what you need and would like but can do without. Do you need a building with top-of-the-line amenities like a doorman, pool, and gym? You might need to forgo a one-bedroom in place of a studio. What about having a lot of space? You may need a bus to the nearest subway. If you don’t want your search to take forever, you need to be flexible in your wants and needs.

From offer to acceptance: 2 to 4 days

Once you’ve found a place, it’s time to make an offer. If you’re going to be making a lowball offer, make sure you have reasons to back it up. Sellers want to know that you’re serious and you can do this by having all the paperwork and team of professionals including real estate attorney and banker etc. in place and ready to go. Include your mortgage pre-approval letter and your, submit offer form, along with the contact details of your attorney and lender. Including a “Love Letter” can also help sweeten the deal if you’re facing a bidding war with other interested buyers. Also, be wary of negotiating mistakes that could stall the process, or tank the whole deal.

Preparing a contract and signing: 1 to 3 weeks

Once an offer is accepted a deal sheet will be circulated between the brokers and attorneys. After this, the seller’s attorney will prepare and send a contract of sale, along with the building financials and by-laws to your attorney to review. This due diligence period between both sides can take one to two weeks depending on the specific issues that come up during the attorneys’ evaluation and back and forth regarding contract rider notes if any.

Assuming that the home inspection turns up no issues and both parties are happy with the contract of sale, the buyer signs the contract and makes the 10% escrow down payment which is delivered to the seller. Once they sign it and send it back to your attorney, you now have a binding contract of sale.

Receiving mortgage commitment: 6 to 12 weeks

If you’re financing, now is the time when you pass on your fully executed contract to your lender. You’ll need to submit bank statements, pay stubs, W2s, tax returns, and whatever else is required for the audit. Along with this due diligence on both your financials and the building, a home appraisal will be conducted. On average the process can take 30-45 days but can take longer depending on the process and how many follow-ups are required.

The Board Application: 30-45 Days

If you’re purchasing a co-op apartment, you should start immediately on putting together your co-op board package once you have an accepted offer. This will include not only information like you submitted to your lender but also reference letters and whatever else the board requires.

Board approval can be subject to numerous delays that are entirely outside your control such as their schedules to meet and procedures for reviewing board packages. If you’re fortunate, have a superb board package and ace the board interview, you will receive the green light to close. More often it can take up to 45days in total from the date of board application submission.

While condos also require board approval, this is more of a formality as they have much less power to refuse your application. Assuming you’ve provided all the necessary paperwork, all you’re waiting on is a waiver that declines their right of first refusal. Condo board approval can take anywhere from a few days to a month.

Scheduling the closing: 1 to 2 weeks

Like receiving board approval, this is a hard one to estimate as it all depends on the parties involved. Assuming that everything is in order and everyone is eager to close, it can take about one to two weeks to schedule a closing. Your attorney needs to coordinate with the title company, confirm with the bank that they’re ready to show up with the checks and find a date that works for all the parties involved. On closing day, it will finally be time to hand over the remainder of the payment and receive the keys to your new home. The average timeframe in NYC from an accepted offer to closing day is 60-90 days. But with so many variables in play, it can sometimes take longer.

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Understand Leverage and Liquidity in Real Estate Investing

Anyone who’s thinking of becoming an investor in NYC real estate will no doubt come across the terms leverage and liquidity. For beginner investors, these terms can cause some confusion. And even if you are familiar with them from previous experience trading on the stock market, it’s essential that you understand how they apply to real estate investing. Before you start risking your hard-earned cash in real estate speculation, make sure you know these terms and what they can mean for your investments.

What is the leverage?

It’s hard to imagine that debt can be a good thing in real estate investing, but under the right circumstances, it can be.

At its purest, leverage is the use of borrowed capital to purchase and increase the value of an investment. The easiest example is when you take out a mortgage, make a 20% down payment and secure 100% of the property.

An example of leverage

Let’s imagine you’re looking for a great investment property. Your search turns up two properties, one for $500,000 that you’ll need a mortgage to purchase and one for $100,000 that you can buy outright.

Scenario 1: You go for the $500,000 property for which you put 20% ($100,000) down and secure the remaining 80% ($400,000) through a mortgage. Assuming that the property appreciates at 5% per year, your net worth from the purchase will increase to $525,000 after just one year.

Scenario 2: You make an all-cash purchase on the $100,000 property. Assuming the appreciation rate is still 5%, your net worth from the purchase will only be $105,000.

In the first scenario, the use of leverage netted you an extra $20,000. Now try to imagine that 5% gain every year for 20 years. in this example, leverage worked in your favor. However, it can also work against you. If instead real estate prices had fallen by 5% you would have lost $20,000 rather than $5,000.

Pitfalls to avoid when using leverage

Leverage can be a very effective way of increasing your return on investment (ROI), but it’s important that you understand the risks involved and avoid these pitfalls:

Counting on high levels of appreciation –. NYC is regarded as a haven because of its high property value appreciation. Even if there’s an economic downturn in the rest of the country, you can expect property values and demand to remain stable. Still, this should be a concern. When considering leverage, you have to keep in mind three scenarios, best case, worst case, and most likely. Rely too much on appreciation and your investment can become a loss or worse.
Having too high a payment – The larger the amount you borrow, the higher your monthly payments will be. If the market softens or properties experience higher than expected vacancy rates or credit losses, you could find yourself unable to make those payments. If you can’t keep up with those payments, your property could face foreclosure.
Letting good financing cloud your judgment – Just because you can secure a mortgage with little cash overlay doesn’t automatically make it a good investment. You still need to consider the value of the property, look at the competition and where the local market is. If your property is overpriced appreciation will be little or non-existent.

What is liquidity?

Liquidity is the degree to which an asset can be sold quickly or slowly and whether the price will be above or below market value. It’s also the ability to buy or sell without affecting the asset’s price. Money is the most liquid asset as it can be quickly traded for anything while real estate, fine art, and collectibles are considered the least liquid.

Having an illiquid asset, such as real estate, isn’t necessarily a bad thing as has the potential for long-term gains. Property in Manhattan can be very illiquid because there’s always high demand and, at present, a low inventory. But if you need cash fast the length of a sales transaction can tie up your asset until the sale is finalized and you’ll probably have to reduce your asking price if you need it done quickly.

When considering real estate liquidity here are the questions you need to answer when evaluating a purchase: 

How fast can a deal be made and how long will it take to finalize the paperwork?
How much will it cost to close the deal (closing costs, taxes, broker fees, etc.)?
Is the property in demand and what is the real estate market like?

You’ll also want to consider the type of property. In general, large and expensive properties are the most illiquid as fewer buyers are looking to pay large amounts and there is more due diligence involved. As an investor, you need to plan for worst case scenarios. You can do this by having a diverse portfolio that includes highly liquid assets such as stocks which can be quickly converted to cash in an emergency.

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Get out of Midtown

Anthony Bourdain. He gave us a lesson on how to experience the very essence and soul, eat and smell the air of a place like a local. Anthony’s voice and inspiration for everything authentic motivated me for writing this article discussing why tourists visit New York as a tourist.

Being a proud New Yorker for the past 20 years, I live and breathe real estate, but that does not stop me from looking past the lobby onto the street, into the kitchen and experiencing the best of what the New York City offers.

Much has changed since I first landed. New York was distressed just working its way through a recovery from the national savings and loans crisis.

New York is not for the faint or easily offended. If you are not a fighter, then do not bother taking on this heavyweight. New York makes you fight above your weight class, and that makes it great. At times it can make you better than you ever imagined, pushing you to excel at the highest level.

The genuine and authentic survive. The confused and weak are quickly discarded.

New York City

The center of the world. Everything big and worthwhile has either passed through or fuels the energy of this towering city.

The City of everyone, everything, all flavors and all ethnicities. The good and bad are clear, the mediocre is usually a storefront with a sign “Out of Business”.

Why bother coming to New York City if you are going to do the old cliché tourist traps like Times Square, Macy’s, Penn Station and McDonald’s?

Why not see New York and experience it like a local? Get on a subway or go walkabout and discover.

Experience a great slice of pizza, dumpling, a great bowl of pasta or the best ice cream the city has to offer instead. If you are gluten-free, lactose intolerant or vegetarian, perhaps, walk the best streets or sit on a park bench watching the passersby.

There are still places and areas for me yet to explore after 20 years. But from what I do know, tourists will have a far richer experience by distancing themselves from double-decker buses and big department stores.

New York is real-time and forever evolving. Like no other place, its energy does not stop.

Midtown

The lack of fresh air, packed sidewalks, and bumper to bumper traffic, is this chaos attractive to you? Maybe, as a no-cost admission ticket to the largest urban zoo in the country. For those that work and must commute to Midtown daily, well, hopefully, you enjoy your job.

One’s view is subjective to one’s taste, but I can’t for the life of me understand why many tourists end up at McDonald’s? Do they think it tastes better in NYC or, perhaps, they do not have one at home? It is like when in Mexico, eating at a ‘Taco Bell’ when you have a fresh taco stand in front of you. Or, worse, not going to an ‘In-N-Out Burger’ once landed in Los Angeles.

When in NYC, try ‘Shake Shack,’ or go deep at the ‘Corner Bistro’ or ‘Spotted Pig’ in the West Village and enjoy their spin.

The first fundamental rule: do not be persuaded by a sign saying ‘the best pizza slice in NY,’ or ‘the best whatever,’ usually the experience will fall short. The best places often do not even have a sign to the name in front.

The second rule: if the restaurant is full of people that don’t look like they belong to the ethnicity of the cuisine, that usually is a blinking warning sign to move on unless you plan on eating like a tourist. Good luck then, and I hope you enjoy your lousy meal.

In Sum

Avoid having regrettable experiences. Stop finding places to eat at or visit based on Yelp reviews. Yelp? That is like reading the yellow pages as far as I am concerned.

Act like a local. Find a hyper-local blog to read instead of a generic ‘national dumping ground’ for content. Of course, there are credible sources like Michelin for food, but there are gems without a Michelin too.

Get out of Midtown. Head downtown, the village, east or west or lower east side, Chinatown, or cross a bridge to Queens and Brooklyn. Go to the Bronx to catch a Yankees game and enjoy a hot dog.

After years of enjoying NYC, I prefer to avoid the crowds, unless I need my MoMa, Central Park, or Shake Shack fix, but there is an app for that. If you want to check out a list of my favorite things to do or eat in the City, you can find them on our New York list at foursquare. Keep it authentic and local!

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Living in NYC as a College Student

Starting college usually means moving to a new place. For those going to college in New York, it will be one of the most exciting moments of your life. But for new arrivals, it can take some time to adjust to living here. Despite its rather deserved reputation for being a very expensive place to live, the Big Apple still remains one of the most popular cities where graduates would like to move. And for good reason, if there’s ever a perfect time to move to NYC, it’s in your early 20s. To help you adjust and make the most of life In New York, we’re here to help you with scoring a good spot and, once moved in, how to make the city home.

1. Start your apartment search early

NYC is known for (among other things) its fast-paced real estate market and low vacancy rates. To give you the best chance of finding your first apartment you should start your search 60-90 days before making your move. At the very least you should do some research to get an idea of what you want ahead of time. Make sure you communicate your needs and wants to your broker and keep track of all the apartments you’re looking at.

2. Choose the right neighborhood

New York is made up of five boroughs (Manhattan, Brooklyn, Queens, The Bronx, Staten Island), each of which can be broken up into smaller neighborhoods. Each one has its own particular vibe so choosing the right one for you will be vital if you’re to make New York your home. For an artsy feel and great nightlife, look to Williamsburg. For something a little more residential and relaxed, Central Brooklyn/Brooklyn Heights are the places to be. Do a little research and consider carefully what you’re looking for before you sign a lease.

3. Be ready for roommates

Unless you’re lucky enough to have your parents help out with buying your own apartment, you’ll need to be ready for roommates. If that makes you nervous then don’t let it be. It can be very comforting at the end of each day to know there’s someone back home keeping the place warm. Having a roommate means you can split the rent and sites like Roomster make it easier than ever to find a roomie. To ensure things go smoothly, interview each potential roommate and ask them the right questions. Even besties can get on each other’s nerves once they start living together

4. Have a budget and stick to it

This can be a crazy expensive city to live in. As a new arrival, you won’t make it without a budget to keep your spending in check. Even if you’ve been lucky enough to find an affordable apartment you’ll still need to consider all the other costs of living. Utilities, unlimited MetroCards, Uber rides or just a trip to the grocery store can quickly add up. keep all your receipts and track your daily, weekly and monthly spending. Fortunately, NYC has plenty of freebies on offer, so you don’t need to live above your means to enjoy life here.

5. Step out of your comfort zone every so often

You’ll no doubt have your schedule pretty full with classes, studying and catching up with friends but you should also make time to try something new. After all, that’s one of the biggest reasons for moving to NYC. The diversity in what’s on offer and how you can spend your free time. Try to do random things every so often like attending art galleries, if that’s normally not your thing, volunteering with St. Joe’s soup kitchen or just exploring a neighborhood you’ve never been to before. Take full advantage of what the city offers.

6. Get out of the city occasionally

NYC may have more than enough to keep you busy but one thing it lacks is nature. Sure there’s central park but sometimes that doesn’t cut it and you need fresh air, mountains, and wildlife that isn’t just pidgins. You can find some great weekend getaways from the city when you feel the need to escape and recharge your batteries. Trust me, you’ll need it every now and then.

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