Gea Elika's Blog, page 115
June 26, 2018
Buying Investment Properties in NYC
It is time to eradicate the myth that buying investment properties in New York City is only for elite real estate moguls. Investors come in all shapes and sizes, and some properties are available for reasonable prices.
While owning your own home has many benefits, there is a way to invest in real estate that can also produce a steady flow of income. However, this oversimplifies the subject. This article discusses the essentials of real estate investing.
It is best to buy an apartment that a New Yorker would appreciate and want to live in.
Click To Tweet
Market dynamics
Approximately 45% of New York City Housing consists of rental units, according to the U.S. Census Bureau’s American Community Survey, presented by the National Multifamily Housing Council. This is the highest among cities in the United States. For instance. Los Angeles had 39% or its housing devoted to rental, while San Francisco’s was 37%.
Other sources estimate about 67% of Manhattan’s housing stock are rentals. While there is a ready source of demand, the economy is performing well.
Don’t Chase Yield
Baseball season is upon us, so you sit down to watch your favorite team. The star player is at the plate, and he is ready to hit the ball with a cricket bat. Of course, this scenario is ridiculous, but we equate this to New York City real estate investors playing the wrong game. Instead of hunting for yield, capital appreciation is the main game in the city.
Historical yield
The yield, or cap rate, is your net cash flow divided by your purchase price. In this city, it has historically been 3%-4%. This is much lower than yields across the country. For instance, multi-family properties in Atlanta and Chicago are about 4.75% at the low end and over 6% in Indianapolis, according to a study done by Cushman.
There are many cities that offer a higher yield, making rents an attractive source of steady income. However, despite the high rents commanded in New York City, this is not the major factor generating returns. This naturally leads to the question: why invest in New York City? After all, an investment in the ten-year Treasury note currently has a 3% yield, but this has been an unusually low period for rates. Since it is backed by the full faith and credit of the United States government, repayment of the principal is considered risk free. Unlike real estate, it is a passive investment that does not involve inconvenient calls for emergency repairs and unruly tenants.
Since real estate involves more risk, there must be a higher potential return. There is a missing piece to the return equation.
Capital appreciation
The answer is that investors have generated a large portion of their gains from rising prices. For instance, real estate appraisal and consulting firm Miller Samuel examined Manhattan prices for 100 years, from the 1910s through 2010s. In the 1970s, the sale price was $45 per square foot for luxury properties, rising to $1,200 in the 2000s. In a narrower period covering 2004 to 2013, the median sales price for Manhattan rose from about $606,000 to $855,000. This is a 141% rise or a 3.5% compounded annual growth rate.
There are a couple of things to note. The 2004-2013 includes part of the build-up during the bubble and sharp contraction during the recession. But, over a decade, these large swings balanced out to a 3.5% annual gain. While this is about equal to the historical yield, it includes data across the entire borough. Doing some homework would have helped you outpace this gain. As an investor, you are going to be more discriminate in examining trends. For instance, if you invested when you noticed gentrification in certain Brooklyn and Queens neighborhoods, your appreciation was notably higher.
New York City is also a liquid market compared to other parts of the country, which is appealing for investors. There is demand from global buyers, meaning it is not solely dependent on the local economy. This provides a measure of support in a recession as foreign buyers step up to bargain hunt.
Putting it together
We do not mean to dismiss rent collection. Hopefully, it provides you with a steady annual cash flow. However, for those that are patient and astute, capital appreciation can be the real wealth generator. To get started below is our comprehensive guide to help you begin planning your NYC property investment.
1. Hire an Attorney
You will need to protect your personal assets in the event of bankruptcy or litigation. Many form a limited liability company (LLC) or limited partnership. There are ways to do it online, or you can consult an attorney. This is one area where it may pay to consult an expert since the cost of not doing it right could be catastrophic to your personal finances.
2. Choosing a Location
New York City has very favorable investment characteristics. It is a cultural and commerce powerhouse. Unlike the 1970s, the city has a reputation as a safe city. This blog gives a better explanation of the attractive characteristics of New York’s real estate climate.
But, you must still decide on a neighborhood. In general, economic factors such as income growth, proximity to transportation, and neighborhood characteristics such as the types of shops and restaurants are considerations. A well-informed agent can assist with this task. For a risk-averse real estate asset, we recommend thinking about micro markets within New York City.
We won’t repeat the maxim about the three most important rules for real estate, but clearly location matters for your investment.
Your decision on which neighborhood to invest in comes down to the risk/reward, similar to any investment. If you have a high tolerance for risk, an up-and-coming area should provide you have higher price appreciation potential and a higher capitalization (cap) rate.
You may feel comfortable purchasing an apartment to rent in an established neighborhood. In our experience, below 23rd street offers the best rental potential. There are a lot of amenities that draw people, such as the nice restaurants and cafes. You can draw comfort that it has been this way for decades.
The more established areas are, the safer choice, particularly in today’s market. While more speculative properties should have more capital appreciation upside, you are in for a wilder ride when the housing market corrects. The rental yields are not necessarily higher than you could expect to receive in a more established area. Our simple rule is to invest in areas where New Yorkers want to live, and there is a lack of competition from rental buildings.
Know the market trends for the neighborhoods you’re looking in and research other rental buildings and inventory nearby. Find out if anything new is coming to the neighborhood that will make it more desirable, such as a new subway station or grocery store. Research the property tax rates and school zones, especially if you’re purchasing a two-bedroom apartment. Ask a professional in real estate about which neighborhoods in NYC are anticipated to grow and why.
3. What type of property?
The same factors that go into choosing the right residential property to invest are useful in finding a property that the will outperform as a rental (e.g., neighborhood, building). There are other things to consider since this is an investment property, however.
There is a myriad of investment properties. Will you purchase residential properties? If so, will it be a single condo or co-op unit, or the building? If it is a co-op, the board may have restrictions on subletting. Multi-units or multi-family homes may have more upkeep, but you will still have a cash flow if some of the units remain empty.
Condo units are easier to rent than co-op units. The former typically has less restrictive rules regarding renting, with some placing a complete ban while others limit the amount of time. It is also likely to take longer to purchase a co-op since you have to pass muster with the board. While you may be willing to bear this hindrance if you plan to live there, the extra time means a longer closing and a delay in rental payments.
A wide range of commercial properties are available, should you choose to go that route. While the tenant typically is responsible to take care of more things, the complexities also rise.
Delving deeper, you will find one, and two bedroom units are easier to rent than three bedroom condos. Three bedroom units compete with single-family homes. If you choose a studio, your unit may be vacant for a greater amount of time since the tenant may leave for a bigger apartment.
There is further work to do, such as the rent a similar unit fetches. A buyer’s agent can help you with this information.
4. The Building
Always see the property for yourself, even if virtually, before you buy. If you are purchasing a condo, get in touch with the building’s management to learn about what changes are coming up in the future. If you can, get a copy the building subletting policy and leasing application, and see what fees you might be responsible for paying. Some buildings even offer tax abatements or temporary tax reductions.
5. Sales Versus Rental Rates
You don’t want to end up paying more for a property than what you will be receiving in rent from tenants each month. Compare sale prices for properties in similar neighborhoods against typical rental rates to gauge the potential rental yield for the property; currently, rental yield in NYC is between three and five percent.
Be sure you know what the rental rates are, and stay competitive so that your units will always have tenants. If you are flipping the property, you’ll still need to know this information for potential buyers.
6. Hold Time Frame
As with most investments, your time horizon is an important consideration. You can buy a fixer-upper, in the hopes of making a fairly quick profit. This can be high risk as hidden problems could get discovered or the real estate market changes direction. However, the potential rewards could also be high. Conversely, your time horizon might be measured in decades, and you will be content collecting stable rents, although potential appreciation could be substantial given the long time frame.
Know how long you want to own the property and study market trends. Are you going to hold onto the property for a decade and always keep it occupied or are you going to renovate and flip it? Whether it’s long-term maintenance or renovation costs, the length of time you intend to own the property should factor into your budget.
7. Tenants
This is a broad category to consider, but an important one. If there are existing tenants in place, that provides immediate income. But, contemplate whether the rent is market-rate. In addition, it is important to remember you have not personally done the background check and vetted the tenant.
8. Legal Issues
If you choose to become a landlord, you will be working with rental agreements, liability concerns for tenants, possible evictions, and more. Be sure to have an attorney on your side who can help you navigate these scenarios as they arise.
Be aware of your rights as a buyer and seek advice when encountering contracts, titles, and other legally binding documents.
9. Costs
Identify what costs are involved in acquiring and managing an investment property.
If you’re purchasing a condo with the hope of renting it out, review the rental applications at your desired building so that you are informed about any fees involved for owners and tenants. You may want to consider paying a company to maintain the property for residents if you rent it out, in case something breaks or needs to be replaced. For individual condo management, 5% of the gross monthly rent is the average rate. Most condominiums collect common charges for the building’s operational and maintenance expenses.
10. Outside management or go alone?
There are management companies that will lessen your burden. Typical tasks include collecting rent and dealing with troublesome tenants. However, this comes at a price. Most charge a fee that is a percentage of the rent.
11. Taxes matter
There are special considerations. This is a complex area, with many rules, such as deducting non-cash items like depreciation.
Investors should also be mindful of tax abatements. These buildings have had property taxes lowered for a certain period of time in order to help revitalize an area through development. The cash savings will increase your take-home income, and your property could experience price appreciation, providing things go according to the city’s plan.
12, Inspection
This goes beyond examining for structural issues like the condition of the roof. Since it will be rented, the apartment must be clean. Beyond that, it might have to be spruced up so it includes items such as up-to-date appliances. This could require additional cash outlays, and may cause a loss of rental income until the unit is ready.
13. Financials
If you are investing in a condo or co-op unit, financial stability will be important. There should be sufficient funds put aside for wear and tear items such as a new roof. Otherwise, maintenance fees could increase, which you might have to bear until you can raise the rent sufficiently.
In a multi-unit building, examining the financials is also important to see how the returns are derived. For instance, if there is a large unit that generates a disproportionate share of the rent, this is an important factor.
14. Return on Investment
Needless to say, it is important to measure profitability. However, in isolation, it means very little. Rental income, less monthly expenses such as maintenance, repairs, and financing costs, gives net income. However, it should be compared to the amount invested. The percentage should be compared to other investments. For instance, if you have a 2% return, and the 10 year Treasury bond is yielding 2.8%, you would be much better off in the latter. This is especially true since the risk of losing your principal is extraordinarily small (most consider it a risk-free investment).
There are a couple of other considerations. Although the purchase price is typically determined based on square feet, renters typically look at the number of bedrooms. Therefore, if extra bedrooms can be created, a smaller unit may command a higher rent while costing less to purchase. In addition, it is important to analyze sales and rental data. The two do not always move in lock-step, and there have been instances where sales prices have risen faster than rents.
In real estate, leverage, or borrowed funds, is often used. This potentially increases returns since you can purchase a property with a down payment and pay the balance over time. Of course, it also increases risk and magnifies losses in a downturn.
Conclusion
This gives an outline for investors to consider. Real estate investing can be profitable through rental income as well as price appreciation. But, as always, it is wise to investigate and consult an exclusive buyers agent before a large investment is made.
It is important to budget your cash inflows and outflows, and calculate how a potential vacancy affects your finances.
While not a get rich scheme, rental units can provide a steady source of extra income. If you choose, you can use your income stream to buy additional properties as time goes on.
The post Buying Investment Properties in NYC appeared first on | ELIKA Real Estate.
Guide to Buying Investment Properties in NYC
It is time to eradicate the myth that buying investment properties in New York City is only for elite real estate moguls. Investors come in all shapes and sizes, and some properties are available for reasonable prices.
While owning your own home has many benefits, there is a way to invest in real estate that can also produce a steady flow of income. However, this oversimplifies the subject. This article discusses the essentials of real estate investing.
It is best to buy an apartment that a New Yorker would appreciate and want to live in.
Click To Tweet
Market dynamics
Approximately 45% of New York City Housing consists of rental units, according to the U.S. Census Bureau’s American Community Survey, presented by the National Multifamily Housing Council. This is the highest among cities in the United States. For instance. Los Angeles had 39% or its housing devoted to rental, while San Francisco’s was 37%.
Other sources estimate about 67% of Manhattan’s housing stock are rentals. While there is a ready source of demand, the economy is performing well.
Don’t Chase Yield
Baseball season is upon us, so you sit down to watch your favorite team. The star player is at the plate, and he is ready to hit the ball with a cricket bat. Of course, this scenario is ridiculous, but we equate this to New York City real estate investors playing the wrong game. Instead of hunting for yield, capital appreciation is the main game in the city.
Historical yield
The yield, or cap rate, is your net cash flow divided by your purchase price. In this city, it has historically been 3%-4%. This is much lower than yields across the country. For instance, multi-family properties in Atlanta and Chicago are about 4.75% at the low end and over 6% in Indianapolis, according to a study done by Cushman.
There are many cities that offer a higher yield, making rents an attractive source of steady income. However, despite the high rents commanded in New York City, this is not the major factor generating returns. This naturally leads to the question: why invest in New York City? After all, an investment in the ten-year Treasury note currently has a 3% yield, but this has been an unusually low period for rates. Since it is backed by the full faith and credit of the United States government, repayment of the principal is considered risk free. Unlike real estate, it is a passive investment that does not involve inconvenient calls for emergency repairs and unruly tenants.
Since real estate involves more risk, there must be a higher potential return. There is a missing piece to the return equation.
Capital appreciation
The answer is that investors have generated a large portion of their gains from rising prices. For instance, real estate appraisal and consulting firm Miller Samuel examined Manhattan prices for 100 years, from the 1910s through 2010s. In the 1970s, the sale price was $45 per square foot for luxury properties, rising to $1,200 in the 2000s. In a narrower period covering 2004 to 2013, the median sales price for Manhattan rose from about $606,000 to $855,000. This is a 141% rise or a 3.5% compounded annual growth rate.
There are a couple of things to note. The 2004-2013 includes part of the build-up during the bubble and sharp contraction during the recession. But, over a decade, these large swings balanced out to a 3.5% annual gain. While this is about equal to the historical yield, it includes data across the entire borough. Doing some homework would have helped you outpace this gain. As an investor, you are going to be more discriminate in examining trends. For instance, if you invested when you noticed gentrification in certain Brooklyn and Queens neighborhoods, your appreciation was notably higher.
New York City is also a liquid market compared to other parts of the country, which is appealing for investors. There is demand from global buyers, meaning it is not solely dependent on the local economy. This provides a measure of support in a recession as foreign buyers step up to bargain hunt.
Putting it together
We do not mean to dismiss rent collection. Hopefully, it provides you with a steady annual cash flow. However, for those that are patient and astute, capital appreciation can be the real wealth generator. To get started below is our comprehensive guide to help you begin planning your NYC property investment.
1. Hire an Attorney
You will need to protect your personal assets in the event of bankruptcy or litigation. Many form a limited liability company (LLC) or limited partnership. There are ways to do it online, or you can consult an attorney. This is one area where it may pay to consult an expert since the cost of not doing it right could be catastrophic to your personal finances.
2. Choosing a Location
New York City has very favorable investment characteristics. It is a cultural and commerce powerhouse. Unlike the 1970s, the city has a reputation as a safe city. This blog gives a better explanation of the attractive characteristics of New York’s real estate climate.
But, you must still decide on a neighborhood. In general, economic factors such as income growth, proximity to transportation, and neighborhood characteristics such as the types of shops and restaurants are considerations. A well-informed agent can assist with this task. For a risk-averse real estate asset, we recommend thinking about micro markets within New York City.
We won’t repeat the maxim about the three most important rules for real estate, but clearly location matters for your investment.
Your decision on which neighborhood to invest in comes down to the risk/reward, similar to any investment. If you have a high tolerance for risk, an up-and-coming area should provide you have higher price appreciation potential and a higher capitalization (cap) rate.
You may feel comfortable purchasing an apartment to rent in an established neighborhood. In our experience, below 23rd street offers the best rental potential. There are a lot of amenities that draw people, such as the nice restaurants and cafes. You can draw comfort that it has been this way for decades.
The more established areas are, the safer choice, particularly in today’s market. While more speculative properties should have more capital appreciation upside, you are in for a wilder ride when the housing market corrects. The rental yields are not necessarily higher than you could expect to receive in a more established area. Our simple rule is to invest in areas where New Yorkers want to live, and there is a lack of competition from rental buildings.
Know the market trends for the neighborhoods you’re looking in and research other rental buildings and inventory nearby. Find out if anything new is coming to the neighborhood that will make it more desirable, such as a new subway station or grocery store. Research the property tax rates and school zones, especially if you’re purchasing a two-bedroom apartment. Ask a professional in real estate about which neighborhoods in NYC are anticipated to grow and why.
3. What type of property?
The same factors that go into choosing the right residential property to invest are useful in finding a property that the will outperform as a rental (e.g., neighborhood, building). There are other things to consider since this is an investment property, however.
There is a myriad of investment properties. Will you purchase residential properties? If so, will it be a single condo or co-op unit, or the building? If it is a co-op, the board may have restrictions on subletting. Multi-units or multi-family homes may have more upkeep, but you will still have a cash flow if some of the units remain empty.
Condo units are easier to rent than co-op units. The former typically has less restrictive rules regarding renting, with some placing a complete ban while others limit the amount of time. It is also likely to take longer to purchase a co-op since you have to pass muster with the board. While you may be willing to bear this hindrance if you plan to live there, the extra time means a longer closing and a delay in rental payments.
A wide range of commercial properties are available, should you choose to go that route. While the tenant typically is responsible to take care of more things, the complexities also rise.
Delving deeper, you will find one, and two bedroom units are easier to rent than three bedroom condos. Three bedroom units compete with single-family homes. If you choose a studio, your unit may be vacant for a greater amount of time since the tenant may leave for a bigger apartment.
There is further work to do, such as the rent a similar unit fetches. A buyer’s agent can help you with this information.
4. The Building
Always see the property for yourself, even if virtually, before you buy. If you are purchasing a condo, get in touch with the building’s management to learn about what changes are coming up in the future. If you can, get a copy the building subletting policy and leasing application, and see what fees you might be responsible for paying. Some buildings even offer tax abatements or temporary tax reductions.
5. Sales Versus Rental Rates
You don’t want to end up paying more for a property than what you will be receiving in rent from tenants each month. Compare sale prices for properties in similar neighborhoods against typical rental rates to gauge the potential rental yield for the property; currently, rental yield in NYC is between three and five percent.
Be sure you know what the rental rates are, and stay competitive so that your units will always have tenants. If you are flipping the property, you’ll still need to know this information for potential buyers.
6. Hold Time Frame
As with most investments, your time horizon is an important consideration. You can buy a fixer-upper, in the hopes of making a fairly quick profit. This can be high risk as hidden problems could get discovered or the real estate market changes direction. However, the potential rewards could also be high. Conversely, your time horizon might be measured in decades, and you will be content collecting stable rents, although potential appreciation could be substantial given the long time frame.
Know how long you want to own the property and study market trends. Are you going to hold onto the property for a decade and always keep it occupied or are you going to renovate and flip it? Whether it’s long-term maintenance or renovation costs, the length of time you intend to own the property should factor into your budget.
7. Tenants
This is a broad category to consider, but an important one. If there are existing tenants in place, that provides immediate income. But, contemplate whether the rent is market-rate. In addition, it is important to remember you have not personally done the background check and vetted the tenant.
8. Legal Issues
If you choose to become a landlord, you will be working with rental agreements, liability concerns for tenants, possible evictions, and more. Be sure to have an attorney on your side who can help you navigate these scenarios as they arise.
Be aware of your rights as a buyer and seek advice when encountering contracts, titles, and other legally binding documents.
9. Costs
Identify what costs are involved in acquiring and managing an investment property.
If you’re purchasing a condo with the hope of renting it out, review the rental applications at your desired building so that you are informed about any fees involved for owners and tenants. You may want to consider paying a company to maintain the property for residents if you rent it out, in case something breaks or needs to be replaced. For individual condo management, 5% of the gross monthly rent is the average rate. Most condominiums collect common charges for the building’s operational and maintenance expenses.
10. Outside management or go alone?
There are management companies that will lessen your burden. Typical tasks include collecting rent and dealing with troublesome tenants. However, this comes at a price. Most charge a fee that is a percentage of the rent.
11. Taxes matter
There are special considerations. This is a complex area, with many rules, such as deducting non-cash items like depreciation.
Investors should also be mindful of tax abatements. These buildings have had property taxes lowered for a certain period of time in order to help revitalize an area through development. The cash savings will increase your take-home income, and your property could experience price appreciation, providing things go according to the city’s plan.
12, Inspection
This goes beyond examining for structural issues like the condition of the roof. Since it will be rented, the apartment must be clean. Beyond that, it might have to be spruced up so it includes items such as up-to-date appliances. This could require additional cash outlays, and may cause a loss of rental income until the unit is ready.
13. Financials
If you are investing in a condo or co-op unit, financial stability will be important. There should be sufficient funds put aside for wear and tear items such as a new roof. Otherwise, maintenance fees could increase, which you might have to bear until you can raise the rent sufficiently.
In a multi-unit building, examining the financials is also important to see how the returns are derived. For instance, if there is a large unit that generates a disproportionate share of the rent, this is an important factor.
14. Return on Investment
Needless to say, it is important to measure profitability. However, in isolation, it means very little. Rental income, less monthly expenses such as maintenance, repairs, and financing costs, gives net income. However, it should be compared to the amount invested. The percentage should be compared to other investments. For instance, if you have a 2% return, and the 10 year Treasury bond is yielding 2.8%, you would be much better off in the latter. This is especially true since the risk of losing your principal is extraordinarily small (most consider it a risk-free investment).
There are a couple of other considerations. Although the purchase price is typically determined based on square feet, renters typically look at the number of bedrooms. Therefore, if extra bedrooms can be created, a smaller unit may command a higher rent while costing less to purchase. In addition, it is important to analyze sales and rental data. The two do not always move in lock-step, and there have been instances where sales prices have risen faster than rents.
In real estate, leverage, or borrowed funds, is often used. This potentially increases returns since you can purchase a property with a down payment and pay the balance over time. Of course, it also increases risk and magnifies losses in a downturn.
Conclusion
This gives an outline for investors to consider. Real estate investing can be profitable through rental income as well as price appreciation. But, as always, it is wise to investigate and consult an exclusive buyers agent before a large investment is made.
It is important to budget your cash inflows and outflows, and calculate how a potential vacancy affects your finances.
While not a get rich scheme, rental units can provide a steady source of extra income. If you choose, you can use your income stream to buy additional properties as time goes on.
The post Guide to Buying Investment Properties in NYC appeared first on | ELIKA Real Estate.
Guide to Buying Investment Property in NYC
It is time to eradicate the myth that buying real estate in New York City is only for elite real estate moguls. Investors come in all shapes and sizes, and some properties are available for reasonable prices.
While owning your own home has many benefits, there is a way to invest in real estate that can also produce a steady flow of income. However, this oversimplifies the subject. This article discusses the essentials of real estate investing.
It is best to buy an apartment that a New Yorker would appreciate and want to live in.
Click To Tweet
Market dynamics
Approximately 45% of New York City Housing consists of rental units, according to the U.S. Census Bureau’s American Community Survey, presented by the National Multifamily Housing Council. This is the highest among cities in the United States. For instance. Los Angeles had 39% or its housing devoted to rental, while San Francisco’s was 37%.
Other sources estimate about 67% of Manhattan’s housing stock are rentals. While there is a ready source of demand, the economy is performing well.
Don’t Chase Yield
Baseball season is upon us, so you sit down to watch your favorite team. The star player is at the plate, and he is ready to hit the ball with a cricket bat. Of course, this scenario is ridiculous, but we equate this to New York City real estate investors playing the wrong game. Instead of hunting for yield, capital appreciation is the main game in the city.
Historical yield
The yield, or cap rate, is your net cash flow divided by your purchase price. In this city, it has historically been 3%-4%. This is much lower than yields across the country. For instance, multi-family properties in Atlanta and Chicago are about 4.75% at the low end and over 6% in Indianapolis, according to a study done by Cushman.
There are many cities that offer a higher yield, making rents an attractive source of steady income. However, despite the high rents commanded in New York City, this is not the major factor generating returns. This naturally leads to the question: why invest in New York City? After all, an investment in the ten-year Treasury note currently has a 3% yield, but this has been an unusually low period for rates. Since it is backed by the full faith and credit of the United States government, repayment of the principal is considered risk free. Unlike real estate, it is a passive investment that does not involve inconvenient calls for emergency repairs and unruly tenants.
Since real estate involves more risk, there must be a higher potential return. There is a missing piece to the return equation.
Capital appreciation
The answer is that investors have generated a large portion of their gains from rising prices. For instance, real estate appraisal and consulting firm Miller Samuel examined Manhattan prices for 100 years, from the 1910s through 2010s. In the 1970s, the sale price was $45 per square foot for luxury properties, rising to $1,200 in the 2000s. In a narrower period covering 2004 to 2013, the median sales price for Manhattan rose from about $606,000 to $855,000. This is a 141% rise or a 3.5% compounded annual growth rate.
There are a couple of things to note. The 2004-2013 includes part of the build-up during the bubble and sharp contraction during the recession. But, over a decade, these large swings balanced out to a 3.5% annual gain. While this is about equal to the historical yield, it includes data across the entire borough. Doing some homework would have helped you outpace this gain. As an investor, you are going to be more discriminate in examining trends. For instance, if you invested when you noticed gentrification in certain Brooklyn and Queens neighborhoods, your appreciation was notably higher.
New York City is also a liquid market compared to other parts of the country, which is appealing for investors. There is demand from global buyers, meaning it is not solely dependent on the local economy. This provides a measure of support in a recession as foreign buyers step up to bargain hunt.
Putting it together
We do not mean to dismiss rent collection. Hopefully, it provides you with a steady annual cash flow. However, for those that are patient and astute, capital appreciation can be the real wealth generator. To get started below is our comprehensive guide to help you begin planning your NYC property investment.
1. Hire an Attorney
You will need to protect your personal assets in the event of bankruptcy or litigation. Many form a limited liability company (LLC) or limited partnership. There are ways to do it online, or you can consult an attorney. This is one area where it may pay to consult an expert since the cost of not doing it right could be catastrophic to your personal finances.
2. Choosing a Location
New York City has very favorable investment characteristics. It is a cultural and commerce powerhouse. Unlike the 1970s, the city has a reputation as a safe city. This blog gives a better explanation of the attractive characteristics of New York’s real estate climate.
But, you must still decide on a neighborhood. In general, economic factors such as income growth, proximity to transportation, and neighborhood characteristics such as the types of shops and restaurants are considerations. A well-informed agent can assist with this task. For a risk-averse real estate asset, we recommend thinking about micro markets within New York City.
We won’t repeat the maxim about the three most important rules for real estate, but clearly location matters for your investment.
Your decision on which neighborhood to invest in comes down to the risk/reward, similar to any investment. If you have a high tolerance for risk, an up-and-coming area should provide you have higher price appreciation potential and a higher capitalization (cap) rate.
You may feel comfortable purchasing an apartment to rent in an established neighborhood. In our experience, below 23rd street offers the best rental potential. There are a lot of amenities that draw people, such as the nice restaurants and cafes. You can draw comfort that it has been this way for decades.
The more established areas are, the safer choice, particularly in today’s market. While more speculative properties should have more capital appreciation upside, you are in for a wilder ride when the housing market corrects. The rental yields are not necessarily higher than you could expect to receive in a more established area. Our simple rule is to invest in areas where New Yorkers want to live, and there is a lack of competition from rental buildings.
Know the market trends for the neighborhoods you’re looking in and research other rental buildings and inventory nearby. Find out if anything new is coming to the neighborhood that will make it more desirable, such as a new subway station or grocery store. Research the property tax rates and school zones, especially if you’re purchasing a two-bedroom apartment. Ask a professional in real estate about which neighborhoods in NYC are anticipated to grow and why.
3. What type of property?
The same factors that go into choosing the right residential property to invest are useful in finding a property that the will outperform as a rental (e.g., neighborhood, building). There are other things to consider since this is an investment property, however.
There is a myriad of investment properties. Will you purchase residential properties? If so, will it be a single condo or co-op unit, or the building? If it is a co-op, the board may have restrictions on subletting. Multi-units or multi-family homes may have more upkeep, but you will still have a cash flow if some of the units remain empty.
Condo units are easier to rent than co-op units. The former typically has less restrictive rules regarding renting, with some placing a complete ban while others limit the amount of time. It is also likely to take longer to purchase a co-op since you have to pass muster with the board. While you may be willing to bear this hindrance if you plan to live there, the extra time means a longer closing and a delay in rental payments.
A wide range of commercial properties are available, should you choose to go that route. While the tenant typically is responsible to take care of more things, the complexities also rise.
Delving deeper, you will find one, and two bedroom units are easier to rent than three bedroom condos. Three bedroom units compete with single-family homes. If you choose a studio, your unit may be vacant for a greater amount of time since the tenant may leave for a bigger apartment.
There is further work to do, such as the rent a similar unit fetches. A buyer’s agent can help you with this information.
4. The Building
Always see the property for yourself, even if virtually, before you buy. If you are purchasing a condo, get in touch with the building’s management to learn about what changes are coming up in the future. If you can, get a copy the building subletting policy and leasing application, and see what fees you might be responsible for paying. Some buildings even offer tax abatements or temporary tax reductions.
5. Sales Versus Rental Rates
You don’t want to end up paying more for a property than what you will be receiving in rent from tenants each month. Compare sale prices for properties in similar neighborhoods against typical rental rates to gauge the potential rental yield for the property; currently, rental yield in NYC is between three and five percent.
Be sure you know what the rental rates are, and stay competitive so that your units will always have tenants. If you are flipping the property, you’ll still need to know this information for potential buyers.
6. Hold Time Frame
As with most investments, your time horizon is an important consideration. You can buy a fixer-upper, in the hopes of making a fairly quick profit. This can be high risk as hidden problems could get discovered or the real estate market changes direction. However, the potential rewards could also be high. Conversely, your time horizon might be measured in decades, and you will be content collecting stable rents, although potential appreciation could be substantial given the long time frame.
Know how long you want to own the property and study market trends. Are you going to hold onto the property for a decade and always keep it occupied or are you going to renovate and flip it? Whether it’s long-term maintenance or renovation costs, the length of time you intend to own the property should factor into your budget.
7. Tenants
This is a broad category to consider, but an important one. If there are existing tenants in place, that provides immediate income. But, contemplate whether the rent is market-rate. In addition, it is important to remember you have not personally done the background check and vetted the tenant.
8. Legal Issues
If you choose to become a landlord, you will be working with rental agreements, liability concerns for tenants, possible evictions, and more. Be sure to have an attorney on your side who can help you navigate these scenarios as they arise.
Be aware of your rights as a buyer and seek advice when encountering contracts, titles, and other legally binding documents.
9. Costs
Identify what costs are involved in acquiring and managing an investment property.
If you’re purchasing a condo with the hope of renting it out, review the rental applications at your desired building so that you are informed about any fees involved for owners and tenants. You may want to consider paying a company to maintain the property for residents if you rent it out, in case something breaks or needs to be replaced. For individual condo management, 5% of the gross monthly rent is the average rate. Most condominiums collect common charges for the building’s operational and maintenance expenses.
10. Outside management or go alone?
There are management companies that will lessen your burden. Typical tasks include collecting rent and dealing with troublesome tenants. However, this comes at a price. Most charge a fee that is a percentage of the rent.
11. Taxes matter
There are special considerations. This is a complex area, with many rules, such as deducting non-cash items like depreciation.
Investors should also be mindful of tax abatements. These buildings have had property taxes lowered for a certain period of time in order to help revitalize an area through development. The cash savings will increase your take-home income, and your property could experience price appreciation, providing things go according to the city’s plan.
12, Inspection
This goes beyond examining for structural issues like the condition of the roof. Since it will be rented, the apartment must be clean. Beyond that, it might have to be spruced up so it includes items such as up-to-date appliances. This could require additional cash outlays, and may cause a loss of rental income until the unit is ready.
13. Financials
If you are investing in a condo or co-op unit, financial stability will be important. There should be sufficient funds put aside for wear and tear items such as a new roof. Otherwise, maintenance fees could increase, which you might have to bear until you can raise the rent sufficiently.
In a multi-unit building, examining the financials is also important to see how the returns are derived. For instance, if there is a large unit that generates a disproportionate share of the rent, this is an important factor.
14. Return on Investment
Needless to say, it is important to measure profitability. However, in isolation, it means very little. Rental income, less monthly expenses such as maintenance, repairs, and financing costs, gives net income. However, it should be compared to the amount invested. The percentage should be compared to other investments. For instance, if you have a 2% return, and the 10 year Treasury bond is yielding 2.8%, you would be much better off in the latter. This is especially true since the risk of losing your principal is extraordinarily small (most consider it a risk-free investment).
There are a couple of other considerations. Although the purchase price is typically determined based on square feet, renters typically look at the number of bedrooms. Therefore, if extra bedrooms can be created, a smaller unit may command a higher rent while costing less to purchase. In addition, it is important to analyze sales and rental data. The two do not always move in lock-step, and there have been instances where sales prices have risen faster than rents.
In real estate, leverage, or borrowed funds, is often used. This potentially increases returns since you can purchase a property with a down payment and pay the balance over time. Of course, it also increases risk and magnifies losses in a downturn.
Conclusion
This gives an outline for investors to consider. Real estate investing can be profitable through rental income as well as price appreciation. But, as always, it is wise to investigate and consult an exclusive buyers agent before a large investment is made.
It is important to budget your cash inflows and outflows, and calculate how a potential vacancy affects your finances.
While not a get rich scheme, rental units can provide a steady source of extra income. If you choose, you can use your income stream to buy additional properties as time goes on.
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June 25, 2018
Co-op Board Election: Run and Win or Reconsider
If you’re the proud owner of a co-op apartment, you’ll undoubtedly recall your co-op board application and interview. There you met with the board, an elected group of managers who also call the building home. Being a member of the board comes with some responsibility but also influence in the running of the building. If you feel that some things could be done better you might consider running for a seat at the next election. Read on to see how to approach an election and give yourself the best chance of winning.
1. Go out and meet the people
Just like any election, if you’re going to succeed, you’ll need the support of the people. A board election calls for grassroots politics, meeting people face to face, listening to their concerns and giving your message. If it’s a small building, you can easily go door-to-door and have a friendly conversation about why you feel changes are needed. This is also a good way to find out if your neighbors share the same concerns as you do.
If it’s a large building, it’s more ideal to enlist other residents who can speak with their neighbors on their specific floors. People warm more easily to those who share the same floor as them and are more likely to listen. Meeting the neighbors isn’t just about laying out your message, it’s also about collecting proxies. A proxy is a document which will allow you to act in their stead if they are unable to attend the upcoming meeting.
2. Have the right message
Regardless of how much legwork you do, if you don’t have the right message and deliver it efficiently, you’ll be out of the race. Make it clear to people why it is your running. Maybe the board is enacting new policies or repairs are coming up, and the board mishandled them the last time.
Rather than going on a smear campaign make your case by being transparent, positive and straightforward. Your message should be capable of being distilled on a single sheet of paper with the use of bullet points for easier reading. You’ll have only one shot at getting this right so make sure your flyers are the best they can be.
3. Find out who can vote
By law, the co-op must provide you with a list of shareholder’s names, addresses, and the number of shares if you request it. But to do so, you’ll need to turn in an affidavit that you’ll only be using the information for business relating to the co-op and not for commercial purposes. With this information, you’ll have a good idea of the number of votes at stake and also who’s not worth approaching. For example, if a shareholder is subletting or has a family member staying in the apartment, that person can’t vote. Only the shareholder themselves can.
4. Vote
Now for the big day. At the meeting you’ll need to show up with the shareholders’ proxies, sign them in, get a ballot and cast that ballot. Depending on the building, there will be different methods on how they distribute ballots. An inspector also will be present to ensure that everything goes fairly.
Before ballots are cast, each candidate is allowed to say a few final words. Use this time to state your qualification and repeat your message of what you will do if elected. If you’re not confident with public speaking that’s fine. Write out the speech and practice it a few times in front of a mirror or friend. You’ll be largely judged on how you present your message rather than the actual details of it. Remember, you don’t have to win a majority but can also win by plurality. Meaning you need more votes than other members. Also, don’t forget to smile, make eye contact and thank everyone who gave you proxies for their confidence in you.
Life in a co-op building might be a tad easier if you or your significant other has a chance to sit on the board of directors. My husband has been the secretary of our board since 2010. He initially expressed an interest in joining so he could convince the other members to add more basement storage units in hopes that we would be able to lease one for our overflow of personal belongings. (Downsizing from 2800 square feet to 825 is never easy, but that’s another blog post.)
After he had added the subject of “storage” to monthly meeting agendas for four years, finally, the board agreed to construct more units, and we were granted a locker in our basement a few months ago. Board members decide on issues like this as well as critical matters such as building the structure, general rules, and finances. Whether you’re a natural decision maker and think that becoming a board member is for you, or you have an ulterior motive like my husband, know that the title isn’t as glamorous as it sounds. Although there’s a host of advantages, being a co-op board member is probably more involved than you think.
Things to Consider Before Joining Your Co-op Board
Here are a few things to consider before you add the title of “board member” to your resume. If only co-op board meetings in New York City were this easy. Sitting on your apartment building’s co-op board is tougher than you think.
Image via Flickr by tiarescott
You’ll have to devote personal time
Regular meetings could interfere with your daily work and life schedule. You might have to leave your job early, eat dinner later, skip a workout session, and even lose an hour or so of sleep, depending on the day and time of the meeting. Meetings usually take place monthly and during the week, but now and then, an emergency could warrant a last-minute conference, and you are expected to drop everything and attend. Beyond meetings, emails run rampant, and paperwork requires time to review. The time you’ll spend as a board member is almost equivalent to a part-time job.
You’ll be the man (or woman) who knows too much
Strangers’ and neighbors’ finances will be laid out in front of you. Not only will you get a glimpse of salary information, but also stocks, bonds, savings, and 401K will be within eyesight. You might be uncomfortable knowing such personal stats about your new neighbor before he moves in. Of course, you’ll be expected to keep this info to yourself, so no blabbing to family or friends.
You’ll also know anything and everything that goes on in your building. A scuffle between Mrs. Jones in 3C and Mrs. Reilly in 3A; Mr. Sands in 12D who hasn’t paid his maintenance bill in six months; and that problem dog on the sixth floor who won’t stop barking. You’ll know about all of it and be involved in a resolution.
You may be forced to make decisions you don’t want to make
Major issues like installing a new elevator, renovating a lobby, hiring or firing doorman and building staff, are some of the decisions you’ll make as a board member. Capital improvement projects may result in maintenance increases or assessments (extra charges until the project is paid for.) Other shareholders might give you the evil eye in the elevator, knowing you’re partially responsible for tightening their purse strings. As a result, you might become unpopular or even disliked.
You’ll have to handle conflict
Being a board member can be stressful. With a group of passionate New Yorkers striving for the same cause (to create the best living environment while protecting their investment) disagreements between board members is the norm. Be prepared for yelling and screaming and temper tantrums; you’ll need thick skin, and be able to take all of the board meeting drama with a grain of salt.
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June 24, 2018
Opportunistic & Distressed Real Estate Investments
There are certain situations that favor the buyer which your exclusive buyer’s agent can help you navigate. In fact, he/she has an obligation to provide you with information that helps you. But, it is useful for you to recognize situations where you have a bargaining advantage, and understand the potential risks and rewards.
Divorce
In a divorce situation, the marital home is almost always a contentious issue. Aside from the financial commitment, there is the emotional attachment along with the sweat equity. If the house is on the market and being as part of a divorce settlement, this could mean buyers can obtain a bargain since the agreement mandates a sale.
However, you are going to deal with two separate parties that have a long history together, the latest of which may have been hostile. This can make hammering out a deal protracted.
Estate sale
Heirs selling a property is another situation where you can obtain a bargain. Often, they are looking for a quick sale in order to raise cash and not worry about the upkeep. They are ready to move on and do not want to spend their free time traveling back and forth to deal with issues, particularly if this requires coming into the city from a far distance. The quick sale can mean a discounted price for you.
An estate sale is not for everyone, though. You could have to deal with multiple parties, which can draw things out. They may have disparate views, including an acceptable price. If they live in different states or do not get along, this creates another roadblock. The heirs may list the property “as is.” The estate may also require you to obtain the permanent certificate of occupancy. This could mean having to put in a lot of work to bring the apartment up to code and your liking.
Foreclosure
There is an opportunity for buyers if a homeowner is facing foreclosure, or the bank has already foreclosed. In these situations, the buyer has fallen behind on his/her mortgage payments. It has reached a point where the bank, which holds a lien on the title, has threatened or actually repossessed the home and will sell it to recoup the amount the borrower owes.
Since banks are not in the real estate business and do not want to own the property, you can obtain a bargain. You have to go through the bank’s bureaucracy, however. Short sales became popular during the economic downturn. In these situations, the bank has not yet foreclosed but has agreed to a sale that will bring in less than the owner owes it. In these situations, there is a potential bargain, but you have to deal with the homeowner and bank.
As a caveat, you may find it challenging to uncover foreclosures in the current environment. The city’s real estate market has experienced an upward trajectory over the last several years. This means many owners have equity, meaning he/she can sell their apartment and pay off the loan. In the case of co-op buildings, boards try to avoid distressed sales by typically requiring a sufficient liquidity reserve to cover one to two years worth of maintenance charges.
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June 23, 2018
Best Furniture and Home Design Stores in NYC
You’ll find no shortage of design inspiration when it comes to New York City. Whether it’s the iconic architecture, the landscapes of central park or it’s endless museums, New York has plenty to marvel at. The shopping experience is little different and when it comes to finding good quality furniture and home goods the options are near infinite. But which ones are the best? Here we’ve rounded up our top picks. Whether you just want to organize, add some personality or do a total décor overhaul, here are the places you need to check out. Also, if we’ve missed your favorite store but sure to mention it in the comments.
Photo by: designmilk.com
1. ABC Carpet and Home
With thousands of items spread over six floors, this Gramercy store has long been the north star for design fanatics. First opened in 1961, here you’ll find furniture, lighting, and fixtures sourced from all over the world. It’s pricey but it’s hard to find such an extensive collection anywhere else.
888, Broadway, abchome.com
2. Jung Lee
Have you ever wished you could recreate the scenes in an event planners Instagram page? Now you can with the help of Jung Lee at her namesake home goods store. She’s big on mixing and matching so don’t be surprised to see high-end labels like Hermès next to acrylic drinking glasses that can be had for a few bucks.
25 West 29th St, jungleenycom
Photo by canvashomestore.com
3. Canvas Goods
A must-shop location for the last eight years this is where you’ll find affordable prices with stylish designs. If you’re looking to personalize your living space with a plethora of ceramics, furniture, and table linens – many of them handcrafted – this is the place to go.
426, Broome St, canvashomestore.com
4. Tictail Market
This Swedish start-up began life as an e-commerce site before its first brick-and-mortar store opened recently on the Lower East Side. This is where you go to find creative or unusual home goods that will immediately stand out. Check it out for clothing, accessories and home goods from emerging brands that come from all over the world.
90 Orchard St, tictail.com
Photo by designmilk.com
5. Coming Soon New York
First opened in 2013, the store had quickly gained a reputation for some of the best vintage furniture and artsy home goods in the city. If you really want to personalize your home you’re sure to find something to your taste here.
37 Orchard St, comingsoonnewyork.com
6. The Future perfect
Certainly not for those on a budget, Future Perfect is where the innovative meets the stylish. Formally located in Brooklyn, it’s new location on NoHo is a virtual mecca for anyone interested in interior design.
55 Great Jones St, thefutureperfect.com
7. Flying Tiger Copenhagen
Definitely worth a visit even if your just window shopping, this quirky Danish home goods store generated a lot of talk when it first opened last May. Especially when you consider that none of its products top $20. All set up in an Ikea like maze, here you’ll anything from candlesticks to picture frames to bathroom accessories.
920 Broadway, flyingtiger.com
8. Muji
The Japanese lifestyle brand opened its largest US store to date in 2015, making fifth avenue the largest purveyor of the Japanese retailers home goods. This enormous store sells just about everything you could want, including furniture, storage solutions, blankets towels, and bedding. Everything has a modern and minimalist feel to it which the store is famous for.
475 Fifth Ave, muji.com
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June 21, 2018
Most Common Reasons Why Sellers Reject an Offer
When hunting for a home in NYC one of the biggest moments is when you make a purchase offer on a property. Chances are, you’ll be competing with multiple buyers who are also interested in the property and if your offer is rejected outright it can be heartbreaking. Maybe they got a better offer from someone else or they found your finances to be questionable. Often times the reasons why an offer is rejected are the same. Below are five of the most common.
A smaller offer but with less or no contingencies can work out as a better deal for the seller.
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1. The sellers received a better offer
If your first thought on viewing a property was “dream home,” chances are, other buyers thought the same. Extra interest means extra offers, so there’s a good chance of being outbid if your offer is too low. The offering price isn’t the only thing seller’s look at. They may have had an offer similar in price to yours but with better terms. For instance, they have mortgage pre-approval, are offering all cash or have no contingencies, to name just a few. Make sure you do enough research on the property and discuss it with your buyer’s agent to ensure you put forward the strongest offer possible.
2. The sellers have unrealistic expectations
It often goes this way. The sellers launch their listing with a great marketing campaign and at the right time of year. Almost immediately they are flooded with interested buyers who have been waiting for a home just like theirs to hit the market. Most of the offers a property will receive happen within the first few days or weeks of the listing going live.
Some sellers mistakenly conclude that all these early offers must mean they have underpriced the property. The dollar signs appear in their eyes and they start to think they can make more by waiting. Unfortunately, there is little you can do about this except wait for them to realize their mistake or another listing comes along.
3. You don’t have your finances in order
Have you received pre-approval for a mortgage? Or, do you have enough money in the bank for an all-cash purchase? If your answer was no to both questions you’ve given the seller good reasons to reject your offer. Remember, being pre-qualified is not the same as being pre-approved for a mortgage. The latter makes for a stronger offer as it assures the seller you’ve been fully vetted by a financial institution for the necessary funding of the purchase.
Try to see it from the seller’s perspective. They could have two great offers to decide between. One for the asking price but with no pre-approval. The other, slightly less but with pre-approval. Chances are they’ll go with the second offer as it’s far more of a sure thing.
4. The time frame doesn’t suit the seller
You could have everything else in your favor but if the timing isn’t desirable for the seller your offer stands a good chance of being rejected. Before making an offer, you should find out what type of closing date the seller can work with. If they’re in need of a quick closing a 60-day closing date may not work. Similarly, if you make an offer with a very long closing date that drags out the escrow for weeks this can put the seller off. A good buyer’s agent will know what questions and answers to seek before making an offer. If the timing isn’t right this can sink a deal.
5. You requested too many contingencies
It’s never just about the price when it comes to making an offer on a home. Even if your offer is the highest of the competition but comes with a lot of contingencies don’t be surprised if it gets rejected. There’s nothing wrong with asking that the seller fix X or Y but just know, too many requests damages the chances your offer will be accepted. A smaller offer but with less or no contingencies can work out as a better deal for the seller. If you absolutely must have some contingencies try to keep them reasonable and consider the offer price you’ll be making.
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Small Co-op and Condo Buildings: The Advantages & Disadvantages
For many outsiders, they view New York City as filled with towering skyscrapers. While the city’s skyline is littered with these tall buildings, there are many smaller co-op or condo building options. There are advantages and disadvantages, both financial and personal to consider, however.
While you may have an initial preference, it is good to decipher between the pros and cons for you to make a fully informed decision. A small building affords you a modicum of privacy. There are also those that appreciate the character that comes from a small building.
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Advantages
You could very well find it easier and more profitable to sell your unit in a small building. We have seen an attraction for many buyers to boutique buildings, creating a scarcity value. Your apartment also faces less competition from sellers than it would in a larger building. This adds up to a higher price and faster sale, all else equal. Of course, you need to look out for overpaying, mainly since building comps could be stale.
You may also experience lower monthly maintenance if your small building is a self-managed co-op or condo in which there is not a management company and hence lower expenses.
A small building affords you a modicum of privacy. There are also those that appreciate the character that comes from a small building.
A small building may also mean fewer restrictions, including house rules that govern everyday behavior. In the event of a rule change or a major building renovation, this likely will get done quicker in a small building due to the lack of bureaucracy. If you appreciate this type of living, which extends to seeing your neighbors more regularly, a small building will appeal to you. A bigger building likely has more significant financial resources and oversight, but a smaller one typically offers more flexibility in your day-to-day living.
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Disadvantages
A bank may approve your mortgage quicker in a larger, well-established building that it knows since your lender approves both you and the building.
In a smaller building, you may face a special assessment should the building need a major repair. A larger building may have stronger finances and reserves. But, if that is not the case, the assessment is spread over a larger number of owners, easing your burden, even if the total cost is higher.
The maintenance staff is typically larger, and the building could have its own, dedicated superintendent. This should translate into having any issues repaired quickly.
It is not unusual for a bigger building to have more amenities. If you prefer the knowledge of knowing there is a 24/7 doorman, a large building is more likely to have one. Other facilities could include a pool, gym, and many other more luxurious elements. The cost for each tenant is typically not markedly higher.
Final choice
While financial considerations are necessary, the decision often comes done to a personal one. Are you the type of person that enjoys interacting with your neighbors? Or, would you rather not bother?
A bigger building likely has more significant financial resources and oversight, but a smaller one typically offers more flexibility in your day-to-day living. You may also want a higher voice in your building’s management, which comes in a small building. If you prefer to leave the management decisions to others, a larger structure is more suitable.
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Supporting Our Community
At Elika Real Estate we believe in supporting people by helping them buy real estate to transition to the next phase in their lives. What you might not know, however, is that we also believe in and support our community in other ways as well! We’d like to take this opportunity to recognize some of the great work that local organizations are doing and the positive impact they’re making on the community! With everything going on in our busy lives, it’s easy to forget about great organizations that are working hard every day to improve the communities we know and love. Take the time to show your support.
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American Heart Association
The American Heart Association is the oldest and largest organization actively fighting against stroke and heart disease with over 22.5 million volunteers and advocates. The AHA works to save lives by helping fund heart disease and stroke-related research, educating the public on proper healthcare, performing services in the community, fundraising for those in need, and much more.
More specifically, they’re working toward making more public areas smoke-free to discourage unhealthy habits, and improving nutrition and exercise programs within school systems. They’re also the largest provider of CPR education and training in the entire nation!
Habitat for Humanity
In real estate, we’re in the business of helping people transition to the next phase of their life by assisting them in finding a new home and part with their previous one. Often, that’s precisely what Habitat For Humanity does; they work with people all over the world to improve the place they call home. That typically means working alongside Habitat For Humanity volunteers to help build their own home. They even do things like provide financial education around the home-ownership process and help with disaster response!
Homes For The Homeless
Another organization we’d like to recognize that also deals with providing shelter to those in need is Homes For The Homeless. Homes For The Homeless works toward preventing family homelessness by providing immediate shelter all across NYC. However, they do much more than just that; they understand that family homelessness is the result of a poverty issue, so they work with other organizations in the community to help these people get back on their feet.
Showing Support
With everything going on in our busy lives, it’s easy to forget about great organizations like these that are working hard every day to improve the communities we know and love. So take the time to show your support to organizations such as these to help invest in the betterment of our community for years to come!
1. Make a Donation
Perhaps the most natural thing you can do to show your support is donating. No matter how big or small of a donation you make, it’s still helping take a step in the right direction for a great cause – and that’s something to be proud of! In fact, you should check out Amazon Smile. They automatically donate a certain percentage of the price of your eligible purchases to a charitable organization of your choosing.
2. Volunteer
If you don’t want to give money, you can always give your time! Most charitable organizations regularly have open volunteer opportunities. After all, many of this organizations survive off of volunteers and donations to survive and drive their cause forward; so you’re playing a crucial role just by giving a few hours of your time.
3. Host a Fundraiser
If you want to go above and beyond, you might want to think about recruiting some help to make an even more significant stride for your cause. If that sounds like you, consider creating a fundraiser event of your own! The event could be as simple as a bottle and can drive or car wash. Or if you want to get a little more involved with it, and also have some more fun, you could coordinate with a local golf club to host a charity golf tournament!
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June 20, 2018
Getting Your Rental Security Deposit Back
For NYC renters, the process of finding an apartment and signing the lease is troublesome enough as it is. Adding to that, you’ll also be asked to pay the first and last month’s rent and a security deposit. So long though as you leave your apartment in the same condition, you found it you should have little trouble getting your security deposit back. However, sometimes it’s not that easy, and you may have a struggle on your hands to get your money back. Here’s what you need to know about security deposits in NYC and how you can make it back.
Why would my security deposit be withheld?
The only grounds a landlord has for withholding all or part of your security deposit is:
For the cost of wear and tear to the apartment
Payment for unpaid rent
If you need to break your lease, it’s unlikely that you’ll get your deposit back. The reason being that it’s likely there will be a gap between you and the new tenant. The exception would be if you sublease your apartment and pass on the deposit cost to them. Also, if the landlord finds another tenant immediately, you will still be owed your rent. Unless if the lease stipulates that any break in the lease results in loss of the deposit.
Who owns the deposit?
On signing the lease and handing over your deposit, it is supposed to be held in trust by the landlord. It should not be commingled with the landlord’s money, and the name and address of the bank in which it is kept should be included in the lease, the account number and amount plus interest. The bank must also be located in NY State.
If you are renting in a building with six or more units your deposit must be placed in an interest-bearing account. The only catch is that the landlord is entitled to keep one percent of the deposit amount each year as an administrative fee. You have three options in how you handle this interest. You can withdraw it, use it to pay part of the rent or leave it in the deposit account.
How can I ensure I get my deposit back?
There is no full-proof way to ensure you get your deposit back. But you can better protect yourself by doing the following:
Carefully read your lease – before signing your lease read it correctly to make sure you understand what your freedoms are as a renter. If you wish to make updates like painting or putting nails in the walls, make sure the lease allows it. Any violations of the lease will be held as grounds for withholding the deposit.
Take photos – on both your first and last day do a walkthrough of the apartment, preferably with your landlord, and makes notes of the condition. Take pictures as proof that you found the place in a certain way.
What if my landlord won’t return my deposit?
A landlord is allowed to hold the deposit for a “reasonable” amount of time. This usually means 30 days or can be longer depending on what the lease states. If your landlord refuses or doesn’t reply write a letter demanding it back. Have it sent in a way that guarantees receipt (such as FedEx or certified mail) and threatens to sue or file a complaint with the NYS Attorney General’s Office.
If the amount in dispute is under $5,000, a small claims court is your best choice. If over $5,000, you should hire a lawyer. Legally speaking, the onus is on the landlord to provide proof of damages that warrant withholding the deposit. As always, consult a lawyer if you are unsure of your rights.
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