Off-Market Deals In NYC?

Question

Question For The NYC BP Fam:

I have solid direct marketing skills.

I've written sales letters and emails that have directly generated millions of dollars in sales...

I don't mentioned any of this to brag...but rather to ask YOU:

Can I use these skills to find off-market deals in NYC?

I just moved here (Manhattan), so logically, I'd like to use my skills to find off-market deals...

And if I were in almost any other market...I'd go after single family houses (wholesale, wholetail, take-over sub2, seller finance, etc -- I used to go on appointments with a "We Buy Houses" Franchisee back in the day)...

But in NYC... I honestly have no idea what I'm looking at.

Like... WTF is a co-op?

Should I be looking into smaller multifamily units?

Condos?

It seems the NYC real estate landscape is heavily regulated so flipping and assigning contracts (especially in such a competitive and well-priced market) would be an uphill battle...(although I honestly have no clue)...

...but maybe...just maybe... there are off-market deals to be had...and I just need a little more direction and clarity on what I'm looking for...

Your thoughts?

Wesley Sherow · Answer

@Ryan Davis in my limited experience New York City is a big version of any market you're already familiar with. I mainly invest in upstate NY where properties of 2-4 units go for about $150-400k, whereas in NYC you're playing in the ballpark of $1-3M.

The formula however here remains the same. Purchase at market lows, value adds, inherit problems that you know how to solve in order to get a discount, etc. Contracting is more expensive, and codes/approvals is more complicated, but it's still manageable.

Ironically, Albany, NY where most of my investments are is more stringent than NYC on their approvals process. Obviously given my experience i'm biased, but another aspect I don't like about NYC is the ROI is often very depressed. 4-5% is a good return for your average turn key investment locally, wherein most other places in the US will exceed a minimum of 8%.

Co-ops are a lot like condos, with some notable exceptions. You'll need to know and understand the contracts/agreements for what you CAN and CANNOT do on those investments before you buy. The thing that blows me away is that I went into contract recently on a 84 unit multifamily complex, and my down payment was about the same as a 10 unit in Manhattan, or a 20 unit just outside of Manhattan.

Another thing to keep in mind is that the market in NYC is SERIOUSLY competitive. There are hundreds, thousands of firms cold calling for off-market deals. It take serious effort to squeeze this lemon.

Hope that helps, lmk if you have any more specific questions!

Lauren C. · Answer

@Ryan DavisI've lived here for several years in co-op apartment. We own shares in a corporation that owns the building and the land underneath it. The "purpose" of the co-op is to vet who lives in the building and establish what is/is not allowed. Co-op boards are made up of shareholders (that what the owners are referred to), and they make sure your financials are in order and you're not a shithead - so you're unlikely to to be foreclosed upon - and thus the maintenance is paid and you're contributing to the building.

It's a really wonderful living arrangement for your primary residence or pied a terre in NYC. It is traded like a condo but they're often less expensive because they're in the non-luxury space (<$5M).

The actual point is to deter anyone from becoming a landlord. In my building, we do allow owners to sublet for a total of 2 years but it's really to accommodate life circumstances.

So, if you see that something is a co-op, it's not in play. If you're doing NYC, maybe look in outer Brooklyn or parts of the Bronx. Look for multifamily, because condos, like co-ops, usually impose a "flip tax" (not really a tax per se; it goes to the building reserves). One good thing is that property taxes are low. Jersey City used to be good but it's too expensive now IMO. NYC is a developer's territory, it seems.

Andrew Jennings Freerks · Answer

@Ryan Davis Great question!  I have worked in NYC Real Estate for 10+ years, and can attest that it is heavily relationship based.  I can count on 1 hand how many times I have received a listing from a mailer.  That being said, you are probably better at it then me and it can be very lucrative, once you find that deal.  I wish you the best of luck and let me know if you have any follow up questions.

Ryan Davis · Answer

@Lauren C. thanks for the super-candid response.

this was the most helpful.

i just needed an idea: outer-borough multifamily. preciate it!

Ryan Davis · Answer

@Mohammed Rahmanthanks for replying.

my strategy would be ANYTHING that's valuable... an off-market smoking hot deal -- whether that's wholesale, sub2, seller fi, looking for development....i'll do whatever needs to be done... I'm just not sure what I'm looking for yet

Ryan Davis · Answer

@Andrew Jennings Freerksthank you for chiming in!

crazy you don't get a ton of direct mail...love to hear it!

Ryan Davis · Answer

@wesley

'Preciate you taking the time to post this well-thought response. Thank you!

Mohammed Rahman · Answer

Hey @Ryan Davis - welcome to NYC!

As some of the other users have mentioned, real estate in NYC isn't much different than real estate anywhere else, just more expensive. A co-op is an apartment in a building that a person inhabits through purchasing shares in the corporation (which is the building itself). The shares give you the right to live in the apartment, vs. a condo where you own the actual apartment itself.

If you're wanting to wholesale, then co-ops and condos aren't the best places to look.

What's your strategy? Are you primarily wanting to wholesale? If so cc'd are some other wholesalers here that can chime in.

cc @Oladimeji Sonibare @Jean Tranquille

Arya Zand · Answer

HI Ryan, NYC Real Estate is heavily reliant on trust and reputation. It may take you months to develop a relationship with an off-market owner/seller to have an exclusive on representing it or buying it.

I have worked at a private equity CRE firm in NYC for 10 years , and just recently started sourcing & syndicating deals in NYC-metro.

Happy to answer any questions you may have. The key is persistence, integrity, and transparency.

Off-Market Deals In NYC?

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