All Forum Posts by: Jason Lee

Oh I missed the other 4% for closing costs. That would typically include the transfer taxes.

FYI it's customary for the seller to pay the transfer taxes EXCEPT from a sponsor, in which case it's customary for the buyer to pay. So you often get hit with the taxes going in and out at a new development. In slow markets it's negotiable, so it's possible you might have paid them going in.

$1800 a sq ft isn't really all that high. I've seen parking spaces listed for 1M, maid's quarters at luxury buildings sell for 3-4M... The surprising thing to me about this apartment isn't the price, it's that it looks like he somehow got around following ADA dimensions for the bathroom. Also, this doesn't technically count as "lux." The luxury market in Manhattan is sales above 4M. This sale falls well below the average and median sales price here.

You're missing NYS and NYC transfer taxes which will come out to about 11-12k. Hopefully you didn't have to pay them if you purchased from the sponsor. Maybe another 3-4k for your attorney and condo fees.

620k sounds like the right asking price, maybe a little optimistic for a final sales price considering active comps and all the available inventory.

This is a co-op and so just because a buyer can afford the apartment doesn't mean they can get board approval. You have to know how to vet buyers and be comfortable parsing through assets and liabilities, determining debt-to-income ratios, etc. You yourself will need to be comfortable reviewing buyers' tax returns, bank statements, etc. There are also nuances to how to successfully frame applicants who are atypical but still qualified.... self employed, getting gifting, co-purchasing, etc. Putting together a board package isn't rocket science but it doesn't make sense to most who are not familiar with them. I'm amazed at how many errors I see coming from even "experienced" buyer's agents.

Then there's the practical side of how you will be able to show the apartment to potential buyers, hold open houses, prepare the unit for sale, etc. Yes, you can sell and even do a closing from out of the country (via power of attorney) but you won't actually be able to sell it unless you have boots on the ground. Oh and once you're licensed, you can't have a non-licensee hold open houses for you as that would then be the unlicensed practice of real estate. As a real estate licensee you're held to a higher standard.

The state exam must be done in person in NY.

You're assuming incorrectly that you can get licensed and save yourself 6%. The market in Manhattan has softened and it's gotten a lot harder to get deals done. Prices have dropped in many segments of the market and inventory has reached the highest level in several years. The majority of buyers are now represented by buyer's agents (whether they have consciously decided to work with one, or have been unknowingly paired with one through the many online portals). Those buyer agents expect a commission split or they will not show your apartment. Then there's your sponsoring broker (you need to be sponsored by one) who will take a cut as well. Then there are the costs to being sponsored: annual local board fee (REBNY in Manhattan), e & o insurance, tech fee, possible desk fee, etc.

If you really want to be an agent and have been thinking of switching careers or trying it out part-time then by all means get licensed, but this really doesn't sound like the right first deal. Is it possible? Yes. Is it more likely you'll net less than if you work with an expert? Most likely.

I disagree. If you’re just looking at sales prices then yes, you get more bang for your buck at co-ops but the barrier to entry is typically much higher with much higher minimum down payments, post close liquidity requirements, and low debt-to-income caps. It’s often much easier to buy a higher priced condo than it is to buy a lower priced co-op.

As for finding co-ops that allow investors and are warrantable, you just need to know where to look.

I really like Elmhurst and Forest Hills. Very different vibes but both have great transportation and amenities. I would say Elmhurst has the edge for diversity of dining options and I personally prefer a bit more city energy. These areas are close enough to each other that growth/appreciation are going to be very similar, if not identical. It's kind of like asking if the Upper West Side will appreciate more than the Upper East.

If you haven't thought about it, 3 bed is considered "family-size" and so one of the biggest factors on value and appreciation is going to be school zoning. In Forest Hills you can see that 2-3 bed apartments that are zoned for the higher scoring elementary schools sell at a premium compared to those zoned for the lower scoring schools. If you're planning to home school, go private, or don't have/or plan to have kids, I would still consider the zone because it will affect resale and the rent (if you can and decide to rent it out).

Does it have to be one or the other? It depends on your debt-to-income but you could purchase a primary residence in NYC and then also investment properties in areas that have better cash flow. Presumably your 120k will continue to grow and you can pick up properties even after you purchase a primary. You could also take out a Heloc on your primary and use that for investing.

Which neighborhoods do you want to live? If it's a frothy area where prices have gone bonkers than it might make more sense to rent, but if you're ok in a secondary or tertiary area where prices might not have peaked then purchasing could be a good idea.

Many of my landlord clients became landlords by accident. Most purchased as primary or pied-a-terre and then at some point outgrew or had to move and then decided to rent out their apartments. The good thing about condo and co-op rentals is you won't need property management, even if you move out of state or around the world. They're pretty easy.

@Anthony Rosa There are many condos in NYC that don't allow renting? I don't know of any. As for co-ops, there are some that allow investors and renting from day one, and some that allow open subletting after a certain period of ownership (usually after 1-2 years). 

I would think the seller would try to do a 1031 exchange which would defer any capital gains but you never know. With the new rent laws this building has become much less valuable and the buyer pool has shrunken pretty dramatically. Seller could be more negotiable and open.

If you didn't do a walk through (and note any existing damage) with the tenant when the lease started then it's going to be difficult to prove they caused the damage. Ask them about the crack. If they tell you it was existing then I would probably go ahead and eat the cost of the repair since you yourself aren't even sure. If I recall correctly, this is at a relatively high price point. If this sours them on extending the lease then even just a few days of vacancy could cost you significantly more than the cost of replacing the sink.

Going forward, do a walk through with all tenants when you hand over the keys. You should make a list of any existing damage and have the tenant sign the list and give them a copy. That way you can refer back to it when you do a walk through when they vacate.

The downside to East Elmhurst and northern Jackson Heights is lack of transportation. This puts a cap on appreciation and rents. I've sold listings there recently and the buyers aren't hipsters priced out of other nabes (which is what you want to see if you're looking for appreciation). It's still a lot of blue collar folks who commute by car. East Elmhurst in particular is a bedroom community with few amenities.

Yes, prices have shot up over the past few years but that's slowed down dramatically. There are a bunch of reasons: new tax laws, more inventory as prices have risen, prices just aren't affordable, etc. Here's recent sales data for 1-3 family homes in western Queens. The median sales price increased 2.7% year over year in Q2 2019. The average price was up 1.1%. That's less than inflation? The number of sales is down -16.2%. That's the 3rd strait year that the number of sales is down so there are fewer buyers now. If we look back a year to Q2 2018 the median sales price was up 14.7% year over year and the average was up 14.4%. Q2 2017 median was up 16.1% and the average was up 17%. So we can see appreciation has ground to a halt. The good news is it sounds like your property should have appreciated pretty nicely over the short period you've owned it.