All Forum Posts by: Jason Lee

Your question can't be answered properly (except by luck) unless we know where you're looking to buy. If it's in NYC then it depends where in NYC. In Manhattan and prime Brooklyn and Queens the seller customarily pays both the seller's and buyer's agents and there is customarily no buyer's broker's agreement. As you get further out into the boroughs that starts to change.

Without having more details I would probably lean towards the more expensive apartment with the lower maintenance. Maintenance only goes up. You can roughly expect it to go up similarly to inflation but I've seen plenty of buildings where there have been huge increases in certain years. While you're calculating the monthly costs you might want to also figure out the tax consequences for each. Maintenance is typically around 50% tax deductible while mortgages will be mostly tax deductible interest payments in the earlier years, so my guess is there's more tax benefit to having more mortgage over higher maintenance. But maybe AMT and the SALT cap make it moot... consult your accountant. Buyers seem to have an aversion to high maintenance. It might give an impression that there's something wrong with the building finances or that the building isn't run efficiently. Regardless you can see the drag on prices now and so you can expect that when you try to sell in the future.

If your HOA and cc's are under $400 then you must be getting a tax abatement? The thing to look out for there is the cash flow can actually get worse over time as you get closer to the unabated amount. While your rent will go up over time, it won't jump up in sync with the 20% tax increases. It can also have a drag on appreciation as the cost to own goes up. That's why you often see a flood of inventory in recent new devs as the abatement comes to an end.

I have a few investor clients that only buy A and B class condos in NYC. They buy all-cash. Some buy pretty regularly and mainly B class with low taxes and common charge, with boards that have a history of strong financial management, and in areas that have consistent and strong rental demand. They don't care that they could get much better cash flow somewhere else. They get easy, A class tenants, do almost no management, the properties appreciate nicely, and the rents go up over time.

You probably don't have many options here. You're not going to be able to walk away unscathed and most new dev purchase agreements prohibit you from selling within a year of closing. Your best bet sounds like it would be to rent it out for a year at a loss and then try to sell. Hopefully the building is sold out by then and you got the sponsor to pay the transfer taxes.

Median sales prices in Q2 were higher than pre-covid. We're back to around early 2019 prices. The sales market is hot. Another week of over 300 contracts signed in Manhattan and over 30 contracts signed above 4M. That's something like a 22 week streak. The rental market is recovering too. It's improving week by week. Anecdotally, none of my landlords have been negotiable on rent since the beginning of this year and most have had no vacancy on turnover. That's with rents still down about 10-15%. But again, the market seems like it's improving each week. 

Not sure what condos you're looking at but the premium for condos is no where near 2-3X. In most cases it's probably around 40-50% if you adjust for size and condition. Since co-ops have debt-to-income limits and post close liquidity requirements it's often easier to buy a much more expensive condo than it is a cheaper co-op. So co-ops might seem like a better value but the barrier to entry is much higher. On top of the financial barrier, the potential buyer pool for co-ops is smaller because most don't allow investors, non-US persons, LLCs, trusts, etc. 

Hi Maria, A little more info would be helpful. Are you planning to live in the home? If so, is commute time a consideration? Are you open to renovations? If so, how extensive? If it's not going to be a primary residence do you plan to self manage? I'd start there. Your answers will help focus your search.

@Die FU you can find condos that break even at about 40% down but that doesn't take into account any vacancy or repairs. You'd want to put more down and then at that point my clients prefer to do all cash. It all depends on your budget and comfort level.

The market is very active. We have a record number of contract signed each week in Manhattan going back a few months now (at least 300 each week). Historically there would be a seasonal slow down now but there were 353 contracts signed last week, so no signs of slow down. That's a record number of activity. Pending sales continues to rise, meanwhile supply is down. A lot of people are moving back into the city now. If it's between now (a seller's market) and a year or two from now, then I would get your apartment listed asap. We have no idea what the market will look like in a year or two.

Are you sure you're looking at condos, and not co-ops? $1500 HOA on a $300K purchase price sounds like a co-op maintenance fee which includes the co-ops underlying mortgage interest and real estate taxes. Many aggregator sites lump the two forms of ownership together since co-ops aren't that common throughout the US. Keep in mind most co-ops don't allow investors to begin with. If these are condos you're looking at then the HOA is ridiculously high and I'd be concerned with how the HOA is run. In NYC you'll find a $1500 HOA on a $1.5M two bedroom condo. You'll rarely find a sub $500K condo in Manhattan but you can find one sub $600K with an HOA around $350 and you won't need a property manager.

If you have a house or multi-family there's no HOA fee but you still have expenses that will never go away (lawn care, snow removal, trash, utilities for common areas, super/property management, and capex).