All Forum Posts by: Llewelyn A.

@Michelle Backer are you investing IN Brooklyn or are you not Investing IN Brooklyn but just live here?

I have 10 Investment Properties and they all revolve around Prospect Park. It so happens that these properties and Brooklyn in General is doing FANTASTIC, especially compared to Manhattan.

Here is a really good Article that JUST came out on Brownstoner.com :

https://www.brownstoner.com/re...

Photo by Susan De Vries

• Real Estate Market

All the things that make Brooklyn Brooklyn have been assets in the pandemic — abundant parks and outdoor space, low-rise neighborhoods, houses and small buildings in lieu of apartment towers, stoops, knowing your neighbors, mom and pop businesses that cater to locals — even streets of hopping outdoor eateries that can at times feel like a Parisian boulevard. (It’s not exactly Trump’s “anarchist” city.)

That includes real estate too. Buyers have been flocking here from Manhattan, as well as picking up and moving within the borough, brokers report. Pending contracts surged in August after a 30 percent drop in deals during the pandemic, according to numbers from StreetEasy.

“Anything with outdoor space is flying, and renovated townhouses that are priced well are going into bidding wars,” Keller Williams NYC agent Melissa Leifer told The New York Times.

Case in point: A single-family townhouse in Clinton Hill at 445 Washington Avenue in move-in condition with multiple outdoor spaces, including an extra-deep backyard, closed in a head-spinning 32 days from the time it was listed, agent Eileen Richter of Compass told Brownstoner.

Sunbathers in Domino Park in Williamsburg in June. Photo by Cate Corcoran

“The rumors of the New York City real estate market’s demise have been greatly exaggerated, especially when it comes to the Brooklyn townhouse sector,” said Lindsay Barton Barrett, an agent with Douglas Elliman, in her September newsletter to clients. “Any New Yorker knows that walking down the street, seeing the bustling outdoor dining scene, shops open and active, this is the city that we know and love, in a slightly new incarnation.” In July and August, signed contracts for single-family homes in Brooklyn jumped 130 percent and 180 percent, respectively, over the year prior, according to Douglas Elliman.

Bucking trends, Brooklyn saw a major increase in contract signings for all types of properties in August, StreetEasy shows. In that month, 735 homes in Brooklyn went into contract, a 38.7 percent increase from August 2019. This, despite prices staying flat compared to last year, at $956,900.

The only time the number of pending sales were higher was in March 2019, when 748 homes entered contract.

Photo by Susan De Vries

Manhattan and Queens, according to the report, are moving in the opposite direction. The former saw the number of contracts fall by six percent and the latter by 4.3 percent.

Contracts were signed across multiple “price tiers,” according to StreetEasy, concentrated on the more affordable end of the market. Sales in a tier with a median price of $253,000 rose by 100 percent from the previous year, while homes in a tier with a median price of $999,614 gained 65 percent from the previous year. Pending sales fell slightly, by 0.7 percent, for the “luxury tier,” with a median price of $1.6 million.

Home sales showed strength in relatively more affordable areas of Brooklyn. Sales increased in Bay Ridge, Flatbush, Downtown Brooklyn and neighborhoods around Prospect Park, including Park Slope, Prospect Heights, Prospect-Lefferts Gardens, Prospect Park South and Windsor Terrace, according to the report.

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YES... to answer the OP.... I don't believe that my particular niche Market in Brooklyn will take a hit. In fact, we will do the opposite and see quite a bit of appreciation!

@Billy Archer

If you did an inspection report on your Investment, you can easily find what is the recommended replacement for major equipment and their costs.

I actually try to make a 10 year plan in the way that @Jeff Copeland recommended rather than the full life expectancy. You just never know when something happens that was completely unexpected.

As an example, you can accumulate money for the replacement of your Car tires. But what happens if you wind up with a deep nail in it and it needs to be replaced?

My time horizon is always adding up all the Cap Ex in 10 years and dividing it by 10. Makes the math simple as well.

For Maintenance, that should be determined by the amount of work needed and that depends on whether or not the Investment is high maintenance or not.

Older homes definitely are high maintenance. But brand new homes, hopefully not! I would look at the history of repairs per month and then budget a monthly maintenance a bit over the average monthly maintenance for the past 2 years or so.

While everything is all a guess, better to guess with thoughtful analytics than just making things up.

@Chad Doerr

Hi Chad,

Just trying to get a better understanding of what you are doing.

You mentioned that you will carry 100% of the financing but you did not state whether or not you are going to be the only purchaser. Will your Cousin be an owner who is on the Deed as well?

This becomes relevant mainly because when you flip, a 1099-S should be generated that states the Sale Price and who is the 1099-S issued. If you are the only person that is on the 1099-S, then you are going to be responsible for the entire capital gains, which seems to be what you have stated.

The Capital Gains will be calculated as Sale Price minus Cost Basis (which will probably be Purchase Price plus all expenses related to the purchase PLUS Renovation of the property).

If your Cousin isn't part of the Ownership and is NOT on the Deed and therefore won't be named on the 1099-S, why not negotiate a fee for his services, even if you don't know how much he should be paid until you know the Sale Price? That way you can pay him from the Sales Proceeds directly at the closing which will then reduce the Sales Proceeds and reduce the Capital Gains.

Doing it this way will make the Capital Gains work out. Your Cousin will pay Income Tax on his payment to him by you and you will pay a reduced Capital Gains because the Sales Proceeds is reduced by the Payment to your Cousin.

There are a number of great CPAs on here that might have better input that I, however. Or you can consult with your own CPA to determine the best Tax Strategy.

For instance, if you can get your Cousin on the Deed, his negotiated payment can be taxed at a lower rate versus normal Income Tax.

@Mitch Messer

Interestingly, here is one of the Slides that was used in the Yahoo Video with Miller Samuel:

I think many Investors or readers here don't really understand that Manhattan and the outer boroughs of NYC are two different animals.

This slides tells a lot about those differences.

Here in Brooklyn, we are doing GREAT as far as Sales of Apts and Single Family homes. Manhattan is down 50%+ for Apt Sales but Brooklyn is UP over 20%+. Single Family Homes are even more of a divergence.

It makes a lot of sense because when your 2 Bedroom Condo in Tribeca, Manhattan is worth $10 Million on Average, you can sell it and buy an average $2 Million Home in Brooklyn and then keep $8 million!

I have mentioned this when the Pandemic started in April as it seems very predictable to me.

Maybe now I will wait to see if I can buy a Manhattan Investment as the Pandemic unwinds!

@John Collins

I have 10 small multi-family properties in Brooklyn, approximately 25 apts. I had been given notice for 7 of them through out the pandemic. 6 of the I had re-rented with one left.

My rent roll is slightly HIGHER as people flee Manhattan. Some have come to Brooklyn. In fact, Brooklyn is a HOT market right now if I were to sell my apts.

I don't think this should be a surprise unless people were biased against NYC in general.

I'm doing quite well, especially since Interest rates have fallen and my rent rolls are approximately the same or slightly higher.

@Michelle Backer

I do have a relative that lives in Briarwood, Queens!

I will mention that this same relative owned a 2 bedroom Condo in Carol Gardens just a few blocks away from the Trader Joe's on Atlantic Ave and Court Street.

They sold that Condo around 2009 and bought their home in Briarwood for approximately the same price (around $800k).

HOWEVER, the Condo is probably worth around $1.3 Million or so and their Briarwood Home may not be worth more than $900k to $1 Million.

The appreciation factor is much different.

That being said, they moved mainly because they expanded their family (2 kids) and wanted a bigger place than a 2 Bedroom Condo.

You can't put a price on having a great space for your family!

I offered to manage their Condo as a rental but they couldn't swing owing both properties.

The point here is that there are other factors to take into account when it comes to selecting a neighborhood.

My relatives didn't do well in comparison to Carol Gardens but having some decent appreciation shouldn't be discounted.

The way I like to put it is that my Windsor Terrace 2 Family building I bought in the year 2000 for $140k is now worth around $1.2 Million today.

That's fantastic! BUT.... if I had bought a Williamsburg building in the year 2000 for the $140k.... well... It may be worth over $2 Million now! But I still don't have any regrets.

Something to think about.

@Scott K.

Hi Scott, you can read my Bio here on BP. However, I have been investing in Brooklyn, NYC for the past 23 years and continue to do so now.

I currently manage a Portfolio of 10 Brooklyn Properties owned by my Partners and I.

I initially started out by house hacking before BP was even a Blog and the term House Hacking wasn't even used yet!

Either case, you can go through a lot of my posts as most of them are about my Investments and my philosophy of investing in NYC.

The one caveat I have is that the laws and politics have become extreme anti-Landlord.

Right now, I am putting new acquisitions on hold until the uncertainty become less foggy and I can see if we will continue to see higher Rent and Value appreciation.

@Michelle Backer

I am a Real Estate Investor with 2 decades of experience buying only in Brooklyn and have a Portfolio of 10 Brooklyn Properties in Ditmas Park, Windsor Terrace, Clinton Hill and Bed-Stuy.

As of today, I have NOT had issues with tenants unable to pay rent except for some small situations such as a Canadian tenant that wound up being stuck across the border to renew her Visa as the Border was shut down as well.

 Obviously, lower income neighborhoods will have a much different experience, which is why I buy only in A to B neighborhoods in Brooklyn.

I would like to suggest you go to Brooklyn Bridge Park on a nice evening, if you have not already done so.

It really is AMAZING the amount of wonderful people enjoying the amenities in Brooklyn. The exodus as has been proposed doesn't seem to be impacting my properties and I have been re-renting several apts between 3 months ago and Now.

That being said, the notice to leave for 3 of my apts are due to moving out of Brooklyn from those that came here out of State. But I don't blame them at all considering that they want to be closer to family right now.

So while I have to do more work to re-rent apts, I'm actually getting higher rents for my specific buildings.

I believe that's the case because High Rise Elevator Apt Buildings are now seen as too dense during a Pandemic. When you step into an Elevator you cannot social distance. Imagine if someone sneezes in an Elevator with you?

I had just listed one of my apts in Clinton hill early this morning for a 1 Bedroom, Balcony Apt in a Brownstone on the Parlor floor that was previously rented for $2,400 for $2,500.

I just got 5 inquiries from tenants that already mentioned to me that they have good qualifications (ie... one is a Psychologist making $150k with an 800+ FICO... etc). I have set up 3 appointments and it has not even been 24 hours yet.

I think if you are Investing in the right areas AND are priced right, it's difficult to go wrong.

I have survived at least 3 Major Crisis in NYC. Those were the Dot Com bust on Wall Street, 9/11 and the Financial Crisis.

I guess I'm used to it, but the Pandemic is just another Crisis to me in which I will be just fine! 

@Sheldon Kohl

Yes, there are very few banks willing to give a HELOC on a 4 Family Residential Investment Property.

HOWEVER, I did find one: 

https://www.eastwestbank.com/?utm_source=Google&utm_campaign=Yext&utm_source=Google&utm_campaign=Yext

Note that this is not a Traditional HELOC but an Investment HELOC. Therefore, East West Bank WON'T pay for closing costs. That will be up to you.

If you don't mind, after contacting EWB, post results here.

Most of my relatives moved away from NYC since the 9/11 Terrorist event and the Great Financial Crisis in 2008.

Guess what happened to them?

They got priced out of the NYC Market.

One relative owned a cute building right next to mine. I offered to manage it as a rental so she could keep it back in 2003.

NOPE.... she sold it for $230k.

Today, it's worth 1.2 Million.

Not only is she priced out, but her entire generation after her is priced out.

Leaving NYC can be a hard and permanent lesson to learn, unfortunately.

WHOLE Families and their Generations have learned that the hard way.