Friday, January 12, 2018

Second Avenue subway pays dividends for Yorkville landlords, defying Manhattan rent declines | Crain's New York Business

Hard not to say "I told you so" about this.  Unfortunately by the time it gets to the press, the rents are already rising. However I still think that sales in the area are per square foot a bargain over other parts of Manhattan!

Second Avenue subway pays dividends for Yorkville landlords, defying Manhattan rent declines | Crain's New York Business:

'via Blog this'

Thursday, August 31, 2017

Rents Flat since 2016, Residential Sales Up but Lower Price Point, Office Rents Up

Some real estate agents have acknowledged there has been a slow down in rents in the city - a blurb by the New York City Economic Development  Corp (NYCEDC) quoted local companies showing rents staying practically flat against June 2016.

Landlords should adjust their expectations.  Don't look at the highest rents advertised and price your unit there just because... there are fewer people looking around and they start at the bottom of the scale, not the top.  

In addition, don't over renovate (ie, choose all the most expensive materials), but do fit in amenities that are important for living (so, marble - out; dishwasher - in). 

When I started in the business in 2005, it was more common for Manhattan units not to have any dishwashers.  They were the domain of doorman "luxury" buildings.  But frankly, more and more new arrivals in New York expect dishwashers - or set their sights on one.  More than one renter has said "I can't live without" or, more telling: "I know I can't have everything I want, but dishwasher is one thing I am willing to pay for."

As I deal in the older parts of the city, I have this conversation with sometimes generational owners who don't see the value in adding dishwashers, and importantly, might not have the infrastructure needed (mainly, a waste pipe that's wide enough to handle it).  We have to have the tough conversation as to whether it makes sense to open a wall on every floor to replace that often corroded infrastructure with something new.  It will last for decades, but that doesn't mean it's not a messy, expensive job.

As we head into what I think will be an extended flat patch for rents, and as NYC's buildings continue to age, more and more landlords will have to do this calculus with their budget.

If you want to talk about this or any other maintenance issue, please feel free to contact me.

Sunday, June 11, 2017

Inventory Shrinks as Home Shopping Season Kicks Off | StreetEasy

Not surprisingly, first time homeowners are getting in on the action this year, but there aren't as many homes for them to buy.

If you're in the market to buy a home, keep in mind that listings will be competitive and prices will be up.

But if you're a seller, just remember that it is still possible to over price and end up with a listing that sits on the market!

Happy Hunting!

Inventory Shrinks as Home Shopping Season Kicks Off | StreetEasy: " summer up to be a competitive shopping season for buyers."

Tuesday, May 30, 2017

Retail Report - but What Really Stuck With Me

Large commercial brokerage Marcus & Millichap kindly posted this video link to a CNBC interview that their CEO gave last Thursday. They were discussing how malls are faring given the "Amazon-ization" of so many businesses.

While Mr. Nadji had some good insights into how malls are being repurposed (one thing that stuck out to me was that fitness and wellness companies - which do require physical locations - were moving in where the former product-based retail moved out), the one thing that stuck out to me most was that apparently, fast food sales were higher than grocery sales last year for the first time!

I'm not surprised that fewer people have time to cook - that's one reason we have single and double portions of chopped vegetables available at Whole Foods now, pre-chopped meal services like Blue Apron, etc.  But fast food?  I'm a little surprised because I always thought the millennial generation cared more about their health.

Then I remember: Chipotle and salad companies like Just Salad, Chop't (a favorite of mine), and Sweetgreen also technically count as fast food. So does Starbucks, whose bottom line I contribute to mightily despite the fact that I don't drink coffee.

Maybe I'm getting a bit old, but I've always struggled with my weight, so I have tried to embrace the slow food, home cooked movement.  Plus, I'm such a picky eater that I like making my own food just the way I like it.  So it feels like cheating to me.

In the meantime, an interesting juxtaposition of fast food and gyms, spinning gyms, mixed martial arts gyms, and maybe a few day spas, physical therapy offices and urgent cares will define your mall experiences for the near future.  And Starbucks, of course.

Marcus & Millichap - CNBC:

'via Blog this'

Tuesday, May 23, 2017

Announcing Solid State Properties LLC!

Effective immediately, I'm proud to announce that I have started my own company, Solid State Properties LLC, to continue the focus on small property management in Mid and Lower Manhattan, and parts of Brooklyn as well.

Solid State Properties LLC is a New York City based property management and brokerage firm specializing in Manhattan and Brooklyn properties under 6 stories. Whether it's a single condominium unit, a mixed use property, small co-op or small office building, we practice efficiency of scale and no-nonsense management, and rental brokerage all in one.

Thursday, July 16, 2015

2016 Tax Rates by Class

‎In case anyone missed it:

The City Council adopted real property tax rates for fiscal year 2016, which begins July 1, 2015.  Here are the 2016 tax rates by class as well as last year's rates for comparison.  
Tax Rates by Class

Please note that the tax bills issued for the first half of fiscal year 2016 (July 2015 through December 2015) were based on the fiscal year 2015 tax rates.
As a result, your second half tax bill will be based on the recently adopted fiscal year 2016 tax
 rates and will include an adjustment for any overpayment or underpayment in 
the first half of the year.


Monday, July 13, 2015

My Own Non-Scientific Take on the City-Verizon Spat

I've been following Crain's NY Business' chronicle of the fight that the De Blasio administration is picking with Verizon over its failure to roll out FIOS citywide. In a nutshell, Verizon struck an agreement with the Bloomberg administration in 2008 to install fiber optic cable (trademark FiOS) internet access throughout the city, ostensibly so that areas served by only one cable provider (Time Warner, Cablevision, etc.) will have another choice.  This makes sense on the face of it. After all, cable companies are currently the only broadband providers in certain areas. Sure, you can go with another "provider" if you want - you might get mailings announcing "alternatives", but the fact is that in most areas, those companies have to rent capacity from the main cable company in the area, for the simple reason that those are the only cables in the ground.

My bugaboo with the whole scheme is that while attempting to lay all this fiber, Verizon has completely neglected the existing copper wire network that runs throughout New York. It is falling apart - and that fact is not being covered all that extensively.  One article in Ars Technica from 2014 mentions it briefly, as does the above Crain's article, again, briefly.

Let me paint a picture at how bad it has gotten by talking about two buildings that my firm manages. The first is on West 11th in Greenwich Village, a building with residential and business tenants.  At least every two months, and sometimes more often (depends on the weather conditions), I am forced to meet a Verizon repair tech at this building to let them through an apartment to the back, where they try to find a "good pair" in the phone box. This box is older than the hills, and it's full of rust. But when I have asked about replacing said box, I'm told that Verizon isn't replacing ANY copper phone equipment.

The problem is sometimes within the line between the building and the hub, which is an apartment building on the next block south. The tech must then go back and forth between this building and that, trying to find a connection that will hold. Once, I was told it was not the box, but the line between the hub and the box, which - in contradiction to Verizon's claims in the articles - runs above ground. You can see the phone wire strung all along the back yards of the block! When the line "goes bad" - meaning that it gets exposed and nicked/broken somehow - the tech has to "splice" it, meaning cutting the damaged part of the line out and basically taping the two ends together.  The tech who told me about the line said "that line has so many splices in it I don't know how it still works."  When I asked about getting a new copper line run - yes, you guessed it!  "They're not replacing anything."

 So, the tenants in this building constantly lose the phone service they pay so much for. And it's not just that building! My firm manages an adjacent building that has also had similar phone problems.

I looked into FiOS as an option to get away from the crumbling infrastructure and found to my amazement (though not so much now that I've been reading articles telling of similar experiences all around the city) that FiOS is NOT available on that block. This blew my mind. I understand that Verizon may not wish to wire every small building right off the bat (though seven years in one would hope they'd made some headway), but this building is right between two major thoroughfares - Fifth and Sixth Avenues - that surely must have fiber available? They don't have to bring it that far, and they have a building manager - ME - who is willing to get them access - all so they don't have to waste thousands of dollars visiting this building's back yard every six to eight weeks. Recently I head that another building towards Fifth Ave had successfully managed to get FiOS installed. How did they do that?

Which leads me to the other building, also on Fifth Avenue in the Flatiron. This building is not a large office building but it happens to have line running through it that serves some adjacent buildings as well. Within the past two months I have had at least five technicians needing access to that basement to repair copper phone and data connections! Again, I am completely shocked. The copper here in Silicon Alley is no better maintained (though it is apparently underground)! And I listen to the techs speaking with their home office, trying again to find "good lines". There isn't enough capacity to service all the commercial and residential tenants in that block!  The tech suggested I try to get some of them to sign up for "fiber", which would alleviate the crowded copper box.

Today I had a conversation with a very nice lady from the Verizon business office, and she informed me that she knew "no more FiOS installations were being scheduled for the rest of the year".  !!!!!!  In the meantime Verizon is spending millions of dollars running fiber "past" buildings but telling potential customers that it's not available to them. What kind of shell game is that? It reminds me of the recent scandal about the military contractors who built all kinds of equipment that only got destroyed once it was shipped to the Middle East. And all the money spent on advertising a service that no one can get? There's just no answer to that.

Following which, I might as well air my frustration at the fact that I am seeing many many of those little internet antennae popping up all over the place in Manhattan subway stations... but I am not getting any service!  I travel all over the city (forget the fact that not a single underground station in Brookyn has service), and I have seen these tell-tale signs of service in Washington Heights, East Harlem, and the Lower East Side - some for eight months or longer - but zero bars in any of these stations (I'm looking at YOU Second Avenue!).

I've said before that Transit Wireless' strategy seems completely haphazard. Their blog states that they have begun installing equipment in Upper Manhattan and the Bronx, but their Lower East Side stations? Nary a word - oh wait, I see that Delancy is part of the Phase 3 rollout - but no announcement as to when that will happen?

Oh, and the website seems to have been hijacked, or given up. It takes you to a website about call forwarding. It does not, as suggested on the Transit Wireless website, show you which stations have service.

Friday, June 20, 2014

How Much Higher Can Rents Go if Manhattan Wages Keep Falling?

According to the US Labor Department, employment in Manhattan increased, but wages have fallen because fewer jobs were added back in the finance industry. Overall private sector wages fell 3.3% in Manhattan.  

What does this mean for the crazy rents that we see throughout Manhattan? And the crazy home valuations? It could mean bad things. Sure, there are still tons of foreign buyers snapping up townhouses and condos in Manhattan; but that's still a small fraction of the people who live on the island. So... eventually... either we get a new extreme high wage-paying industry to employ lots of people.... or finance resurges in Manhattan.... or rents are going to have to come down.

It has been a strange year in Manhattan so far. Rents slipped quite a bit in November to a new 7 year high, which is par for the course, but Manhattan landlords were introducing incentives as late as February 2014.
According to Elliman's monthly report, May 2014 vacancy rates were just a tick lower than May 2013, and actually .13% higher than April 2014.  Some articles made mention that Brooklyn rents and Manhattan rents came close to equal during this time, suggesting that many Manhattanites are decamping to Brooklyn. But ultimately, it may simply be that rents are just too damn high, especially since the people who could afford the sky-high rents, and all the amenities, are less and less likely to be working in Manhattan.

I'm not saying that rents are going to fall off a cliff. New York is still the place to be and many people from all over the world locate here. And there is still a housing shortage, albeit an affordable housing shortage. The first developments to be squeezed will be the mid-range developments, those renting for $3500-$7000/month. The danger is that we might start to see more high end rentals than affordable developments, for the same reason that high end condo developments have proliferated in this city over middle class ownership housing: the middle class is getting squeezed, wages are falling, and the rich are the ones we can count on to have money.

But the 1% is only a single percent, so eventually rents will have to fall a little. Or even a lot. At least until New York finds its next big wage paying industry.

Friday, May 30, 2014

How Much Should You Borrow Based on What You Want to Pay Monthly

So you hear a lot about relative cost to rent versus cost to buy, but really, you're thinking... What can I afford?  Or, more likely, how much can I borrow but still pay the same amount in mortgage as in rent?  Today I want to show you a quick and dirty way to figure that out.

First, take your monthly amount of rent. Let's say $3000 for a round number.

Then, you need to subtract something to represent the maintenance (for a coop), or common charges + property taxes (for a condo) that you might be paying. This amount varies a great deal based on the size of the property that you are looking at. Common amounts are $500-$800 for a one bedroom or $800 - $1000 for a two bedroom, and go up from there. 

Let's say we're looking at a one-bedroom and want to be conservative, so we'll take $800 as the number. $3000-$800=$2200.  Notice we didn't include insurance. This is because homeowners policies are not a very big jump from renters insurance policies, so we'll assume that cost remains the same. (If you don't have a renter's insurance policy, you should seriously consider getting one up - your belongings are not covered by the landlord's insurance policy if they are stolen or destroyed).

So we have a principal and interest payment of $2200. Now, we look at the current interest rates. Your bank's website can provide those to you. Keep in mind two things: 1) interest rates change daily and 2) when the economy is good, interest rates tend to move up.  So if you are doing this exercise for a future purchase six months from now, you might want to add .25%-.5% just to be safe. (of course you can always buy the interest rate back down if you have the cash and the desire).

At the moment I am writing this, I just clicked over to the website. Bankrate is an independent web site that publishes information about mortgage rates across many banks and regions of the US. Keep in mind that New York rates may be different from the national average. Coop loan rates are usually higher, as are condo loans, though somewhat less so.  Indeed, Bankrate gives me a range of 3.97%-4.89%, while the national average is listed as 4.29%.

Let's again be conservative and use 4.75% as our rate. Now, we flip over to, where we find a nicely laid out table of the cost per $1000 borrowed. Scroll down to 4.75 in the first column, then slide your finger over to the 30-year column (all the way to the right). The number is $5.22. That means for every $1000 you borrow at 4.75% interest rate, your monthly payment is $5.22 for a 30 year self-amortizing loan (meaning when you hit the last payment of the 30 year loan, you have paid off the loan).

Ok, so now we take your monthly rent payment less allowance for monthly maintenance fees (remember that? $3000-$800=$2200), and we divide $2200 by $5.22. So in other words, we are seeing how many thousands of dollars we can service with the $2200 we already pay.  The answer? 421.456. Just multiply that by $1000 (or  move the decimal over 3 places) and you'll get $421,456, which is the amount of mortgage you can carry, plus maintenance charges and (if condo) property taxes.  

Now let's take that one step further. You generally need a 20% down payment to get a mortgage. Most coops require that at least 20% be put down. Condos might only require 10% (some coops do as well, but banks have become more stringent since 2008 and it's harder to get a 90% mortgage on a coop than it once was).

The amount of mortgage that we figured, $421,456, represents 80% of the total cost of the property that you can purchase. This is the maximum loan to value ratio (or LTV) that most loans allow. Dividing that number by four tells us what 20% of the total price must be. Answer: $105,364.

To get 100% of potential purchase price, we multiply that number by five. (because 5 x 20% = 100%). So $105,364 x 5 = $526,820.

So, the total purchase price that you can likely afford while still keeping  a similar housing payment to what you pay in rent is $526,820. This assumes a down payment of $105,364 (the 20% number we calculated earlier).

In the hottest parts of Manhattan, this will get you a studio or a small one bedroom. In northern Manhattan, this will get you even a two bedroom. Even in Brooklyn, you can score a very nicely sized one bedroom or even two bedroom depending on area (though probably not in Williamsburg, alas).  So if you feel you can't afford to buy, think again. You can afford to buy if you can afford to rent at Manhattan's prices.

Friday, May 23, 2014

What's a Non-Conforming Coop?

You're searching the Internet for your new home to buy.  You find a property - a coop unit - that looks really, really good. You read through the description and you are loving the way it sounds. The photos look great too. Then you see at the bottom of the listing "Non-conforming building - cash offers only (or preferred)." Huh. What does that mean?

You Google the term "nonconforming building". The returns define it to be a building that doesn't conform to existing zoning laws. But in New York City, it's more likely to mean that the building's financials and/or owner occupancy do not conform to guidelines set by Fannie Mae (FNMA) and her compatriot, Freddie Mac (FHLMC), the two entities that purchase loans on the secondary market from the banks that originate them.

So you Google "nonconforming loans".  This search just gives you a lot of information about jumbo loans, which are a type of nonconforming loan, because the amount of the loan is higher than Fannie Mae conforming limits.

But this property is asking less than the published conforming loan limits. Are there other issues that can put a property into nonconforming territory?

Answer: yes there are. One of the big ones is owner occupancy. This refers to the number of units in the coop that have been sold by the sponsor to individual owners and are occupied by those owners and their families. Units that are owned by individuals but sublet to renters do not count, but individually-owned vacant units do. Sponsor-owned units also are not considered owner-occupied (a sponsor unit is one that continues to be owned by the original landlord of the building who created the coop, or their successor).

FNMA/FHLMC requires 51% of cooperative units to be "owner occupied". Not 50%, but 51%. This was a big issue back in the 1980s and 1990s when sponsors owned more than 50% of units in many coops that had just been converted. The sponsor ownership is less of a problem these days, but smaller coops (under 40 units) can still slip into this nonconforming status if they have a significant percentage of sponsor ownership (ie, 25-40%) and if the coop allows too many owners to sublet in addition. When that happens, the coop falls into non-conforming status.

In the olden days, it was possible to get something called a "waiver" on nonconforming buildings. This literally meant that the owner occupancy issue could be waived, and a bank could get you a conforming loan. Since 2008, however, that is practically impossible, according to mortgage lenders that I have considered. Whereas waivers were practically a given before the mortgage crisis (for a small fee), now each application for a waiver is scrutinized and takes weeks to process. Few are granted.

So that leaves us back to this beautiful coop in your price range. You don't have cash, but you see it's a bargain. What can be done?

First, realize that while many mortgage programs are not going to be available for that particular unit, some loans might be. These loans are called portfolio loans, and they may be given by banks or mortgage lenders.  A portfolio loan is a loan that a bank cannot sell to FNMA/FHLMC. The bank has limited choices - either the loan must be held and collected by the bank until the end of the term, or the loan can be sold to an investor who will deal in nonconforming loans.

Unfortunately, that translates to a slightly higher interest rate for the borrower.
But such a property may present an opportunity. Remember, every coop is different. Some may be primarily investor-owned, while others may simply be one unit from conforming.  Ask your agent what the situation is.  If the situation is just one unit, then you might have an opportunity to get a little pop in value when that one unit does finally turn the owner occupancy ratio over 51%. You have the option of refinancing into a conforming loan once the building is conforming as well.

So, all in all, don't leave those gems in the dust. Nonconforming coops can present an opportunity to the person looking for a below market opportunity for a long term primary residence.