All posts by Lisa Maysonet

THE GOOD, BAD, AND UGLY OF REAL ESTATE INVESTMENTS

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As a real estate broker, owner, and investor in New York City for 38 years, I have witnessed the good, the bad, and the ugly of the New York real estate market. If you’re looking for the best kept investment properties in New York City. Contact me for more information.

In this article, experts and observers weigh in on the essentials that should guide your decisions, as well as the ways to guide your financial forays toward success.

Know your market well. If you pay market price for an investment property, you probably won’t see particularly robust returns. “It will make a market return, and if you want to do better than that, you have to pound the pavement,” Reiss says. “Look for deals that are underpriced for one reason or another. And you won’t know which deals are underpriced unless you have a good sense of how properties are priced.”

Luxury homes may hold a key. In 2014, the S&P/Case-Shiller National Home Price Index for single-family dwellings rose roughly 4.5 percent. But Frank Symons, executive vice president and chief operating officer for the western region of Sotheby’s International Realty, reports that luxury homes appreciated 8 percent that same year. He cites Sotheby’s Global Luxury Residential Real Estate Report for 2015. “This is a healthy return on investment at a time when residential real estate is still recovering,” Symons notes. “As recovery continues, the rate of appreciation could gain momentum.”

Turnkey properties can unlock returns. With a turnkey investment, you’re buying a fully vetted, redeveloped property with tenants and a property manager. “It’s a lot like buying a take-and-bake pizza. All the ingredients are there, and all you have to do is buy,” says Scarlett Tassone, a vice president and mortgage banker with PrivatePlus Mortgage in Atlanta. The downside is that compared with other tenant properties, “they are not quite as lucrative and a bit more expensive,” she says.

Vacate vacation homes. Just because you can kick back at a recreational abode doesn’t mean profits will recreate themselves. “Vacation homes are nothing more than a whimsical retreat and a low-tier income option,” says Kurt Westfield, managing director of WC Equity Group, based in Tampa, Florida. “Seasonally, they do have the capacity to generate decent returns, but the vacancy and holding costs coupled with typically premium pricing tend to equate to a less-than-stellar rate of return.”

Give REITs a chance. A real estate investment trust is a company that owns, develops and redevelops real estate assets. “Publicly traded REITs and REIT funds offer liquidity and low investment minimums,” says Mike Papierski, national real estate practice leader at Northern Trust Company, based in Chicago. REIT mutual funds in particular offer high diversity. Just be aware that “performance tends to more closely align with stock market return and may not correlate with actual property values,” Papierski says. Overall, he recommends a 15 percent cap on real estate exposure in a portfolio.

Caveat rental. Yes, you can make money with rental properties. But if you have little experience in the game, expect a steep learning curve. “Bricks-and-mortar properties require expertise and intensive management, even with investment-grade properties,” Papierski says. “If the owner doesn’t have the expertise, he or she will need to hire someone to handle the leasing and day-to-day management.” And that fee generally runs between 4 and 8 percent of gross rents.

You might flip for flipping houses. In this form of investment, the goal is to get in short-term and sell properties at a markup. And while many investors make money this way, much depends on the neighborhood you buy and sell in, as well as hidden costs associated with renovating the property that can decrease its net return. “This type of real estate investment has more risk than owning rental properties,” says Rebecca Pavese, financial planner and portfolio manager with Palisades Hudson Financial Group in Atlanta.

Vacant property is a mixed lot. Vacant properties may hold tremendous potential in a neighborhood that’s gentrifying, or if the land sits in the path of a proposed water and sewage line. But investors will pay on both the buying and selling end. “As a development play, these have huge one-time upside,” Westfield says. “But the capital gains tend to be a hindrance. Personally, I avoid it.”

Increase your profit potential with an investment of time. Property development, management and administration often require an army of specialists. But if you’re adept at repairs, accounting or showing a vacancy to prospective renters, you can forego the fees associated with hired help. “Depending on your availability and your skills, these could be trade-offs that are worth making for you,” Reiss says.

It’s not just what you’re renting, but who’s renting. Veteran Atlanta Realtor William J. Golden, who works with RE/MAX Metro Atlanta Cityside, tells how his onetime rental home became a house of horrors. One tenant painted an entire room black; another housed a stolen motorcycle at the property. And when Mr. Motorcycle wasn’t swiping mail from wealthy locals, he allowed his buddies to squat there. Lesson learned? Vet your renters thoroughly and check on them frequently. “I swear that house was cursed,” Golden says. “Interestingly, we’d purchased the home from a psychic, so I wish she could have given us a heads up what was in store.”

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EXCLUSIVE PEEK AT A NEW RESIDENTIAL DEVELOPMENT IN MANHATTAN

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Wow! A 4 bedroom home with 3500 square feet of outdoor space and river views in Manhattan. Where do you find this? In order to stay well informed and ahead of the curve for you, I just previewed the newest residential developments around Manhattan.  This one development in particular really wowed me. Though completion is estimated for Summer 2016, it is important to get in early and reserve your residence as many of these homes sell out before the building is even finished and trust me, you will regret missing out.  A charming and elegant pre-war style with 11 foot ceilings throughout, gorgeous views, generous square footage, luxe private entertaining space, fire places (rare to find) and building amenities at your fingertips that you wouldn’t even dream up.  Pet friendly condominium. Who do you know that this property is the perfect match for? Email me and let’s get you in for a private viewing!

WHAT IS THE BEST MONTH TO LIST YOUR MANHATTAN APARTMENT FOR SALE?

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If you’ve been holding off putting your Manhattan apartment on the market, now’s the time to do it. At least according to real estate analytics site Urban Digs, which found that May is the month with the highest contract volume (it’s just slightly higher than the second-highest month, March).  With the market favoring sellers yet still beneficial for buyers, you will be able to find a buyer fast.

CONDO VS. TOWNHOUSE – WHAT IS THE BETTER BUY?

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One question I often receive from my clients is “Should I buy a condo or townhouse in New York City? What is the better buy?”
Condos and townhouses are very different types of housing and difficult to compare.  Largely, it depends on what you will be using the property for.  Is this going to be your primary residence, strictly an investment property, or a mixture of both?
In Manhattan, the median sales price of a townhouse has risen 33% over the last decade from $2.7 million to $3.59 million according to data from the appraisal firm Miller Samuel. Condo prices have gone up 55.4% from $804,000 to $1.25 million.

Townhouses make up a relatively small portion of housing available in New York City and tend to offer more privacy and space along with more freedom to renovate and sublease etc.  While you won’t pay monthly common charges, you are responsible for 100% of the upkeep and repairs.

Do you plan to rent it out for additional income at any point?  If so, the bulk of renters in the city are looking for smaller, more secure apartments and generally avoid being on the ground level.  This indicates that on a per-square-foot basis you are better off buying a small condo and renting it out instead of buying a large townhouse.

Do you plan to sell it for a profit?  Some people argue that townhouses cost less  than condos on a per-square-foot basis but don’t be fooled.  Townhouse square footage is measured from the outside of the walls, where as condos are measured from the inside of the walls.  If they were measured in the same way, townhouses would be roughly 15% smaller which would drive up the price per square foot.  Lastly, even condos that are the same size as a townhouse may sell for more if they are on a higher floor.  The views alone can be an amenity that increases the price dramatically.

There are many factors to keep in mind when you are looking at places to buy. Remember that if this is your home and sometimes usage is the greatest value. As long as your asset appreciates in value, your primary concern should be enjoyment and living in a home that suits your everyday life and brings you joy.

All the best,

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NOW UNDER CONTRACT | UNBELIEVABLE ASKING PRICE OBTAINED

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Our sellers were thrilled at the high asking price we obtained for their gorgeous Upper West Side apartment without ever listing it on the public market.  A unique and customized marketing strategy by the Lisa Maysonet Team at Sotheby’s International Realty and a network of highly qualified buyers got this luxury apartment sold for an unbelievably high price.

Curious to know more about our “highest asking price” strategy? 

PURCHASING A PIED-A-TERRE IN NEW YORK CITY? 10 THINGS TO CONSIDER…

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Having lived here for 38 years I can attest that New York City living has an addictive quality. How else can you explain the phenomenon in which people who happily spend most of their time in the suburbs or out-of-state even or out of the country choose to purchase pieds-a-terre here within the city? These secondary, part-time NYC abodes prove that just a little bit of city living is better than none. Are you thinking of purchasing a pied-a-terre? Consider these ten questions beforehand.

1.  First and foremost, you want to understand if the building you want to live in allows Pieds-A-Terre.

This is an obvious question but it bears asking because many buildings, especially older and more traditional coops restrict purchasers who don’t plan to use the apartment as their primary residence.  Do your homework before and work with a qualified broker who has experience selling in all sorts of buildings around the city to ensure your purchase runs smoothly.

2. How will your apartment be used and who will be using it?

The board and management is most concerned with how often you plan to be there and who will have access to it when you are not.  You should always give them your clear intentions and be sensitive to what their expectations are and how they want the resident makeup of the building to remain.

3. Are you allowed to sublet?

Understandably, most buildings have very specific rules in place about guests and renters.  1 year minimum leases are standard and some buildings restrict guests to live there other than your immediate family.  Co-ops can restrict the length of time that the apartment can be rented so if you plan rent it out majority of the time this is to be understood before entering a purchase.

4.  What amenities are important to you?

While it is certain to be more expensive, buying an apartment in a full service doorman building can give you a sense of security that may be worth the price. Also, if you will not be there full time it may be worth it to have the added security and someone to receive packages or other deliveries when you don’t have regular access to the apartment.

5. Is your pet welcome?

Even in a pet friendly building, most buildings have breed and size requirements.

6. Are you going to be working from your second home?

Even if you are self employed, if you plan to work from your second home you need to get board approval especially if it brings foot traffic.

7. Are you planning to make renovations?

If you are going to be renovating, don’t forget that you need to get approval before anything happens.

8. What neighborhood in New York City will fit you best?

Street by street, block by block, the city can change drastically. You want to choose a broker that has an extensive knowledge not only of the neighborhood makeup but the building makeup within.  Consider where you will be spending most of your time in the City and also how you will be arriving to and from.  Will you need parking? What airport will you be flying into etc.

9. Do you need financing? Are you an International buyer?

Getting financing to purchase a secondary residence can be a tricky proposition these days.  It if is a second home, it needs to be at least 60 miles from your primary residence in order to get a fixed rate loan. Having worked with several international buyers, financing and fund transfer can be tricky to navigate.  Having someone direct your purchase who has experience working with International buyers will give you access to resources that will make your purchase that much more successful and your experience much less stressful.

10. Who will fix repairs if needed?

Generally, secondary residences endure less wear and tear.  However, the last thing you want to happen is for something to happen which requires immediate attention and repair and you only hear about it after it was too late.  Give a friend or a neighbor an extra set of keys in case of an emergency or at the very least make sure the management company has your immediate contact information while you are away.

For more tips and guidance on purchasing your pied-a-terre in New York City reach out to me.
I am happy to answer any questions and will happily discuss your options.

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