Friday, December 25, 2009

Foreign / Overseas buyer tax rate of Manhattan New York investment property

Perhaps the first question foreign or international investors ask about buying Manhattan New York property is the tax rate.  Understandably, countries like Hong Kong and Singapore have low tax rates and people hear horror stories about the high taxes in New York.  This is why having a great team is crucial in your efforts for wealth creation.  Anyway, here is the summary:

Capital Gains Tax:
Long term capital gains tax (for property held more than 1 year) is 15% for US residents.  For foreigners, it can be as high as 30 percent.  However, there are ways for a foreigner to qualify for US resident status and hence get the benefit of the 15 percent long term tax rate.  This is where we would recommend our foreign clients to the right attorney and CPA to properly handle tax strategy.

Cantonese Chinese speaking agent, Manhattan New York condo

I am a Cantonese Chinese speaking property agent in Manhattan, New York serving foreign and international investment property buyers.  Our clients include investors from Hong Kong, Singapore, China and Malaysia.

Our clients usually purchase investment condos in new developments in Manhattan because Manhattan has shown to be an asset that sustains its value, despite the current recession.  For example, Manhattan prices decreased by about 20 percent during the current recession.  This decline is much lower than the declines at similar major cities such as Los Angeles and San Francisco where prices declined by 40 to 50 percent.  Manhattan prices are also more stable relative to stocks where in 2008, prices declined by 40 percent.

Saturday, December 19, 2009

Manhattan Office Market Oct 2009

October 2009
Manhattan average asking office rent    $50
Midtown                                    $56
Midtown South                          $42
Downtown                                 $39

Office tenants getting deal a great deal which they can lock for the next 10 - 20 years.  Asking rents down 20% but including free rents and improvements, net effective rents down a whopping 44%.  However, landlords are filling buildings and not dropping rents as rapidly as before.

Manhattan #2 in nation for distressed commercial property

Manhattan #2 in distressed commercial real estate.

1.  Las Vegas $17.7 billion in commercial properties that are in default, delinquent, foreclosed.
2.  Manhattan $12.3 billion
3.  Miami $7.6 billion

As reported by the Real Deal.  Data by Real Capital Analytics.

Sunday, December 13, 2009

Foreign buyer financing, Manhattan New York investment property

In Manhattan, New York, many foreign and international investment property buyers purchase in cash.  Buying property in cash in Manhattan will save the buyer the mortgage tax, which is about 2% of the loan amount.  In addition, the cash buyer saves various bank related fees. 

Financing allows the ability to leverage funds, thereby being able to buy more property.  For example, if you buy one condo at $1 million in cash, you only get the appreciation benefit of 1 condo.  Buy if you finance at 50%, you actually get to buy 2 condos and hence benefit from appreciation (or price decrease) of two investment properties. 

The two ways of arranging financing are:
(i) Financing from US lender:  This option is easily arranged through a mortgage broker or a bank that STILL lends to foreigners.  We have connections to both.  The requirement is usually a 40 percent downpayment (60% LTV).  Also, the buyer needs to show liquid assets that is usually based on a multiple of the monthly payments.  Since financing is in the US, the buyer would have to pay ~ 2% mortgage tax.

(ii) Financing from home country:  This refers to getting financing loan from the home country.  Hence from the US's perspective, it's a cash transaction.  The main difference is saving the mortgage tax and various bank fees.  But of course, there may be other fees associated with the financing bank. 

Ultimately, the foreign or international investor needs to do a cost benefit analysis.  It's a matter of comparing loan terms, amortization period, interest rate, costs etc.  Many buyers don't really understand things like amortization period and just take whatever the bank offers.  I find many offer adjustable rate products.... Big mistake.

Visit Our Foreign Buyer's Guide

Wei Min Tan is a real estate broker and investor focused on investment property in Manhattan.  Formerly, he was a Vice President at Citigroup and managed a $500 million portfolio.  He can be reached at

Disclaimer:  The above is not meant to be financial advice.  Always consult your CPA, banker or attorney on financing matters as individual situations may differ.

Friday, December 11, 2009

Buyers backing out

Buyers fighting to cancel contracts (The Real Deal)

Where buyers are backing out (The Real Deal)

W Union Square acquired for $2 million

My investors would love this.  W Union Square hotel acquired for $2 million.  But very important note - buyer has to assume $212 million in debt :)

Nov 2009 Manhattan New York rental report

Article as reported by The Real Deal.  Manhattan residential vacancy rate 1.8%


Castle Avenue Partners - Manhattan property agent

Manhattan New York property buyers from Malaysia, Hong Kong, Singapore

Many have asked about whether we focus on foreign / international clients from Asia purchasing property in Manhattan to take advantage of the weakened dollar and economic downturn.  Answer is yes, 50% of our clients are high net worth individuals from Asia, specifically Malaysia, Singapore and Hong Kong.

Reasons include growing up in Malaysia, familiarity with the cultures and expectations, ability to speak Chinese Cantonese, Hokkien and Malay.  We are familiar with the property buying process there and can put the process of buying Manhattan, New York real estate in context.  Further, we can discuss the ROI, yield and appreciation potential of Manhattan property relative to those at the home countries of our clients.

We are expanding our client development efforts in Malaysia, Hong Kong and Singapore.  Also, we continue to see increased interest, especially from savvy investors looking to take advantage of the economic downturn.

Visit Our Foreign Buyer's Guide
New York historical price appreciation
Buying New York Property
New York Property articles
New York investment property overview

Contact Wei Min at to discuss how we can help you grow wealth through Manhattan real estate.

Thursday, December 10, 2009

Top New York High Schools rated by USNews

New York High Schools that made US News and World Report's Top 100 America's Best High Schools, December 10, 2009

Newcomers High School Queens County, Long Island City, NY
Gold:#6 of 100

The High School of American Studies at Lehman College Bronx County, Bronx, NY
Gold:#19 of 100

Stuyvesant High School New York County, New York, NY
Gold:#31 of 100

Townsend Harris High School Queens County, Flushing, NY
Gold:#33 of 100

Staten Island Technical High School Richmond County, Staten Island, NY
Gold:#34 of 100

Baccalaureate School for Global Education Queens County, Long Island City, NY
Gold:#35 of 100

Yonkers High School Westchester County, Yonkers, NY
Gold:#41 of 100

South Side High School Nassau County, Rockville Centre, NY
Gold:#46 of 100

Jericho High School Nassau County, Jericho, NY
Gold:#48 of 100

Horace Greeley High School Westchester County, Chappaqua, NY
Gold:#51 of 100

Capital Gains Tax on Property in Manhattan New York

Primary Residence:The IRS allows a seller to sell his primary residence in which he has lived 2 out of the past 5 years and take capital gains tax free of up to $250,000 (for single) and $500,000 (for married filing jointly).

The 2 years out of 5 years rule does not have to be continuous as long as it was used as primary residence during that time. One way an investor can capitalize on this is to buy property, rent it out and move back in for the last 2 out of five years prior to sale.

Investment Property:
Investment property held for more than 1 year will qualify for long term capital gains tax treatment. This means a maximum tax rate of 15% at the federal level. If held less than 1 year, the maximum federal tax rate is about 36%. However, I strongly discourage buying property with the intention of selling in less than 1 year. Buyers should intend to hold at least 5 years.

Many investors use the “1031 exchange” to defer payment of taxes. This requires exchanging the old property for a like-kind new property within a set period of time. Effectively, this strategy uses funds that otherwise would be used to pay taxes to leverage and buy more property, magnifying the return potential.

We will recommend our preferred CPA and attorney to clients so that they receive the best advice.

New York historical price appreciation
New York property articles
New York investment property overview
New York investment property search

Contact Wei Min at on how we can help you grow wealth through Manhattan property.

With the regulatory and legal environment, I need to provide this disclaimer:
The above serves as a general overview, not by a certified tax or legal professional. Always consult a CPA or attorney for tax matters as individual situations differ.

Wednesday, December 9, 2009

FAQ Foreign / International Buyers of Manhattan New York Property: Condos, Mortgage Financing, Expenses, Broker Fee

Can foreigners buy property in Manhattan, New York?Yes. Many foreigners buy property in Manhattan because of the brand value and appreciation potential. They often purchase as a pied-a-terre (vacation home), or investment property. A large percentage of our clients are international, from countries like Malaysia, Singapore, Hong Kong and China.

What type pf properties are popular amongst foreign or international buyers?
There are two categories of apartments, condos and co-ops. We recommend condos because of the higher appreciation and investment value. Co-op buildings often restrict ability to rent and perform renovations and do not make good investment property. The process of buying a co-op is subject to board approvals which dramatically prolong the buying process. The value of a condo, on a per-square-foot basis, is about 20 to 30 percent higher than a co-op. However, the appreciation potential and demand are higher as well.

Besides apartments, our international clientele also purchase townhouses, mixed use buildings and commercial buildings.

What are the expenses associated with owning a property in Manhattan?
For apartments, the main monthly expenses are taxes, common charges, insurance and depending on whether financing was used, mortgage principal and interest.

New development buildings often have a tax abatement which dramatically reduces the monthly tax amount. Without abatement, annual taxes are often between 0.5 to 1 percent of the property’s value. Common charges average $1 per square foot per month and it goes up or down depending on number of units and amenities. Insurance is roughly $500 to $1000 per year and on a monthly basis, a relatively smaller expense item.

Is financing available for foreign or international buyers?Yes, mortgage loan financing is available and can be obtained either through a mortgage broker or directly from the bank. Since the credit crisis, lenders have tightened credit criteria and will require about 40 percent as downpayment from a foreign buyer. Most mortgage products for foreigners are ARMs (adjustable rate mortgage) but some lenders offer 30 year fixed mortgage to foreigners. We will refer our foreign clients to reputable mortgage brokers or banks to help arrange financing.

What are closing costs?Closing costs are roughly 3 to 5 percent of the loan amount. This includes mortgage tax, transfer taxes if purchasing a new development, attorney fees, recording taxes and other administrative expenses.

Who pays the broker fee?
In New York, broker fees are paid by the seller. When the seller’s broker agrees to list the property for sale, a certain percentage is agreed upon as commission. If the buyer is represented by a broker, this commission will be split with the buyer’s broker. If the buyer does not have a broker, then the seller’s broker keeps the entire commission. Hence, it is in the best interest of the buyer to have broker representation to help identify the right property and negotiate the best price.

Visit Our Foreign Buyer's Guide
New York historical price appreciation
Buying New York property
New York Property articles
New York property search
Contact Wei Min at on how we can help you grow wealth through Manhattan property.