Saturday, January 30, 2010

New York Property appreciation

New York (Manhattan) property price appreciation history from 1997 to 2009.  Average price per square foot of condo and coop apartments.  Price peak reached in Q1'2008.  Back in 1997, it was only $328 per square foot, increasing to peak of $1289 per square foot in Q1 2008.  

America's Most Overvalued Cities - CNNMoney

America's most overvalued cities - CNNMoney


New York, NY (Manhattan) is shown as one of the most undervalued cities.  This is news.


Related links:
New York Investment Property
New York Property
New York Property FAQ
New York Property Price Appreciation History
New York Property articles and media
New York investment property search
Buying New York property

Manhattan housing inventory - Wall Street Journal report

Wall Street Journal - Change in housing inventory

It's great that they are finally breaking out Manhattan from "New York" because Manhattan has very different fundamentals from New York City in terms of foreclosures and impact of the 1st time homebuyer credit.  Note the 24% decline in housing inventory for Manhattan in the chart.

New York Property

Castle Avenue focuses on New York investment property.  Specifically, investment properties such as condos, townhouses and commercial buildings.  We will help our clients identify the right property to buy, arrange management and handle the eventual sale. 

Our recommendation for your New York property purchase will include appreciation and rental potential, neighborhood growth, yield relative to stocks and bonds and tax implications. The goal is to serve as an acquisition partner to local, overseas and international clients interested in purchasing New York property. 


Related Links
Castle Avenue - New York Investment Properties
New York Property FAQ
New York Investment Property Search
Buying New York Property
New York Property Price Appreciation History

New York Times real estate page
New York Office of real property services
New York City Online Property Register

New York Investment Property

New York investment property is becoming popular especially amongst investors from China and Hong Kong.  This is partly driven by overinflated property prices in China/Hong Kong and desire to take advantage of the US downturn.

By New York investment property, I'm referring to investment properties in Manhattan, New York.  New York City is divided in Manhattan (the central business district), Brooklyn, Queens, Staten Island and Bronx.

The average asking price of a investment condo property in Manhattan, New York  is about $1200 per square foot.  Trades are usually at a discount to the asking price.  The gross rental yield is about 5 percent while the net rental yield (after common charges and tax) about 3-4 percent.

New York investment condo property are popular especially amongst international / overseas buyers because of the simplicity of ownership. Condo ownership requires minimal maintenance as the monthly common charges paid basically covers the required maintenance activities. A tenant or renter who has issues while staying at a condo can easily call the building staff to fix the issue at hand, eg leaky toilet or ineffective heater. Comparatively, if an investor owns a building, the investor needs to address issues like the roof, boiler, heater etc that may need repair.

New York investment property is an appreciation play, not a yield play.  This means the investor buys for value appreciaiton, not to expect a high rental yield. 
 
Here are links to learn more:
Buying New York Property
New York Investment Property Search
Foreign / Overseas Buyer FAQ
New York Property FAQ
New York Property Price Appreciation History
How to find good investment property - MSN
 
Are you ready to buy an investment property - WSJ
New York Investment Properties on Loopnet

Saturday, January 23, 2010

Price rent ratio November 2009 - from Calculated Risk Blog




Price rent ratio through Nov 2009 as posted on Calculated Risk.  Shows the ratio close to 1.0, which was the 2000 base year index.  It does say prices expected to drop.   Importantly, note that the ratio has decreased substantially from the peak in 2006.

In Manhattan, New York, price is about 16 to 19X annual rent.



Thursday, January 21, 2010

Summary of CBS interview with Political Chick, Lisa Chase

Summary of my interview with CBS's Lisa Chase, The Political Chick, this past Monday.  Topic was state of the residential real estate market.

* In terms of US average, prices should decrease another 10%.  Reasons include:
- glut of foreclosures in the pipeline which will decrease average prices
- expiration of the 1st time homebuyer credit
- higher interest rates as the Fed ends it's mortgage bond buying program in March 2010

* However, real estate is LOCAL and hence one should look at price trends specific to one's local market.

* The Manhattan, New York condo residential market has bottomed in real time.  For example, new development condos traded at $800 per sq ft back in Oct/Nov and then increased slightly.  Real estate market reports will take until Q1 2010 to reflect this as these reports lag 3 months (time it takes to close on a property).  The 4Q 2009 report still shows average prices at $1000 per sq ft.  From this, it's obvious that the coming report will show price declines.

* Manhattan is much less affected by foreclosures and the 1st time homebuyer credit.  I do not feel the Manhattan market will double dip.  Rather, the bottom was here and over.  Transaction volume has been surging, a key signal that the market is finding its bottom. 

* The Obama Making Homes Affordable Program was bad economics.  Should never have started.  It's just delaying the foreclosure process as most intended recipients either have incomes that are too low or own properties that are already too far underwater.

* Over the past couple months, there has been a lot of foreign interest looking to capitalize on Manhattan's downturn. 

Best,
Wei Min
Castle Avenue Partners
New York Investment Properties

Interview podcast at chataboutit.com
New York property articles and media
Buying New York Property
New York Investment Property Search


Website:  http://www.castle-avenue.com/
Blog:  http://www.wealthre.blogspot.com/

Wednesday, January 20, 2010

Asia's Most Expensive Places To Live - Forbes

Asia's Most Expensive Places To Live - Forbes

Cold Weather Chills Housing Starts - WSJ

Link to article:  Cold Weather Chills Housing Starts


Wei min's comments:

Housing starts should tumble because we are in the midst of a foreclosure glut, real estate crisis and price declines of up to 40%. Just because housing starts were a certain number last year does not mean they should be at the "run rate" this year.

We would be in bad shape if housing starts increased.

$8 million in assets and can't get a mortgage - CNNMoney

Link to article:  $8 million in assets and can't get a mortgage


Weimin's comments on the article:
Banks are super strict with really large mortgages of high net worth individuals because they can't predict these loans since these are outliers in the credit models. No point taking the risk because these are not regular customers anyway.

Also, rich people w $8m net worth don't care about their credit score, do they? What would they need a stellar score for? They have the non-cookie-cutter ways of getting financing. They are sophisticated and would walk away when it no longer makes sense to make mthly payments. Unlike regular people who feel 'obligated.'. Hence banks are right to have stricter criteria.

FHA is a recipe for disaster. They require 3.5pct down for low credit people! Downpayment is the main determinant of loan quality/foreclosure. FHA is also technically insolvent. Should just be closed down.

Tuesday, January 19, 2010

China Property Bubble

Link to article:  China Property Bubble

As posted on Bloomberg.  In Shanghai, prices up 54% through Sept 2009.
In Beijing's Chaoyang district, housing prices at $300 per square foot, is 80X annual income !
People talk about real estate riches at the dinner table, no longer about their businesses or factories.

Monday, January 18, 2010

Housing Markets Most Likely To Have Hit Bottoom

Housing Markets Most Likely To Have Hit Bottom

New York, NY is one of the 14 listed, with 18% decline from peak.  These reports are 3 months lagging because it takes 3 months to close.  Those active in the real estate market have a much better gauge than reports.  But good to know.

Saturday, January 16, 2010

New York Investment Property

New York investment property our investor clients buy are divided into condos (residential) and buildings (commercial or residential). 

Residential condos are popular especially amongst international / overseas buyers because of the simplicity of ownership.  Condo ownership requires minimal maintenance as the monthly common charges paid basically covers the required maintenance activities.  A tenant or renter who has issues while staying at a condo can easily call the building staff to fix the issue at hand, eg leaky toilet or ineffective heater.  Comparatively, if an investor owns a building, the investor needs to address issues like the roof, boiler, heater etc that may need repair.

Obviously there are advantages and disadvantages of owning a condo unit vs a building.  Here is a rough breakdown:

Condo:
Upside - ease of ownership, simple to understand
Downside - lower rate of return

Building:
Upside - higher rate of return
Downside - more management intensive, higher cost of entry

Buying New York Property - Our Services
New York Property articles and media appearances
New York property FAQ


View New York investment properties at Castle Avenue Partners.  We specialize in international and overseas clients interested in New York investment property.
cityfeet    Loopnet




Foreign, international buyer, New York investment property
New York investment property

Friday, January 15, 2010

New York Property

Castle Avenue Partners focuses on residential and commercial investment property in Manhattan, New York.  Our value lies in analyzing and recommending the right New York property for our client, managing, and handling the eventual sale. Our recommendation will include appreciation and rental potential, neighborhood growth, yield relative to stocks and bonds and tax implications.  The goal is to serve as an acquisition partner to local, overseas and international clients and collectively grow wealth through New York property.

View Manhattan, New York Properties
Focusing on buyers, the entire Manhattan, New York market is our inventory. 

Castle Avenue Partners in the news
Our media appearances, articles and interviews on major networks such as NBC, CBS and TheStreet.com

New York property

New York Commercial Property Yield

Commercial property yield in New York (Manhattan) is driven by price point.  The lower price point properties, less than $20 million, generally have an asking price at a 5 percent yield.   

The higher price point commercial properties, more than $30 million, would have a higher yield , perhaps 8 percent or more.  Reason is that at a higher price point, there are fewer players  which decreases demand.  Also, buyers at the higher price point are often institutions that put a lot more pressure on sellers from a pricing perspective.

The value of commercial property is driven by yield.  Similar to a stock's PE ratio.  The more the landlord can obtain in rent, the higher the value because a set multiple, in this case rental yield, would be applied.

New York property articles
Buying New York property - services
New York property FAQ



Visit our website http://www.castle-avenue.com/ to learn more about buying New York commercial or residential investment property. We focus on local, overseas and international investment property clients.

Wei Min Tan is a real estate broker and investor focused on investment property in Manhattan, New York. He can be reached at tan@castle-avenue.com

New York Property Yield

New York property (Manhattan condo) as an investment would have a gross rental yield of 4 to 5 percent. After paying for common charges and taxes, the net rental yield reduces to about 3 to 4 percent.

Manhattan, New York property is not a yield but rather an appreciation game. An investor buying New York property focuses on the long term appreciation potential. Demand for Manhattan property is global, coming from all over the world. Manhattan is a brand and the vacancy rate is less than 2 percent, relative to the US's 10 percent average. Inflation would mean rents and property values will increase.

A yield strategy in the US would mean investing in a midsize of small city. For example, Syracuse, New York is a college town with a yield of 10 to 15 percent. From personal experience, the appreciation from a city like Manhattan New York far outweights the rental yield cashflow from a midsize of small city.

Our website Castle Avenue Partners - Manhattan investment properties
Historical price appreciation
New York Property ROI

New York Property Yield

Thursday, January 14, 2010

Chinese Property Agent in New York City

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

I grew up in Klang, Malaysia, and came to the US for college and MBA education.  Consequently, I worked as a banker at Citigroup for 9 years and attained numerous achievements.  Four years ago, I left corporate world to focus on being a full time real estate investor and broker.

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.

Reasons for our clients' purchases include:
(i) taking advantage of the current downturn
(ii) purchasing residence for children attending college or university in Manhattan, such as at New York University or Columbia University.

We also represent clients purchasing commercial investment property in Manhattan, including mixed use buildings and commercial condos. Besides Cantonese Chinese, I also speak Malay, the national language of Malaysia.

Visit Our Overseas Buyer's Guide
New York historical price appreciation
New York investment property overview
Property yield
New York property articles
New York investment property search

Visit our website at http://www.castle-avenue.com/

Best,
Wei Min
tan@castle-avenue.com
212.682.8494

Buying New York Property

New York property, specifically Manhattan, is popular amongst high net worth individuals internationally because of it's brand value and ability to sustain value even during economic downturns. 

Manhattan has performed better than the broader U.S. real estate market and comparable major cities such as San Francisco and Los Angeles.  Relative to peak, Manhattan property decreased by about 20 percent during this economic downturn.  This is compared to the 40%+ decreases in cities like San Francisco and Los Angeles. 

Below are common questions asked by our overseas / international clients about buying New York property

Can foreigners / overseas buyers purchase property in 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 for your New York property.

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?
With New York Property, 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 Overseas Buyer's Guide
New York Property FAQ
New York Price Appreciation History
New York Investment Property Overview
Buying New York Property - Our Services

 
Wei Min Tan is a real estate broker and investor focused on investment property in Manhattan, New York. He can be reached at tan@castle-avenue.com

Buying New York property from overseas, condo and renter management

After our overseas investor client buys an investment condo in New York, the next step is to market to potential tenant renters.  Here are the steps we perform:

1.  Market to potential renters using various marketing channels
2.  Screen potential renters / tenants (credit score, references, salary, work history)
3.  Arrange for tenant move in
4.  Set up automatic transactions for tenant to automatically deposit monthly rent checks into owner's account. 

The system above removes the need for owner to pay monthly property management fees.  Property management fees are anywhere from 3% to 10% of gross rent.  Since Manhattan tenants are usually high income and good credit quality individuals, there is usually very little management necessary.

As the need arises where the tenant requires attention, we will be the point of contact to help resolve the issue at hand.

Visit our Overseas Buyer's Guide
Historical price appreciation
New York property articles
New York property search
New York investment property overview
FAQ

Wei Min Tan is a real estate broker and investor focused on investment property in Manhattan, New York. He can be reached at tan@castle-avenue.com

Thursday, January 7, 2010

Foreign / Overseas parents of New York University, Columbia students. Buy Manhattan property?

For affluent parents of students attending NYU or Columbia, a common question is whether to buy a condo investment property in Manhattan for their child to live in.  Of course, there is no right answer.  Here are high level pointers:

* Staying at the dorm is more expensive than renting an apartment outside.  The dorms, along with the meal plans are revenue streams for the universities.  Columbia and NYU are major landlords and own many properties, land and buildings.  They understand the benefit of owning.

* Renting is the lowest cashflow option.  It's cheaper than staying at the dorm and does not require the large capital outlay associated with buying.

* Buying a condo or building is obviously the long term wealth building strategy.  In this market (because prices have depressed enough).  However, Manhattan property requires tying up at least 40 percent down to break even with rent.  This is capital that may be more productive in another investment. 

Foreigner / International Buyer Mortgage Loan Financing for Manhattan New York Property

Foreign and international buyers of Manhattan New York property can obtain mortgage financing through two sources:
(i) US lenders
(ii) Overseas lenders at the foreigner's home country

US Lenders
The major US banks no longer provide financing to foreigners.  However, certain niche banks still provide foreigner financing.  The downpayment requirement is usually much higher and interest rates are higher as well relative to those provided to borrowers who are US residents.

Overseas Lenders
This is an option as the lender is from the foreign client's home country or region.  Hence the foreign buyer will be more familiar with the documentation terms, mortgage structure etc.  Essentially it's a bank at the foreigner's home country providing an international mortgage.  Again, very few financial institutions provide this but there are niche players.

Manhattan New York Condo Buying Process For Foreigner / Overseas Buyers

As guidance to our foreign / international buyer clients, below is the process for buying a condo in Manhattan, New York.  The process is similar for those buying the condo as an investment property or as a residence.  Main difference is that for investment property buyers, downpayment required by the lender is usually much higher. 

Estimated Time to closing after identifying property:
With Financing:  10 to 12 weeks
All Cash:  2 to 3 weeks

1.  Obtain pre-approval from lender (1-5 days)
Lender can be US bank or overseas bank at foreigner's home country with international mortgage programs. 

2.  Identify Property (2 days - several months)
Property viewing can be a pleasurable or tiring experience.  Make sure you work with a broker who will filter the properties to maximize productivity of your time. 

Tuesday, January 5, 2010

Manhattan Property Prices Drop, 4Q 2009

My article published in Thestreet.com 
Link:  Manhattan Property Prices Drop


NEW YORK (TheStreet) -- The city's major brokerages reported prices in the fourth quarter of 2009 in the Manhattan property market decreased from a year ago while sales increased. I expect this trend to continue into early 2010.


Prudential Douglas Elliman and Miller Samuel reported that the median sales price of an apartment in the fourth quarter of 2009 was $810,000, down 10 percent compared to a year ago. There were 2,473 transactions, up 8.4 percent compared to last year, and 11 percent compared to last quarter. The activity is more than double the 1,195 transactions in the first quarter of 2009. Average price-per-square-foot was $1,176, flat compared to a year ago. Brown Harris Stevens and Halstead, both owned by Terra Holdings, reported median price of $800,000, 9 percent lower than a year ago. There were 2,519 sales, 9 percent higher than a year ago.

Foreigner / Overseas Buyers Interested in New York Investment Property

Foreigners and overseas buyers interested in Manhattan, New York investment property should read our Foreign Buyer Guide below.

Foreign Buyer Guide

Friday, January 1, 2010

Foreigners return to Manhattan

New Neighbors from Far Away - New York Magazine

Fall 2009 showed the return of foreign buyers to Manhattan real estate.  The British, Italians, Brazilians, French, Australians, Russians, and Canadians are coming by the "planeload" after a year of very little buying.  Driven by better prices and favorable exchange rates.

Visit Our Foreign Buyer's Guide

Mortgage Rates To Rise As Fed Ends MBS Purchase

Mortgage Rates To Rise As Fed Ends MBS Purchase

Interest rates on home mortgages set to climb when the Federal Reserve ends its purchases of mortgage bonds, analysts said. The U.S. central bank indicated that it might end the program, through which it bought $1.25 trillion in mortgage bonds, as soon as March. Analysts said the purchases have kept the spread above benchmark interest rates for mortgage bonds much narrower than what private investors would accept. The Fed's withdrawal is expected to push mortgage rates up nearly 0.75 percentage points by the end of 2010.
Excerpted from CFA Institute's Financial Brief.

Extended First Time Home Buyer Credit 2009 / 2010

Excerpted from realtor.org


* Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.

* Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Who Qualifies for the Extended Credit?

* First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.
* Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.