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 email@example.com