Sunday, November 30, 2008

New York City First time home buyer and Investor MUST READ! Know Your Buying Power pt. 2 of 5

The best thing for a buyer in today's market is understand your buying power. Knowing your buying power means more than just having an idea as to what you qualify for and what your monthly payments are going to be.

We always ask during our initial consultation appointment with new buyers what amount of down payment they have. Down payment is so important because it will determine what type of product, condominium or co-op, which is suitable for you. Aside from the amount of the down payment, it is also important to know where your down payment is coming from...such as parents, inheritance, gifting, personal accounts. Some buildings require that you have 30% down, 50% down, or even buy with all cash. Some buildings do not allow parent gifting, or co-purchasers, so this will narrow down what a prospective purchaser should look at.

The overall financial picture is so important when finding the perfect apartment in New York City especially if you are looking into a Co-op. The reason being that each co-op has its own specification for what they look for in a prospective member. Do they allow guarantors, co-purchase, parents monetary involvement, the debt to income ratio and work history. So not only do you have to work with the banks to qualify for the loan, but you have to satisfy the co-ops requirements also.

It's best to discuss your financial conditions upfront so as to not waste time or get excited about an apartment that you would not be able to purchase anyways.
The next major question that I think can confuse a lot of first time homebuyers is what are the differences between a bank lender and a mortgage broker and what are the pros and cons of each? I work with both bank lenders and mortgage brokers so I asked them this exact question and this is what they had to say.
This is the information I received from a mortgage broker...

Working with a Mortgage Broker
More Options working with a Mortgage Broker
When you work with a mortgage broker you have more financial institutions to work with. The broker will research which banks offer the best products that the borrower will qualify for.
When you work directly with one bank you have a loan officer who is hard selling you their products and is not necessarily looking out for the best interests of the borrower.
Banks may change requirements on the mortgage commitment

A mortgage broker is constantly looking at what the bank's requirements are for the borrower and the property that they are looking to finance. When the bank's guidelines change and financing may no longer be viable........the mortgage broker can research the market to find another financial institution to finance the loan.

If you are working directly with a bank and that happens the borrower either has to take what ever new options the bank has to offer or.........go out into the market and start the process of finding financing all over again.

Rates many drastically change after a borrower starts the process
Not often but there are times that after you apply to a particular bank that another bank comes into the market that has much lower rates; ½ point lower. If the new bank's guidelines are ones that work with the transaction and the time parameter still makes it possible that the bank can close when the sales contract requires........the mortgage broker will move the borrower's deal to the new bank.
If a borrower is working directly with a bank and that bank's rates are no longer competitive..........

The borrower now is going to have to determine who has the lowest rates. Time is going to be wastedtrying to find that new bank to work with.
Trying to get the financial institution to grant an exception
When you are working with a mortgage broker they will research which banks are most competitive for the borrower. Sometimes the mortgage the borrower wants is 5% larger than the bank's guidelines or they don't have sufficient credit. A mortgage broker will work towards trying to get the bank to grant an exception or finding other documentation that will satisfy the bank's requirements. Part of that influence, in getting the approval, is the standing that the mortgage brokerage firm has with the bank. If they have a history of having loans in good standing with the bank; the mortgage broker has a better chance of having their request granted.

If a borrower is working directly with a bank they need to know if the loan officer they are working with is in a position to have some exceptions granted. Loan officers at the many banks are not equated with the same credit authority. It is important for the borrower to understand if their loan officer has the authority to get exceptions approved.
Work with a Mortgage Consultant or Banker who has proven experience in this market place
Now is not the time to work someone who has not worked in this industry for many years. In years past borrowers had to be qualified in order to obtain financing. In recent years mortgage brokers and bankers could qualify their borrowers with very little effort.
Now you need someone who knows how to qualify a borrower and the property that they want to purchase.
Debra K. Bedell has been a Mortgage Consultant for over 17 years. She originally worked in the industry when the bank's requirements were very stringent. We have come full circle and those days have returned. It is best to work with a Mortgage Consultant who understands the system and can navigate it.

Working with a Bank
According to my loan consultant at a local Manhattan bank, the best deals are usually at a bank The reason being is because there aren't a lot of confusing add-on fees and middlemen ie. Mortgage brokers, who touch the loan and have to get paid for the work they do. Banks do volume business and make money servicing the loan, not by charging you origination fees.
Brokers don't work with every single bank so if a bank is offering terrific rates on a certain type of loan program they won't have access to it, the consumer will only have access to it through the bank directly. A mortgage broker is not going to tell you what banks they do and don't work with.

In conclusion, whether you work with a broker or a banker you should talk to a professional consultant to talk about your specific needs and goals. Finding someone that listens and gives you the service that you require is what counts.

Is Battery Park City coming to the Upper West Side of Manhattan?

I have been reading a few different articles and on-line postings regarding the development of a specific tract of land on the Upper West Side/Lincoln Square area near the Hudson River. Here are my findings.

Once known as Trump City, Extell Development Co. has finally unveiled their plans for Riverside Center. The plan is said to resemble Battery Park City rather than the West Side and stretches from 59th to 61st St.

The proposed area is currently a couple of parking lots. These parking lots would be transformed into a mega complex of 3.3 million-square-feet. The plan will involve 5 glass towers of residential condominiums, retail space, hotel space, possible movie theatre, possible auto showroom, possible elementary school, parking, and over 3 acres of privately owned open space. The glass towers ranging in heights of 45-59 stories will be designed by Pritzker-winning Christian de Portzamparc. An estimated completion of the project is in 2018.

The plan is still in a development stage needing approval of the City Council and City Planning Commission. When Extell Co gave the Upper West Side Community a preview of its plans there was considerable disapproval.

Being an Upper West Side resident myself and understanding the area involved in this massive project, I think this development would add considerably to the area. There isn't a whole lot going on in that part of the West Side, a lack of restaurants, entertainment, services, subway access. An area based on Battery Park City would be a huge improvement. Riverside Park is a terrific area and the open space of Riverside Center could really pull together that whole stretch.

A lot of the resistance has focused on what community services will be added to support the site. Will Extell develop the schools, community services to provide the needed infrastructure because of the growth of people and families that will be occupying the apartment towers?

Battery Park City is one of the most beautiful neighborhoods in New York City and if Riverside Park closely resembled it the aesthetic value of the West Side would improve. I do agree that the infrastructure of the area would also have to be considered and planned for because of the number of people moving into the neighborhood. If done correctly there would be considerable improvement to the Upper West Side neighborhood and would give a lot of first time apartment buyers an excellent place to live. This project still seems to be in the early stages and much back and forth between Extell, the city, and the neighborhood will occur. (photo source: provided by Extell via NYC DCP)

Let me know what you think of this development!

Thursday, November 27, 2008

What Makes New York City Amazing! The Macy's Day Thanksgiving Parade!

So a few days ago I decided I wanted to go see the Macy's Day Parade for the first time. Living in New York City I called the parade hotline wanting to know the logistics of what time the parade started, finished and most importantly what time do people start lining up to see it. The gentlemen said that people start lining up around 5am for a 9am start and about an 11am finish. I didn't know how I was going to convince my girlfriend to wake up that early to see that parade. Luckily we live in the Upper West Side about two blocks from Central Park West, where the parade begins, and it wouldn't be much more than a five minute walk over to the parade route.

So starting yesterday afternoon the floats and balloons start to get blown up and organized outside of the Museum of Natural History. We walked up there around 5pm and it was already a mad-house. The streets were crowded; the police were already directing traffic, people lining up to see the balloons inflated. At that point I knew we would have to get to the parade route early to get a good spot.

So we arrived around 6:15am and already people had staked out most of the spots right next to the police barricades on the street. We found a great spot right at the corner of 68th and Central Park West, a prime spot as far as I was concerned. By 7am there was at least two rows of people lined up and by 8am it was officially packed. The stragglers start showing up and try to squirm their way in front of you, one of my pet peeves. Luckily the weather was great, a clear sunny morning, cold probably in the low 40s.
The parade started at 9am and the floats and balloons started coming down. The marching bands were terrific, saw a few celebrities, and watching the balloons navigate the streets was entertaining. I was entertained the whole way; it was worth waking up so early, and putting up with the cold and huge crowds. Definitely a lot more fun in person than on TV. Can't wait to see it again next year!
I hope you enjoy some of the pictures, Let me know which ones are your favorite!
The Macy's Day Thanksgiving Parade definitely makes New York City an amazing city to live in!

Saturday, November 22, 2008

New York City First time home buyer and Investor MUST READ!

This is Part 1 in a 5 part series focusing on what a first time buyer or investor should know before they purchase an apartment in New York City and the most common mistakes to avoid.
We will cover- Know What You Are Buying, Know Your Buying Power, Financial Report of the Building, Who is Managing the Building, What's Your Timeframe, and more!

Understanding the Products: (Co-Ops, Condos, Condops, Townhouse)
Buying an apartment in New York City will be an exciting and also daunting experience. Because New York City offers a unique buying experience with many of its own quirks and differences the first step for any New York City first time homebuyer or first time investor is to become well informed and educated about the different real estate products you will be looking at to ensure your experience will be as calm and rewarding as possible.

1. Co-Op:
A phenomenon that's almost unique to Manhattan, the Co-Op Apartment, has been the traditional form of ownership in New York City for the last century. About 80% of all apartments available for purchase are in co-operative buildings. Co-ops are owned by an apartment corporation. When you purchase within a co-op building, you're purchasing shares of the corporation that entitle you, as a shareholder, to a "proprietary lease." The bigger your apartment, the more shares of the corporation you own.
Standard Co-Op apartments:
Board approval is required. You are buying shares of corporation, you are required to put down 20% or more of down payment, there will be a full financial disclosure, debt to income ratio requirement and board interviewing process. Each Co-Op building has their own financial requirements and criteria, some are more flexible than others, such as allowing guarantor, co-purchase, gift money from parents, pied-a-terre, your debt to income ratio, work history, down payment required...

Subleasing a co-op can be difficult. The board of directors will have to approve the prospective tenant subleasing your apartment. Each building will have their own rules regarding for how long you can lease your unit and other criteria.

All prospective purchasers must interview with the Board of Directors. Prior to the interview, prospective purchasers prepare a detailed "Board Package" which usually contains personal and professional letters of recommendation as well as a great deal of personal information concerning income and assets.

Sponsor Co-Op apartments:
NO Board approval is required. These are Apartments that are held as an investment by the sponsor , the original developer who built the building or converted the building to a co-op. Sponsor units command a premium because people who might not pass a board or don't want to go through a board approval process can buy them.

For example, a sponsor unit would be a good choice for parents who want to buy an apartment for a child who is a student. A sponsor unit may be the best apartment for someone who is not working, or only has a short job history. Buyers of a sponsor unit should take note that they will need to pay NY State and NY City transfer taxes, and often the seller's attorney fees. You still have to submit a board package (Homeland Security! The management company needs to know who is moving into their building) and you almost always have to abide by the building's house rules as far as sublet requirements and pets.

2. Condominium:
Unlike Co-ops, you are buying Real Property. You hold title to your apartment unit plus a percentage of the entire project in common with all other owners.
Resale condo apartments:
These apartment units are previously owned. The sellers are individual owners. There is still a monthly common charge similar to the maintenance charge in a co-operative. These charges don't include your real estate taxes and are not tax deductible. They also tend to be lower than in co-ops because there is no underlying mortgage for a condominium building.
There is no board approval process like a co-op, typically you can finance up to 90% of the purchase price and sublet them at will. Condominiums are the number one choice for flexibility. Because there is more scarcity and flexibility owning a condominium there is a premium paid to own a condominium compared to buying a co-op apartment.
New Development Condo apartments:
These apartments are brand new construction or pre-construction. They are being sold by sales agents of the developer. Buying into new construction has its perks such as being able to pick out the best apartment unit that suits your need, particular floor apartment, or apartment built to your specification if you get in early... Some of the disadvantage of new development would be, uncertain on closing date, not able to know exactly what the apartment looks like, the building management track record, and the possible higher closing cost than resale condo apartments.

3. Condop: Co-Op with Condo rules.
The special hybrid of a Co-Op and a Condo, the Cond-op. When buying into a Cond-op, you are buying shares of corporation, as you would be if you were buying into a standard Co-Op, but the major difference is that the policy and the rules of the building will be Condominium rules. These rules would be unlimited sublet policy, able to resale the apartment unit immediately with no board package and interview, investor friendly, a lot more flexibility.

4. Townhouses:
Townhouses are sometimes bought as hey are non-uniform units in certain neighborhoods or streets in New York City that are designed to mimic detached or semi-detached homes. The distinction between dwellings called just "apartments" or "condos" is that these townhouses usually consist of multiple families, usually multiple floors. The price range of the townhouse is usually higher than single unit of condo or co-op apartments.

Which is Best for YOU???
That really depends on your specific situation and what your goals for purchasing are. If you are looking to buy an investment property and rent it out immediately then a condo or condop would give you the most flexibility. Are you a first time buyer who has fallen in love with prewar apartments with their high ceilings, fireplaces, ornate details, well then a co-op will probably be in your future. Are you looking for privacy, a house in the city, more square footage than in a high rise, looking for an exclusive property, a townhouse might be a good option. What type of property is best for you depends on your personal preferences, your financial situation, your long term goals, and many other important factors. If you have just started thinking about purchasing it may be in your interest to contact a real estate agent for a free consultation regarding what type of property in New York City might be right for you.

This is part one in a series centered on first time buyers in New York City, our next post will focus on the next step in your process, KNOW YOUR BUYING POWER!

Thursday, November 20, 2008

The Me Too Clause

The Me Too Clause

For the last 5 years buying a new development condominium in New York City was a sure fire way of seeing a great return on your initial investment. If you bought in at the early stages of the initial offering, you waited and as the building went up, so did the prices of the available units. So by the time you actually closed on your apartment your exact same unit would probably sell for 10-20% than what you bought it for. This was one of the big reasons why there are so many new development condominiums in Manhattan.

Now that the piping hot real estate market in New York City has cooled off many of the new developments are struggling to find willing buyers to purchase the new product.

A recent buyer said, “Why should I buy now, when condo prices may tumble over the next year?” That’s a great question and this is what some of the developers are doing to handle that objection.

They are adding a price protection guarantee. So if a buyer signs today and if the developer drops prices while you are still waiting to close, you will be guaranteed the lowest price other buyers were able to negotiate.

This “me too clause” is not a universal offer for all developments, but for the developers that are employing this guarantee they are hoping to entice some of these nervous new development buyers who are concerned about the direction of the real estate market in New York City.

I think this incentive will help some of these new development condominiums. If I had a first time buyer purchasing one of these new development condominiums with this “me too clause” I would be very interested to see how the attorney’s write into the contracts how this clause will actually work.

If you are a first time buyer looking at a new development and want to know which buildings are participating in this new incentive, click here and we will email you the new developments that are offering this incentive.


Monday, November 17, 2008

Gramercy Starck Condominium in New York City with Amazing Buyer Incentives

Unlike the rest of the country New York City has just turned into a full scale buyer’s market. We were riding a meteoric rise in prices and now we are in the eye of the storm of the financial market crisis. The New York City real estate market and Wall Street have such strong ties that when Wall Street succeeds a lot of that wealth flows into the real estate market. Now that Wall Street is restructuring itself, a lot of prospective buyers are sitting on the sidelines waiting to see what happens.

I just took a new listing with a very motivated seller and am asking for your advice on what you did to sell your listings in this type of market. The apartment is in fantastic condition, it’s in a brand new building and has barely been lived in. There are 6 other units available in the same building with the exact same layout, but on different floors. We are priced very competitively, and are trying to set our listing apart other than price with different incentives.

Our seller will pay for your moving costs, or they will pay for a year’s worth of your groceries, or help buy down your interest rate. We are trying to think outside the box, inside the box, around the box, destroying the box, throwing the box, anything we can do to expose this property to the highest number of qualified buyers and secure a highly qualified buyer.

To look at our listing click here!

Open House this weekend or call us to schedule a viewing.

What will it take for you to make an offer? What can we do to sweeten the deal?

Let us know!

What Makes New York City Amazing, $801,000 for a Storage Room!

A basement storage room sold for $801,000 in the renowned Dakota apartment building. The Dakota, located on Central Park West, is most well known as the home of John Lennon and still is the current residence of Yoko Ono. The apartments sell for upwards of 10-20 million dollars.Now this was no ordinary damp tiny storage room. The room was about 800 square feet had 20-foot-high ceilings and two windows. There is a bathroom and electricity wired already into the unit. Despite The Dakota being one of New York City’s most expensive and desired buildings there is no common exercise room for the building residents. The new owner of the storage unit was planning on converting the room into a small gymnasium and opening it up to the buildings residents. How altruistic of him!!
Space is at such a premium in New York City that I not really that surprised by this sale. First is the fact that if you can afford a $20 million dollar apartment, an $800,000 storage unit is probably not too much of a stretch in your budget. If you look at the price per square foot it really is not that much in New York City standards. It’s just at $1,000 a sq/ft, some condominium buildings have been selling at $3,000+ sq/ft recently.

I live in the Upper West Side and I walk by the Dakota to go to Central Park. It is an extraordinary building. The location is perfect right at 72nd and Central Park West. The architecture is absolutely eye-catching. You can’t help but check out the building. I’ve never been in any of the apartments in The Dakota, but when I do I will make sure to ask if a basement storage room comes with the unit knowing what one could sell for.