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Tag: real estate investment tips

  • How the Green New Deal Would Impact Real Estate Investors

    Depending on your views on climate change, the Green New Deal framework will either conjure up enthusiasm, anxiety, or perhaps a combination of the two. The proposed bill, which has since been explained as a framework towards what we ought to work towards, calls for “maximum energy efficiency”. Based on scientific research, which concludes climate change is imminent and potentially disastrous, the proposal aims for net-zero emissions in the United States by 2050. As part of the plan to get there, this means every building in the country would need to be upgraded for maximal energy efficiency, water efficiency, safety, affordability, comfort, and durability.

    As of the start of 2020, approximately 40% of the United States’ carbon monoxide emissions come from either commercial or residential real estate buildings (Neiditch, Forbes). Many of the political proponents of the Green New Deal were pushing it behind the idea that up to $1 trillion of infrastructure and coastal real estate could be damaged by global warming by 2050. According to the Energy Information Administration (EIA), currently, there are approximately 5.6 million commercial real estate buildings in the United States. Specifically in New York City, as part of an ongoing effort to combat climate change, legislation was passed to force buildings that are larger than 25,000 square feet to make energy efficient alterations. The legislation mandates cutting down greenhouse gas emissions 40% by 2030 and 80% by 2050. While the parameters for smaller, residential buildings aren’t as explicit, it’s estimated 95 million homes will be impacted and the cost to owners will be in excess of $400 billion (Neiditch, Forbes).

    While the Green New Deal did not come close to passing as it was originally written and there is unlikely to be sweeping legislation on a national level to overhaul climate change, many cities and states are finding a balance between clean air and economic productivity. Unfortunately, a lot of this conversation tends to be intertwined with politics, but the reality is a rural area in Kentucky (as an example) is not going to have the same availability of economic or human capital resources as a metropolis, like New York or Los Angeles. The lack of availability of these resources puts constraints on the ability of certain regions to advance their technological capabilities, thereby making the real estate investment opportunities unattractive to potential investors.

    Though preparations to meet the 2030 and 2050 targets have begun, there are some more immediate upgrades property owners can make that aren’t as long-term oriented, including switching out lightbulbs for “smart” lighting, upgrading HVAC systems, installing remote-controlled window shades, painting roofs with light-reflecting paint, planting trees, and installing photovoltaics. Additionally, preparation for weatherization is key to having a more energy efficient property. Windows, doors, and insulation can all be switched out and there is legislation to include different types of incentives for property owners to make these changes. Upgrading electric and plumbing systems, as well as installing solar panels can make homes more marketable, considering these changes are becoming more prevalent to the point of necessity. Finally, the Green New Deal framework focuses heavily on “green spaces” – or lawns – that cover more than 40 million acres of land in the United States. Lawns limit biodiversity and encourage pesticide usage and emissions from lawnmowers. The Green New Deal supporters encourage the conversion of these spaces to victory gardens and the expansion of green landscape architecture practices. An example of this is xeriscaping, or sustainable, easy-to-maintain landscaping first used in arid regions, which uses native plants and limits turf areas. This can reduce outdoor water use by as much as 50%, saving water as well as the environment (Neiditch, Forbes).

    So, what does the ambitious Green New Deal framework and the implications it will have on commercial and residential real estate mean for investors? Firstly, investors should focus on high-tech, climate-resilient opportunities in the real estate market. Secondly, residential real estate owners who are not under pressure from legislators to make climate change friendly adjustments to their properties should do so anyway, otherwise they will be far less attractive to prospective investors. Finally, commercial real estate investors, who are under pressure to begin implementing climate change measures mandated by signed legislation, are going to face major hurdles with regards to cost cutting. This legislation poses further challenges to commercial real estate investors, who are already in a difficult position coming out of the pandemic, in addition to facing the necessity to transform their assets to handle the push towards digital transformation. One thing is for sure: the conversation will continue. Being prepared for change is the best way to not only save the environment, but your long-term financial stability as well.

  • How the Green New Deal Would Impact Real Estate Investors

    Depending on your views on climate change, the Green New Deal framework will either conjure up enthusiasm, anxiety, or perhaps a combination of the two. The proposed bill, which has since been explained as a framework towards what we ought to work towards, calls for “maximum energy efficiency”. Based on scientific research, which concludes climate change is imminent and potentially disastrous, the proposal aims for net-zero emissions in the United States by 2050. As part of the plan to get there, this means every building in the country would need to be upgraded for maximal energy efficiency, water efficiency, safety, affordability, comfort, and durability.

    As of the start of 2020, approximately 40% of the United States’ carbon monoxide emissions come from either commercial or residential real estate buildings (Neiditch, Forbes). Many of the political proponents of the Green New Deal were pushing it behind the idea that up to $1 trillion of infrastructure and coastal real estate could be damaged by global warming by 2050. According to the Energy Information Administration (EIA), currently, there are approximately 5.6 million commercial real estate buildings in the United States. Specifically in New York City, as part of an ongoing effort to combat climate change, legislation was passed to force buildings that are larger than 25,000 square feet to make energy efficient alterations. The legislation mandates cutting down greenhouse gas emissions 40% by 2030 and 80% by 2050. While the parameters for smaller, residential buildings aren’t as explicit, it’s estimated 95 million homes will be impacted and the cost to owners will be in excess of $400 billion (Neiditch, Forbes).

    While the Green New Deal did not come close to passing as it was originally written and there is unlikely to be sweeping legislation on a national level to overhaul climate change, many cities and states are finding a balance between clean air and economic productivity. Unfortunately, a lot of this conversation tends to be intertwined with politics, but the reality is a rural area in Kentucky (as an example) is not going to have the same availability of economic or human capital resources as a metropolis, like New York or Los Angeles. The lack of availability of these resources puts constraints on the ability of certain regions to advance their technological capabilities, thereby making the real estate investment opportunities unattractive to potential investors.

    Though preparations to meet the 2030 and 2050 targets have begun, there are some more immediate upgrades property owners can make that aren’t as long-term oriented, including switching out lightbulbs for “smart” lighting, upgrading HVAC systems, installing remote-controlled window shades, painting roofs with light-reflecting paint, planting trees, and installing photovoltaics. Additionally, preparation for weatherization is key to having a more energy efficient property. Windows, doors, and insulation can all be switched out and there is legislation to include different types of incentives for property owners to make these changes. Upgrading electric and plumbing systems, as well as installing solar panels can make homes more marketable, considering these changes are becoming more prevalent to the point of necessity. Finally, the Green New Deal framework focuses heavily on “green spaces” – or lawns – that cover more than 40 million acres of land in the United States. Lawns limit biodiversity and encourage pesticide usage and emissions from lawnmowers. The Green New Deal supporters encourage the conversion of these spaces to victory gardens and the expansion of green landscape architecture practices. An example of this is xeriscaping, or sustainable, easy-to-maintain landscaping first used in arid regions, which uses native plants and limits turf areas. This can reduce outdoor water use by as much as 50%, saving water as well as the environment (Neiditch, Forbes).

    So, what does the ambitious Green New Deal framework and the implications it will have on commercial and residential real estate mean for investors? Firstly, investors should focus on high-tech, climate-resilient opportunities in the real estate market. Secondly, residential real estate owners who are not under pressure from legislators to make climate change friendly adjustments to their properties should do so anyway, otherwise they will be far less attractive to prospective investors. Finally, commercial real estate investors, who are under pressure to begin implementing climate change measures mandated by signed legislation, are going to face major hurdles with regards to cost cutting. This legislation poses further challenges to commercial real estate investors, who are already in a difficult position coming out of the pandemic, in addition to facing the necessity to transform their assets to handle the push towards digital transformation. One thing is for sure: the conversation will continue. Being prepared for change is the best way to not only save the environment, but your long-term financial stability as well.

  • CRE PropTech: How Will it be Affected by the Aftermath of COVID-19

    COVID-19 will forever change the landscape of CRE (Commercial Real Estate), especially for firms who are used to operating almost exclusively in a brick and mortar, office environment. The aftermath of COVID-19 will almost undoubtedly include more “smart” CRE. To put it another way, as software like Zoom has become a household name – whereas prior to COVID-19 it was largely known to the white-collar working class – you can expect firms to invest less in physical property. Consequently, the data shows that in every sector, at least in the short-term, PropTech investment has slowed down (Abuelsamid, Forbes).

    Intuitively, successful long-term investors tend to be heavily data driven, which has been a big reason for the slowdown in PropTech. Investors within the real estate sector are exercising caution with regards to their portfolios, as well as towards new deals for CRE projects. A great deal of this is attributed to the initial concept of this piece (which Forbes agrees with): corporations and startup firms alike are showing an increased interest in technology, which allowed them to work “smart” (i.e. Zoom) despite the pandemic (Abuelsamid, Forbes). With decreased overhead being a large incentive for startups and pressure from shareholders to cut costs being a large incentive for big corporations, many are realizing that the way they were forced to do business is perhaps a more efficient way than they were prior to the COVID-19 pandemic.

    With that being said, as we mentioned in a previous piece, PropTech is still a relatively new field to most investors. The CRE investing subsector of PropTech is even smaller, so there’s definitely still plenty of opportunity for successful PropTech investment vehicles. Even with the current data showing there’s slowed growth in the PropTech CRE subsector, that’s not to say you shouldn’t keep an eye out for solid investment opportunities, as they are still out there and can definitely be lucrative. This is the main reason you’ll typically find seasoned, experienced investors in the CRE PropTech space. There is opportunity for large returns, but it is definitely slim.

    In the longer-term, there’s no reason right now to believe firms will switch back to investment in more physical property, especially when that money can be spent on human capital. Therefore, if you’re interested in PropTech investment strategies, you should not expect to see consistent positive performance from PropTech CRE investments. On the other hand – while this subject deserves a complete discussion on its own – residential PropTech is definitely on the rise (Aramati, Forbes). With a major push coming from cloud technologies and digital transformation, there’s a lot more investment in “smart” residential real estate as opposed to commercial real estate. Generally speaking, investments in “smart” technology have gained a tremendous amount of traction and thereby very large returns for earlier stage investors. Again, as we discussed in a previous article regarding PropTech, technological advancement is the future and investors who are looking for the next Amazon or Google in the real estate market ought to look into residential PropTech options with a more favorable outlook than commercial PropTech.

  • CRE PropTech: How Will it be Affected by the Aftermath of COVID-19

    COVID-19 will forever change the landscape of CRE (Commercial Real Estate), especially for firms who are used to operating almost exclusively in a brick and mortar, office environment. The aftermath of COVID-19 will almost undoubtedly include more “smart” CRE. To put it another way, as software like Zoom has become a household name – whereas prior to COVID-19 it was largely known to the white-collar working class – you can expect firms to invest less in physical property. Consequently, the data shows that in every sector, at least in the short-term, PropTech investment has slowed down (Abuelsamid, Forbes).

    Intuitively, successful long-term investors tend to be heavily data driven, which has been a big reason for the slowdown in PropTech. Investors within the real estate sector are exercising caution with regards to their portfolios, as well as towards new deals for CRE projects. A great deal of this is attributed to the initial concept of this piece (which Forbes agrees with): corporations and startup firms alike are showing an increased interest in technology, which allowed them to work “smart” (i.e. Zoom) despite the pandemic (Abuelsamid, Forbes). With decreased overhead being a large incentive for startups and pressure from shareholders to cut costs being a large incentive for big corporations, many are realizing that the way they were forced to do business is perhaps a more efficient way than they were prior to the COVID-19 pandemic.

    With that being said, as we mentioned in a previous piece, PropTech is still a relatively new field to most investors. The CRE investing subsector of PropTech is even smaller, so there’s definitely still plenty of opportunity for successful PropTech investment vehicles. Even with the current data showing there’s slowed growth in the PropTech CRE subsector, that’s not to say you shouldn’t keep an eye out for solid investment opportunities, as they are still out there and can definitely be lucrative. This is the main reason you’ll typically find seasoned, experienced investors in the CRE PropTech space. There is opportunity for large returns, but it is definitely slim.

    In the longer-term, there’s no reason right now to believe firms will switch back to investment in more physical property, especially when that money can be spent on human capital. Therefore, if you’re interested in PropTech investment strategies, you should not expect to see consistent positive performance from PropTech CRE investments. On the other hand – while this subject deserves a complete discussion on its own – residential PropTech is definitely on the rise (Aramati, Forbes). With a major push coming from cloud technologies and digital transformation, there’s a lot more investment in “smart” residential real estate as opposed to commercial real estate. Generally speaking, investments in “smart” technology have gained a tremendous amount of traction and thereby very large returns for earlier stage investors. Again, as we discussed in a previous article regarding PropTech, technological advancement is the future and investors who are looking for the next Amazon or Google in the real estate market ought to look into residential PropTech options with a more favorable outlook than commercial PropTech.

  • Homebuyers: Five Tips for Financing and Budgeting

    When it comes to home buying, there’s a well-known critical rule: Avoid purchasing more house than you can afford. However, what represents “affordable” will differ between homebuyers. Therefore, one of the most important things for a first-time home buyer to do is plan and budget in advance. Diving into a potential multi-decade financial commitment is one of the most daunting experiences for an individual (or a couple, for that matter) in their lives. It is also highly probable that it will be your most expensive purchase. Before doing so, strategically allocating your money is essential. Otherwise the costs are steep. Before you know it, you may quickly find yourself getting buried in financial hardship, or the ultimate worst nightmare: foreclosure. To avoid this, we recommend the following five tips for first-time homebuyers.

    1. Strongly consider getting started with the “28 Percent Rule”

    The “28 Percent Rule” dictates that your mortgage shouldn’t be more than 28% of your gross income each month. While the Federal Housing Administration (FHA) recommends a slightly more generous allowance of 31%, first-time homebuyers in particular ought to air on the side of caution, considering they are likely repaying some other forms of debt. Additionally, there are the normal monthly expenses (food, transportation, healthcare, etc.) that any working-class individuals would have to account for.

    2. Your down payment should dictate your home’s budget

    Generally, lenders will look for homebuyers to put at least 20% of the property’s purchase price in cash. Though you can utilize other resources to obtain an approval, such as private mortgage insurance (PMI), this will inflate your monthly mortgage payment by roughly 1% (Fuscaldo, Investopedia). It’s important to note that the PMI depends significantly on the size of the property, your credit score, and the potential for the value of the home to increase over time. It’s equally important to note that it is in your long-term best interest to avoid these kinds of instruments, as they’ll tie up more and more of your monthly disposable income in interest repayment. On top of everything else, it’s critical to remember closing costs, as they’ll cost you anywhere from 2-5% of the home’s purchasing price, depending on what state you live in (Fuscaldo, Investopedia). Avoid over-leveraging yourself. Put as much money down as you can afford to, but certainly aim for higher than the bare minimum 10%.

    3. Precisely track your debt-to-income ratio

    It’s a very well-known fact that mortgage lenders will look at a prospective homeowner’s debt-to-income ratio when determining if they will extend a loan to the borrower. Therefore, keeping track of this ratio on a monthly basis is a good benchmark for prospective homeowners to calculate themselves, in order to ultimately decide if a home they’re interested in is affordable. Suppose your gross monthly income is $5,000. Then, if your mortgage payment is $1,500 and the total of your other monthly financial obligations is $1,000, this puts your debt-to-income ratio at 50%. Qualified mortgage lenders very rarely will approve a borrower with a debt-to-income ratio above 43%. Thus, in the above example the hopeful homeowner would unlikely to get approved and even if they did, it’s probable they would be setting themselves up for failure.

    4. Don’t forget all homeowner expenses, not just the monthly mortgage

    There’s no question getting approved for a home loan is an essential step in the process, yet this is only one obligation (though it’s by far the largest). The tough reality is your monthly mortgage payment will not be your only reoccurring expense as a homeowner. Consider additional monthly homeowners’ insurance, utilities, repairs, and maintenance costs. Depending on the season, the snow will need to be shoveled, or the lawn will need to be mowed, or the shrubs will need to be trimmed. Many find that over time, the list just keeps growing. When you calculate the affordability of a home, you may find that an affordable $1,500 monthly mortgage payment is no longer palatable when you factor in an additional $1,000 in monthly expenses. This is a large reason behind the idea of putting a considerable downpayment on the home; it frees up money for those other monthly costs, rather than irresponsibly squandering it on interest.

    5. Settle on a property you can handle managing

    Not only are the additional monthly homeowner expenses important to factor in, but you also need to be mindful of the condition and size of the property. In a situation when you’re concerned about a large utility bill from heating or cooling, less is more. A 4,000-square-foot property that needs serious repair may be a tempting proposition, until it breaks the budget. You may find you’re better off financially with more of a picturesque small home on a quaint hill, in a quiet neighborhood instead. For your own benefit, have a construction or homeowner expert look into the homes specifications to ensure you haven’t missed anything vitally wrong.

    The bottom line is that to many, home ownership is still considered to be the American Dream. In reality, it can quickly turn into a financial nightmare when you miscalculate your monthly expenditures. First-time buyers in particular often want more than they can take on at that moment. Without taking the time to properly prepare for the single biggest purchase of one’s life, they can find themselves house-rich and cash-poor, leading to ultimate financial misery. We urge any future homebuyers to take the necessary preparation steps. Do not sign up for a dream you are not exceptionally confident you can afford.

  • Homebuyers: Five Tips for Financing and Budgeting

    When it comes to home buying, there’s a well-known critical rule: Avoid purchasing more house than you can afford. However, what represents “affordable” will differ between homebuyers. Therefore, one of the most important things for a first-time home buyer to do is plan and budget in advance. Diving into a potential multi-decade financial commitment is one of the most daunting experiences for an individual (or a couple, for that matter) in their lives. It is also highly probable that it will be your most expensive purchase. Before doing so, strategically allocating your money is essential. Otherwise the costs are steep. Before you know it, you may quickly find yourself getting buried in financial hardship, or the ultimate worst nightmare: foreclosure. To avoid this, we recommend the following five tips for first-time homebuyers.

    1. Strongly consider getting started with the “28 Percent Rule”

    The “28 Percent Rule” dictates that your mortgage shouldn’t be more than 28% of your gross income each month. While the Federal Housing Administration (FHA) recommends a slightly more generous allowance of 31%, first-time homebuyers in particular ought to air on the side of caution, considering they are likely repaying some other forms of debt. Additionally, there are the normal monthly expenses (food, transportation, healthcare, etc.) that any working-class individuals would have to account for.

    2. Your down payment should dictate your home’s budget

    Generally, lenders will look for homebuyers to put at least 20% of the property’s purchase price in cash. Though you can utilize other resources to obtain an approval, such as private mortgage insurance (PMI), this will inflate your monthly mortgage payment by roughly 1% (Fuscaldo, Investopedia). It’s important to note that the PMI depends significantly on the size of the property, your credit score, and the potential for the value of the home to increase over time. It’s equally important to note that it is in your long-term best interest to avoid these kinds of instruments, as they’ll tie up more and more of your monthly disposable income in interest repayment. On top of everything else, it’s critical to remember closing costs, as they’ll cost you anywhere from 2-5% of the home’s purchasing price, depending on what state you live in (Fuscaldo, Investopedia). Avoid over-leveraging yourself. Put as much money down as you can afford to, but certainly aim for higher than the bare minimum 10%.

    3. Precisely track your debt-to-income ratio

    It’s a very well-known fact that mortgage lenders will look at a prospective homeowner’s debt-to-income ratio when determining if they will extend a loan to the borrower. Therefore, keeping track of this ratio on a monthly basis is a good benchmark for prospective homeowners to calculate themselves, in order to ultimately decide if a home they’re interested in is affordable. Suppose your gross monthly income is $5,000. Then, if your mortgage payment is $1,500 and the total of your other monthly financial obligations is $1,000, this puts your debt-to-income ratio at 50%. Qualified mortgage lenders very rarely will approve a borrower with a debt-to-income ratio above 43%. Thus, in the above example the hopeful homeowner would unlikely to get approved and even if they did, it’s probable they would be setting themselves up for failure.

    4. Don’t forget all homeowner expenses, not just the monthly mortgage

    There’s no question getting approved for a home loan is an essential step in the process, yet this is only one obligation (though it’s by far the largest). The tough reality is your monthly mortgage payment will not be your only reoccurring expense as a homeowner. Consider additional monthly homeowners’ insurance, utilities, repairs, and maintenance costs. Depending on the season, the snow will need to be shoveled, or the lawn will need to be mowed, or the shrubs will need to be trimmed. Many find that over time, the list just keeps growing. When you calculate the affordability of a home, you may find that an affordable $1,500 monthly mortgage payment is no longer palatable when you factor in an additional $1,000 in monthly expenses. This is a large reason behind the idea of putting a considerable downpayment on the home; it frees up money for those other monthly costs, rather than irresponsibly squandering it on interest.

    5. Settle on a property you can handle managing

    Not only are the additional monthly homeowner expenses important to factor in, but you also need to be mindful of the condition and size of the property. In a situation when you’re concerned about a large utility bill from heating or cooling, less is more. A 4,000-square-foot property that needs serious repair may be a tempting proposition, until it breaks the budget. You may find you’re better off financially with more of a picturesque small home on a quaint hill, in a quiet neighborhood instead. For your own benefit, have a construction or homeowner expert look into the homes specifications to ensure you haven’t missed anything vitally wrong.

    The bottom line is that to many, home ownership is still considered to be the American Dream. In reality, it can quickly turn into a financial nightmare when you miscalculate your monthly expenditures. First-time buyers in particular often want more than they can take on at that moment. Without taking the time to properly prepare for the single biggest purchase of one’s life, they can find themselves house-rich and cash-poor, leading to ultimate financial misery. We urge any future homebuyers to take the necessary preparation steps. Do not sign up for a dream you are not exceptionally confident you can afford.

  • CRE Investing Through CrowdStreet

    CrowdStreet™ is an up-and-coming type of crowdfunding website that’s tailored specifically to CRE (Commercial Real Estate) investors. Founded in 2013, the site pairs thousands of investors on their marketplace and pools their money to invest in different CRE properties. The benefits that CrowdStreet claims to provide are: low cost, institutional quality real estate investments that have lower fees than REITs and only include pre-vetted projects.

    As of June 19th, 2021, CrowdStreet has completed 488 deals, raised $1.9B in capital, and returned $197M of investor distributions (www.CrowdStreet.com). With new deals launching every week, the CrowdStreet marketplace is also unique because it gives prospective investors the following three (3) projections on each CRE investment: (1) Targeted Investor IRR, (2) Targeted Equity Multiple, and (3) Targeted Investment Period. Keeping in mind these are all pre-vetted projects, this allows prospective investors to pick from multiple properties based on the attributes that are geared towards their goals.

    Since there are many different types of real estate crowdfunding websites, CrowdStreet in particular distinguishes itself because they target CRE properties specifically. They then break-down individual prospective gains, equity multiples, and the period the investor will have their capital tied up. This allows investors to see a clearer overview of their investment return potential and the amount of time their capital will be utilized for the CRE investment, so they can make more informed decisions, as well as better manage the risk of their overall portfolio. But there’s a catch. While CrowdStreet is continuing to grow along with their user base, an investor account minimum must be $25,000 and the platform is only available to accredited investors. For seasoned CRE investors, that may not be as big of a problem. However, for the average qualifying CRE investor, CrowdStreet’s business model is viewed as highly illiquid.

    Overall, while CrowdStreet offers distinct advantages to CRE investors, its limitations prevent it from reaching a wider audience. Clearly that’s their intention, but perhaps some of the requirements limit the potential success of their offerings. For example, if a non-accredited investor has a higher risk tolerance and is willing to invest the minimum amount, the CRE project may not get financing because that investor wouldn’t be accepted on CrowdStreet. Similarly, if an accredited investor is more risk averse, or is not in a position to immediately invest $25,000 in a given project over a period of years, there is no middle-ground and again, the CRE project may not receive financing. Concisely, within the limited scope of their business model, there is more CrowdStreet can do to broaden their user base and thereby pave the way for more CRE projects to receive financing.

  • What the COVID-19 Vaccine Means for NYC’s Real Estate Market (May 2021)

    What the COVID-19 Vaccine Means for NYC’s Real Estate Market (May 2021)

    As of the beginning of May 2021, in New York City 48.9% of New Yorkers have received one dose of the COVID-19 vaccine, while 37% have been fully vaccinated. This coverts to 7.19 million people fully vaccinated, compared to approximately 106 million nationwide, or 32.3% of America’s total population. Though the vaccinations have slowed down from their initial surge in NYC, their apparent effects on the real estate market were what sellers and renters were hoping for.

    The relatively mass availability of vaccinations seemed to provide a sense of stability to the real estate market in NYC; renters and sellers appear to now be able to gauge price and demand more easily. Additionally, according to Realtors, both average prices for rentals and sales in NYC have continued to rise these first five months of 2021, as the COVID-19 vaccinations became more and more available. In almost all prestigious NYC locations, studio apartments are now consistently renting for over $2500 per month and 1-bedroom apartments are averaging close to $3500 per month. These are more like the numbers we witnessed prior to the COVID-19 pandemics and prior to the moratoriums issued by the State of New York and City of Manhattan, which undoubtedly temporarily created downward pricing in the NYC real estate rental market.

    Other housing statistics from Realtors offer the same conclusion: the stability of real estate prices in NYC have certainly increased by an upward trajectory. Steven James, President and CEO of Douglas Elliman, said there will be an immediate increase in activity once the vaccine is approved. He hinted that the best “opportunity is now” for prospective real estate investors because prices will only continue to increase proportionate to the amount of New Yorkers and Americans who get fully vaccinated. George Ratiu, a senior economist at Realtors, echoed Steven’s point by predicting “a gradual shift over the next six to eight months” in rising real estate prices in NYC.

  • What the COVID-19 Vaccine Means for NYC’s Real Estate Market (May 2021)

    What the COVID-19 Vaccine Means for NYC’s Real Estate Market (May 2021)

    As of the beginning of May 2021, in New York City 48.9% of New Yorkers have received one dose of the COVID-19 vaccine, while 37% have been fully vaccinated. This coverts to 7.19 million people fully vaccinated, compared to approximately 106 million nationwide, or 32.3% of America’s total population. Though the vaccinations have slowed down from their initial surge in NYC, their apparent effects on the real estate market were what sellers and renters were hoping for.

    The relatively mass availability of vaccinations seemed to provide a sense of stability to the real estate market in NYC; renters and sellers appear to now be able to gauge price and demand more easily. Additionally, according to Realtors, both average prices for rentals and sales in NYC have continued to rise these first five months of 2021, as the COVID-19 vaccinations became more and more available. In almost all prestigious NYC locations, studio apartments are now consistently renting for over $2500 per month and 1-bedroom apartments are averaging close to $3500 per month. These are more like the numbers we witnessed prior to the COVID-19 pandemics and prior to the moratoriums issued by the State of New York and City of Manhattan, which undoubtedly temporarily created downward pricing in the NYC real estate rental market.

    Other housing statistics from Realtors offer the same conclusion: the stability of real estate prices in NYC have certainly increased by an upward trajectory. Steven James, President and CEO of Douglas Elliman, said there will be an immediate increase in activity once the vaccine is approved. He hinted that the best “opportunity is now” for prospective real estate investors because prices will only continue to increase proportionate to the amount of New Yorkers and Americans who get fully vaccinated. George Ratiu, a senior economist at Realtors, echoed Steven’s point by predicting “a gradual shift over the next six to eight months” in rising real estate prices in NYC.

  • Five Key Tips to Investing in Rental Properties

    Five Key Tips to Investing in Rental Properties

    1. Stay on Top of Your Personal Debt

    Savvy investors tend to make sure they are not highly levered, especially prior to investing in any real estate property they intend to rent out. While all would agree that it’s not necessary to have 100% cash up front in many situations to make the property a great investment, it’s wise to try to pay down any personal debt you may have prior to, or after acquiring a rental property. Otherwise you may find that your expenses – especially something like a huge, unexpected medical bill – could cause you to pay a lot more in interest, thus losing profit, than you were originally seeking to.

    2. Make Sure You Can Really Afford Your Downpayment

    Whether you want to purchase a rental property for supplemental income, to diversify your investment portfolio, or as part of a longer-term investing strategy, it’s essential that when you decide to pull the trigger, you’re confident your budget can sustain the downpayment. This ties back to staying on top of your personal debt and other investments in your portfolio, but at the same time it’s a common mistake. You won’t be putting down 3-10% like you may on your personal home. With the minimum being 20% and if financing, you generally see it coming in the form of a personal loan, you can once again get into a rut with interest and possible refinancing if you can’t really afford the initial downpayment.

    3. Stay Away from Financing with High Interest Rates

    Comparatively in 2020, the cost of borrowing money has been very cheap due to economic factors from the COVID-19 pandemic, however in general loans with higher interest rates are best to avoid when looking to buy a rental property. Remember, you’re not going to get the benefit of a traditional mortgage interest rate, so be sure to stay away from personal loans (or other means of obtaining financing) that carry high interest rates.

    4. Location, Location, Location

    Investors already in the rental market are just starting to see prices stabilize, but only in certain “prime” locations. For example, if you look at various subdivisions of geographic areas within the Manhattan real estate market, you’ll find studios in the Upper East Side (for example) are now all above a ‘floor price’. However, if you look at similar studios in East Harlem, you won’t see the same uniformity. In fact, it’s very much to the contrary; there’s still high volatility in rental prices in ‘non-prime’ locations. To ensure your investment property is as immune as possible to market fluctuations resulting from uncertainty, the location of your rental property is essential to a successful return on investment.

    5. Invest in Landlord Insurance; Assume Unexpected Costs

    The two don’t necessarily go hand-in-hand (you should always assume unexpected costs), we wanted to recommend landlord insurance specifically on top of homeowners insurance. Landlord insurance generally covers property damage, lost rental income, and liability protection, in case a tenant or a visitor suffers injury as a result of property maintenance issues (for example). Depending on various factors of your rental property, the cost may be higher than you anticipate and you may be one of the people who thinks “this will never happen to me, so I don’t need it”, but in these cases it’s definitely better to be safe than sorry. Investing in a rental property is a big commitment and the landlord insurance certainly isn’t somewhere it’ll be worth it to cut costs in the long-term.