Thought you guys would find it interesting to see Fortune's prediction of RE prices for 2006 and 2007 for the NE region. Best. Image Unavailable, Please Login
I know in the case of Allentown Pa. that the draw is from alot of folks who work in the NYC area, but want cheaper housing, and a more idyllic, small town setting. People are willing to spend hours commuting to achieve a lifestyle that would be out of reach in close proximity to Gotham City.
Well that's just nuts. I used to live a lot closer than that in Warren, NJ and that's a long commute now by car via 78. The traffic these days on 78 all the way from the PA border is staggering. I just can't imagine that as a daily commute from Allentown.
You've got that right Whart, I work in Staten Island and just bought a house in Wantage, NJ. You cant touch what I have there, land, house, view. Granted I have commute but thats the cost, hell someday I'll move my job up there and have no commute to speak of. My property on shyt island would be over 900,000!!!! Insane!!! Colonial, 4 bedrooms, 2.5 baths, hot tub, 3 car garage all on 1.1 acres!!
Being in the Real Estate business for a long time now doesn't make me or anyone an expert. I own about 1000 units in Manhattan, and the biggest change I see in the last year is that my vacancy rate is the lowest its been since this craziness started. This means that people are renting longer and they don't feel that they need to buy now. This is a good sign if you own rental property. Rents will inch up for the time being and I believe that co-ops, condos and houses will stay on the market longer, but sellers will get close to their asking price. The difference will be felt in the high end. The apartmens that are priced at 2 mil or more will will sell for less (don't know how much less). But I don't think that matters because the high end is always a buyers and/or sellers market. The rental apartment buildings (investment property) in Manhattan doesn't make any sense. This may be where the "experts" should be looking. This is where the "kink" in the armour is. In the last five years expenses to run buildings have increased substantially (taxes, fuel and insurance), and this increase has made profits drop. But the prices have gone through the roof! I find myself bidding on buildings against mostly foreigners whom I don't know. I usually know most of the players. These outside investors are buying and betting on another increase in value. They are not buying for income or rate of return. My feeling is that you will begin to see many forclosures in the next 12-15 months, which will bring down the market to where there can be a rate of return. Fuel has hurt the Real Estate busness more then most people know. Also, the increase in mortgage rates will hurt the market. Most investors will refinance 5-7 years and pull out substantial money. I don't see this happening. Commercial buildings will refinance at higher rates and investors will not be "pulling out money" to buy another building. I believe that you have to do your homework and know what your buying. If your planning to hold for a long time, fluctuations won't matter. Short term, be careful. My company has been in a holding pattern for a while now. We are looking at things and including many other variables that we never did before. I do think some areas/neighborhoods have room for improvement (increase in value) then others. Advice? Jump in when the forclosures start. Sorry to ramble on, Vik, but I read this data all the time. It all depends where it comes from.
No, this is a helpful perspective Gary. I was hoping somebody with your level of expertise would weigh in. I was thinking about buying last year, but felt prices were staggeringly high across a number of metrics, including $ / sq. ft. I am glad I waited. While I don't see prices dropping a la the early 90's, like you, I do think there will be a softening in general, and particularly at the strata I will be looking at. I will be keeping an eye on housing prices over the next 6 - 12 months to gauge pricing trends. Could you educate a bit on the foreclosure market Gary - is this something that individuals who are not directly involved in the Real Estate business could track and opportunistically act on - ie, is it as easy as looking at the paper, or are the "true deals" hidden? Are there particular issues we need to be aware of when buying a foreclosed property? Thanks.
Get friendly with the a Bank officer that you do business with. Ask them if they have a foreclosure department. Also, if you get "really friendly", you could tell them that you are interested in buying an apartment and if anyone is in default of their mortgage. You would be helping the bank, because the bank doesn't want the property and you would be helping the mortgagee, because he wouldn't have a default against his credit rating. Its leg work, but if your not in a rush, you should start networking now, things will come your way. Attorneys are a good source too. As far as issues with foreclosures, your title report will give you all the info you need. Are you looking in NYC or the Burbs? If its investment property, that's my expertise. You can E-mail me (or call me) with any questions. By the way, I predict a softening, not the 90's again. I do believe that NYC and Long Island are the best markets in the country. Its almost completly built up. No new developements (large). As opposed to Florida, where there are 5000 home being built everyday on both sides of the street! Stay away from Miami. If you didn't buy there in the last 3-5 years, its not a good time. Many apartments are owned by Foreigners/absentee landlords/investors. When the dollar increases in value, you will see many apartments in Miami on the market (MANY!). Or when people want to get their profits out. Either way, I don't like it. Hows the new G car? Tell Eric I said hello. Great guy. Helped me out with a watch this year.
Gary does this really work? Ive tried this in the past and always felt like I was a day late on my info. I understand killer deals require perserverance, but theres gotta be a better way. Of course Im "outside" the industry.
Thanks. I would be buying for NYC, to live in, not to speculate. I agree, from what I've seen the speculators have really added fuel to the fire. Lots of foreign money coming in as RE is a convenient way to park the money and earn a healthy return. If you're buying in Miami or Las Vegas these days...well, then give me a call: I've got a Bridge to sell ya. I had lunch with Eric today. I'll pass on your well-wishes, but you can thank him yourself - he's a frequent contributor to this sub-forum. And yes, a solid guy. G car will most likely arrive on Wed evening.
Happy New Year Gary! Ironically enough I met up with Vik and a few other Fchat folks for lunch today and I mentioned you and your fine timepiece during a discussion we had (a fellow Fchat member is looking at getting the same piece). As for as Vik's new G, it's a bit delayed in transit and should be here by the middle to end of the week at the latest. Vik's taking it all in stride though...or at least he's not letting his rage within be known yet. Let's catch up one of these days...hopefully the weather will hold up and we'll get a run in soon. (Ok...Vik beat me to the post. I'll leave this here anyway)
With everyone looking to flip over the years, buying a house in default was really tough with all the competition. With the market cooling, I see a lot of these people retiring from that business. Everyone says the tax cuts held the economy together but with the increase in gas, home heating oil and natural gas that extra money is all gone..... Check out these stats on risky loans and you can't tell me that a lot of people are in serious trouble when they a. Can't afford their homes when they have to refinance at these higher rates b. They have no equity and they sell their house for a loss c. Continue to spend more than they save, live off their home equity loans, credit cards, gas bills,.......... http://yahoo.businessweek.com/bwdaily/dnflash/may2005/nf20050518_4924_db016.htm I think the rental market for single family homes in about 2 years is going to be the place to be.
Vik- a couple observations about the residential market here: most buyers have no (read "zero") aesthetic vision. A place that shows poorly to retail buyers may languish, or be regarded as overpriced, when much of what needs fixing is not substantial, even in NY dollars. many folks in our generation are interested in 'move-in' ready dwellings; while people acknowledge that a place may need a new kitchen, bath, have a wall moved, etc., if faced with the choice between a project and one that simply requires plugging in the lava lamp, you know which direction they will go in; while the old real estate maxim about 'location' is true, it is not based on objective factors like convenience, access and proximity to essentials. Desirability of a given location is often dictated by fashion and trends, rather than any objective thinking. (I'm not talking about being a pioneer and living in a slum, but instead, not paying the premium for an address that doesn't really get you anymore than the 'address.') Obviously, part of the magic is buying in a down cycle and unloading when the market is strong- but, more than anything else, being able to see what others may not, and being willing to take on work that others might find daunting, could land you something special, without necessarily having an inside track in the market. I say this without in any way denigrating the expertise and experience of someone like Gary, who as a professional in the business, probably knows far more about the marketplace as a business matter. Fact is, we bought each of our homes to live in them, and did well in light of the above principles.
Not sure why nobody saw the potential......... Still needs a front wall and steps but I can't find a mason I like. Image Unavailable, Please Login
Whart, You hit the mark on the Bullseye. What I did early on was to buy in what I called "fringe neighborhoods". They were on the border line of good neighborhoods but were some blocks into the bad. I saw that in the early 1990's that there was no way a guy coming out of college (forget grad school for a minute) was going to afford the Upper east side anymore. It just got to expensive. Believe me, I'm no expert, but when one bedrooms in doorman buildings (women must live in doorman buildings for safty) were $1,800-$2,000 per month, the graduates had to live at home. So I bought buildings on 117th Street (just sold them) which is one stop away from 96th Street. Another world, but lots more for your money. Similiar to the east village a few years ago. Believe it or not, many people made the move. When they made more money they moved to "better" areas or stayed and bought larger apartments that they would never have had or could afford. I also own buildings in Harlem. In the 1990's (early) I was lucky to rent a three bedroom for $650 per month. I now get $2,200.00 per month and a totally different clientel (sp). I renovate at a different level (wood cabinets, stainless steel appliances) and I'm getting that college graduate. That professional. Who would ever think! Again, its only for a person who feels comfotable in those areas. Don't believe everything you read. Most parts of Harlem are still Harlem. The other area where I'm getting large rents is the East Village. 2 Grand for a Small one bedroom on the 4th floor of a walk up! Living in the City is difficult to do with a family. I did it for a short time with four kids. You just never have enough space. Unless your fortunate enough to get a 5,000 sq foot plus apartment. Your kids must go to private school at $18,000 per year and sleep away camp at $10,000 per year. Nanny cost $500 per week (cash). Parking is a minimum of $500 per month. You get a lot more for your money in the Burbs and I thought I would never like it. I don't think I'll ever go back. If your single its the place (the city) to be. Even if you have the 2nd house in the Hamptons, thats only for 3 months. Your still in the apartment most of the time. Vik, if your not married and do not have kids, then buy the most you can get for your money (in the city). Also buy in a building that allows you to rent it out. If the market changes, and you have 2-3 kids and you want to move, but the prices are depressed, at least you don't have to take the loss. Being able to rent it out, I believe, is important, if you don't have to sell to buy another. Also you may want to consider a school district, because, in reality, you could send your kids to school to the 6th grade. Middle school is NOT an option. This would buy you many more years in the apartment, or you would just do private from 7th and on. Eight years ago, I think it cost me $7,000 for pre school! If I was staying in the City, I would also consider a brownstown in the 90's between 2nd and Park. Its a big decision. Really consider that there are many variables that can change you current thinking. Put it this way... for a couple of Million, your on an acre to 2 acres with a three to four car garage with lifts and a 7,000 sq foot house. I'm talking under an hour comute to the City. The same scenerio in the City gets you a three bedroom apartment in a nice building. Tough decision. If you forsee changes in your life in the future, sit back and relax. And take your time. Also, like wart said, I would buy an apartment that needs work. Don't be afraid of work. You will get a better deal. Sellers are stupid. A little bit of paint for $2,000.00 would probably get them (seller) another $10,000 in price.
Great insight guys - definitely helps in broadening my thinking. darkalley - as somebody that has had first-hand experience, can you give some insight as to how much you have saved (in relative terms if you don't want to disclose specifics) in buying-and-repairing versus buying a "newer" home. What the repair process painful? Lengthy? Contractors honest? Lovely house BTW. As a general note, I can't see myself living outside of the City for now, but am looking for a directional perspective of value here b/w these two options. A buddy of mine bought a run-down apartment two years ago on the Upper East Side for $500K, put in about $150K of repairs - says the apartment is now worth north of a $1.25MM. Obviously some of that is also due to the steller appreciate of RE prices over the past few years, but he said an equivalent apartment at the time would have cost him $800K. I would be looking for a 2BR - open to location, but preference would be Midtown only because - living in this area today - I find the convenience immense. Seems to be a heck of a lot of construction down south, on the Lower West Side and near the financial district.
Eric, Love the watch, but wish it had the date on it. Also the hands are very similiar to each other so its a little difficult to tell time instantly (as opposed to a simple Rolex). I do like the piece though. Like my brother said (who just got the Jeagar 8 day), "its suppose to look good, telling time is secendary". I would be into the run if my schedule permits, but I'll be in the BMW. The Ferrari unfortunatley has been covered since September. Haven't had time to ride it. If the streets stay clean of sand (Long Island), I will try to use it. Happy new year! Best regards, Gary Resnick
Personally, I enjoy home improvements so I hired a siding guy, electrician, plumber and did the rest myself. The demo was tough. I gutted the entire first floor to the studs and the bath on the second floor. I replaced everything. New boiler, installed high velocity central air(anyone owns an old house it is the way to go) http://www.unicosystem.com/AboutUnico/FitsInAnySpace.asp every pipe, wire, new hardwood throughout, marvin window, kitchen, granite, tile, new molding and trimwork etc. I spent about $105,000 on everything. Doing the work myself saved me around $50-75K I have to think. Simple math---- Bought the house for $400K 18 months ago, have $105K invested and I was told about 5 months ago I could get around $700K. I will tell you that I lived in a hotel for 2 months, this was before I started my own business so I was working at the house 7am-8:30am, going to my day job and back at the house at 7pm until 2am most nights for about 2 months.
Wow! That's amazing! Wish I was that adept at home repair / remodeling. It seems based on your nums, even if you had outsourced most of the renovation (like I would have to do), you would have still come out ahead.
Like Bill said most people just walk past the fixer upper. My house was so bad when we pulled up to it my wife refused to get out of the car. Then when you walked in the smell of cat urine(hence the new wood floors) was almost to much to take. There was a 90 yr old lady in one of the bedrooms on Oxygen, depends diapers filled the closet, the bathroom had carpet(I'm pretty sure the tube was never cleaned). Biggest thing-every window had the curtains closed and the house had NO over head lighting. I could have just cleaned it and flipped it for a $50K profit the next day. Even if I did the work I could have made money is correct. Two big things when doing a major renovation-get a good local plumber(my plumber and the inspector spent 10 minutes talking about their kids) and hire a good electrician. My siding estimates were from $15,000 to $24,000. Trim work probably would have killed me but I bought a nailgun and took my time.
Hey Gary, are the Brown Harris Stevens listings in Manhattan priced from 30-50 million really bringing in those kinds of numbers? Seems like those listings sit on the market sometimes for years. Just curious if & when they do sell if they are bringing in anywhere close to the asking price. Market is horrible down here in Philly, def. not an investors market right now. Prices seemed to start getting crazy in '03 & finally they seem to start flattening out a little bit. Properties bought in '00 & '01 for 100K were selling for 400K+ in '05.
I assume that your talking about apartments. Most apartments are not 50 Million. The ones that go for that are very unique or have a history about them and you could count them on one hand. You could buy a townhouse in the 80's, West side between CPW and Columbus, that has 7,000 sq feet for about $730 per sq feet or you could buy a townhouse in the 30's east of Park for $525.00 per sq feet. Do the math. That would be about 65,000 sq foot apartment! recently an apartment building on West 11th Street sold for 30 Million. That was 41,000 sq feet and contained 41 apartments. Townhouses in the 60's between Park and Madison do go for lots of money. But I may be wrong, I haven't heard of any going for 50 Million.
