5 Tips For Buying A House in New York
By Wei Min Tan
New York's position as a top global city has always attracted property investors both local and foreign. To local New Yorkers, they believe in New York (which is why they live here in the first place) while to foreigners, New York is recognized as a safe haven for asset diversification.
Properties in Manhattan start at $500,000 for a studio condominium and go all the way to $90 million for the record setting penthouse apartment at One 57. Townhouses, which come with land and possible air rights, start at around $6 million. In Manhattan, most housing inventory are apartments and within apartments, they are divided into condos and coops.
Top tips based on what we explain to clients are as follows:
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127 E 56 ST, 4TH FL, NEW YORK, NY 10022 USA212.firstname.lastname@example.org Wei Min Tan is a property broker focusing on Manhattan, New York luxury condominiums and foreign buyers. He is often interviewed by the media including CNN, The New York Times and The Wall Street Journal on the subject of foreign buyers of Manhattan property. View Wei Min's media appearances.
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1. Coop vs Condo vs Townhouse
The term and concept of living in a "house" is uncommon in Manhattan because of the high prices of townhouses. For the fortunate few who can afford a single family townhouse, these are a luxury. The owner would own land in Manhattan and it's the equivalent of having a mansion in New York.
The vast majority of housing units are apartments which are divided into Cooperatives (70%) and Condominiums (30%). An investor should buy a condo because a condo does not require board approval when buying or selling. It also allows the owner to rent out without restrictions. This is why a condo has a premium when compared to a coop. Starting price for a Manhattan condo is about $500,000 while a coop's entry point is probably half of that. A one-bedroom condo ranges from $1million to $1.5 million while a two-bedroom ranges from $2 million to $4 million.
2. Location is not everything
Yes, location is very important and can be the main priority if price is not an issue. But for most buyers with a target price point and budget, there has to be a balance between the location, building quality and apartment within the building. For example, getting a top location apartment with no view in a poor quality building is not a wise choice.
It's better to have a better building and apartment view if it means an avenue further because if the apartment is to be rented out, the distance of one avenue is usually not an issue. This is where guidance from a local expert is important.
3. Cheap apartments get low rents
As the most transparent and efficient market in the world, there is a reason why certain properties are cheaper and others are more expensive. A cheaper apartment gets lower rent and an expensive apartment gets higher rents. The rental yield needs to work because it defeats the whole investment purpose if the apartment is cheap but appreciation and rental yields are low.
4. Mind the carrying costs
Carrying costs, specifically common charges and taxes, need to be factored into the analysis. Often, properties with high carrying costs have lower prices and vice versa. High carrying costs are also associated with older buildings and repairs.
5. The most transparent market
In the U.S., the entire inventory is openly available to the public to view from websites like Streeteasy, Trulia and Zillow. This makes the market very efficient. The deal is in getting the right property or house. It is unrealistic to try to get a property at 20 percent lower than market value (which does not happen unless the price point is so high and there's a recession making potential buyers very limited). The majority of transactions are within $5 million and the market is very efficient at this band.
Get a local broker to guide with your purchase. In the U.S., broker fees are paid from the seller side while both brokers represent the interest of their respective clients. It would be unwise to go direct without a buyer's broker because then the seller's broker would just pocket the entire commission.
High end apartment at 40 Mercer in Soho
Castle Avenue Team
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Manhattan, New York residential condominium specialist focusing on investors and international buyers