450 West 17th Street #2504 guess how much profit

Yes, but what could it have been rented for in 2009?

Haha

Oh please. The caledonia is an outlier even among Chelsea new construction. Cherry picking at an extreme level. Do some coops. Many condo buildings are virtually off-limits to people who need traditional mortgages because banks won't write them. This may or not be okay indefinitely, but it's definitely a risky investment.

Everything you disagree with is an outlier?

with 20% down, this is how it works out:

Purchase
Down Payment: $365,400
Closing Costs (6%):$106,620
--------
$475,020

Sale
Closing Costs (6% RE, 2% Tax/Lawyer): $209,200

Calc:
$2,615,000
- $1,827,000
- $ 106,620
- $ 209,200
------------
$ 472,180

Let's call this a 100% return on the money provided during purchase. Now take into account how much more this property cost own vs rent for 3 yrs.... and... don't look that good anymore. if paid all cash, then your closing costs on the way in lower by $70K, but return on investment starts looking worse than market return.

Why did people pay 6% in closing cost when buying? Isn't broker fee usually included in the purchase price? I am confused.

typical closing costs on condos (real property) are 5%. add the 1% mansion tax and you're at 6%. if you're paying some of the builder's taxes, it can even get higher.

Now, please tell me what that 5% closing cost in buying a condo are comprised of. I have bought 4 houses and 3 apartments in NY. Never paid that much in closing cost when buying.

Seriously, with the intention of selling the property in couple years, I would not expect the buyer to pay any mortgage points to the bank to get a slightly lower mortgage rate. Title insurance for a $1.8M property borrowing say $1.3M would cost no more than $5K with lenders only policy, less than $10K with owner and lender policy. Lawyers fee would be about $5K at best. Other fees that may be due on closing would be funding for escrow account, which should not be counted as they were actually future carrying cost paid upfront. You already count the 1% mansion tax out. So, I don't know how to add up to $100K (minus 1% mansion tax) closing cost.

corcoran removed that page they had, but had another guy outline them.

http://www.comitini.com/2007/05/closing_costs_new_development.php

I get $63K (including mansion tax and other tax minus a few thousand property tax escrow)closing cost using the items suggested by your link. About 40% or $40K less than your $106K number.

that's for a $1M. we are looking at $1.8M

My calculation already used the $1.8M as the base.

based on the article above, existing construction is approx 4.2% and new construction is 6.3%.

$1M - $42.4K and $63.15K

From your link

Standard purchaser's closing costs
Attorney $2,500
Managing Agent's fees 500
Credit reports {2 applicants} 200
Lead paint disclosure fee 50
Mansion tax 10,000
Move-in deposit {usually refundable} 1,000
Loan application 500
Appraisal 300
Bank's Attorney 500
UCC-1 filing 75
Mortgage recording tax on $800K {over $500K is 1.925% less $30} 15,370
Title insurance 8000
Building searches 300
Recording charges {$17 per document + $5 per page} 120
Real Estate tax escrow {2 to 6 months} 3,000
Total standard closing costs for the re-sale $42,415

if the purchase price is $1.8M, it would be:

Standard purchaser's closing costs
Attorney $2,500
Managing Agent's fees 500
Credit reports {2 applicants} 200
Lead paint disclosure fee 50
Mansion tax 18,000
Move-in deposit {usually refundable} 1,000
Loan application 500
Appraisal 300
Bank's Attorney 500
UCC-1 filing 75
Mortgage recording tax on $1.5M {over $500K is 1.925% less $30} $28875
Title insurance 10,000
Building searches 300
Recording charges {$17 per document + $5 per page} 120
Real Estate tax escrow {2 to 6 months} should not count, as prepaid for future
Total standard closing costs for the re-sale $62,920

Even with $5K real estate tax escrow, it would still be only $67K

Bottom line is that you cannot use a $1M unit as base and apply that percentage to every price. There are only a few variable that "float" with the purchase price. Many other variables can be relatively fixed.

you are right, but title insurance is around 1% of mortgage amount or $1.5M. the other thing that you are not considering is that $800K is very close to the limit of reselling the loan, while $1.5M is stuck on bank's book forever. other charges also pop up to bring it up to a typical 5% ish.

On transaction costs for a buy/sell round trip:

5% broker for a place like this
1% mansion tax
1.425% NYC tax
0.4% NYS tax
1.925% mortgage recording tax
1% title insurance & misc costs
~0.5% points

That adds up to 10.5% on 80%-financed property (last 3 depend on financing size).

Actual financing here was about 50% (5/1 ARM at 5.5%), so 9.5% spent here on transaction costs. $250K.

This is the Caledonia, an island on an island. Where Related is to apartments in the building, like Debeers is to world diamonds.
It's all good and probably a great investment as it is always protected by Related with measured availabilties. That is of course, as long as Related remains healthy.

It is however, the worst example or source for any indication of what's going on in the rest of NYC real estate.

Financed at 5.5% for 50% of $1.83M, plus $1500 monthlies => another $250K over 3.5 years.

Rent benefit: $6500 * 12 months * 3.5 years => $270K (see next door same-sq-ft rental 2009-2013).

So $2.61M + $0.27M - $1.83M - $0.25M - $0.25M => $0.55M profit.

Actual downpayment @ 50% => $0.915M.

A return of 60%. SPY did 63%, w/o cherry-picking.