what is a better investment ps or upper fifth ave

cps

cps

CP anything

Do either of them have views?

Doubtful: studios are not usually given the views. You see 1BRs every now & then, but I don't think I've ever seen a studio with CP frontage. At 2x the price, most are inclined to go for a living room and perhaps a small 2nd bedroom over a trophy view.

On a 3% pre-tax yield on cash, which becomes 2% pre-tax after amortizing transaction costs, I'd pass on both. I've got better uses for $500K and my time than $10K pre-tax a year plus hopes of inflation.

But if that kind of meager return makes sense to you, then I think you would be amenable to the logic of accepting crap yield for a "premium" location. I.e., Russian billionaires and horse poop beats Harlem. Doesn't make sense to me, but when the world passes your investment by you will be reassured by the "safety" of your choice.

Fifth -- I can't believe people are voting the other way.

For one, size matters. You mentioned a studio condo and a "large" studio condo -- the larger unit is probably more capable of supporting a couple, so your rental pool is pretty deep.

Secondly, if you want a "better chance for appreciation" -- why do you think that's going to happen in the already-gentrified neighborhood? Unless you think that One57 billionaires are suddenly going to have a great need to park a nanny in your CPS unit, bet on the continued rise in quality of life in East Harlem, and that 107th is close enough to the hospital that down the line a healthcare worker will buy it as a crash pad.

I just don't see the "story" for a strong jump in prices for a small unit at CPS, especially since, as nada has noted, this unit is probably in the back.

ali r.
DG Neary Realty

Assuming all other things being equal(which of course is not possible) I'd have to say Fifth avenue. Central Park south in my opinion is the worst side of Central Park and not even remotely similar to Central Park West or East. The traffic is horrible.

The "story" for CPS in terms of appreciation is the foreign buyer. If there is one rule in Manhattan RE, it is that for every bad investment there is a broker with a story.

Thanks for your feedback.

Inroada - I agree with your assessment. I'm having difficulty finding properties that can yield more than 4 pct in manhattan. I've been sitting on cash that is losing more than the 2 pct post tax yield and am frustrated with nyc property values.

Both properties are either side facing or back facing but good light.

Why not wait until the election of Christine Quinn and then swoop in and buy at a lower price?

For example:

http://www.millersamuel.com/files/2012/10/DEnewcurrency.pdf

A fine example of broker story. Starting premise: "The US dollar has weakened in the years following the collapse of Lehman Brothers in the onset of the global credit crises."

Lehman Brothers collapsed Sept 15, 2008. Euro was at $1.42. The report was published Oct 12, 2012. Euro was trading at $1.34.

So a false premise, but a story nonetheless.

I agree with inonada, data coming from Miller Samuel is at best suspect.

Russian buyers, not euro, you say? The ruble was at $0.039, now $0.032.

How long have you been sitting on your cash, and what fraction of your money is in cash vs RE vs stocks vs bonds?

Been sitting on cash for 15 months. My only RE is my apt, which I don't count as an investment. I have about 15pct in bonds and nearly zero on stocks.

Geez, their are REITs paying dividend yields above 2%! Invest in THOSE if you want exposure to real estate!

You could also buy some retail bonds (that trade like stocks on NYSE) with yields above 2%. Buy 10 different ones for diversity.

"So a false premise, but a story nonetheless. "

Ino, it's hardly a "false premise". When measured against the yen, the dollar has weakened significantly: 105.67 on that day:

http://www.exchange-rates.org/Rate/USD/JPY/9-15-2008

...to just 89 now, and all through 2011-2012 it was closer to 79 to 80. And this isn't a carry-trade thing; through the entire period both the USD and JPY returned zero to 0.2% on savings accounts and short-term CDs.

The Canadian and Australian dollars have also reached parity with the USD in that period, as has the Swiss franc. You would have been better off in any of the above currencies; only the Euro and pound have fallen against the dollar since then.

Jason,

I don't know about retail bonds. A google search shows only information in the uk markets. Can you give me a resource or a ticker symbol I can research?

Tx

Ali and Inonada, I totally disagree with you. There are TONS of front facing studios on CPS. 200 CPS has a LARGE (650 sq ft) studio with balcony facing the park as does 210. Obviously, you've never sold on CPS or you would know this. 107th anf Fifth is 2 blocks away from a project/gov't housing and has no desire for someone looking for more "safety". CPS is a much better neighborhood the East Harlem and always will be. The location has done nothing but improve over the years esp with Time Warner and the like coming in. The quality of life is better then East Harlem and the cache is better. You will get more appreciation then you will on 107th -- just look at projects like 2112 Fifth which can't sell and compare them to anything on CPS and you'll see that.

Also, to Riversider who called it Central Park EAST -- really? It's called FIFTH AVENUE which is EXACTLY what the OP is asking about. Please think before you post. Sheesh...

NYC411 - these are bonds just like ordinary bonds, only they trade in like $25-$100 increments on the NYSE. You can buy them using your Fidelity or Schwab or whatever account just like stock or ETF. Sometimes they are referred to as "preferred shares' but they are NOT shares. They are straight-up debt, not preferred shares. The NYSE lists a bunch here:

http://www.nyse.com/bonds/nysebonds/1095449059236.html [click on the "symbol" tab]

They include many well-known investment grade companies. CBS, Alcoa, Allstate - and that is just the first few pages. These of course are safer for each company than there actual preferred or common shares. The yield they pay you have to look up the same way you look up the yield on a stock when looking up a stock quote.

you will note a real estate companies on that list too.

Jason10006, thanks for the information on those bonds. I too am looking for a risk-free return that exceeds the 0.01% you get at the bank.

@nyc411

u could invest in VNQ, vanguard REIT, low expenses. also keep in mind, this is an all US real estate ETF. i think there are many better places in the country right now to buy real estate as an investment than NYC where the yields are low.

also it would help balance out the 15% bond portion of ur portfolio (which obviously contains risk as well).

Thank you Jason.

Thanks 1234

Triple, 411 - these are hardly RISK FREE. And some are indeed actual preferred shares on that NYSE list (for example the First Republic "FRC" perpetual preferred. They yield 6.6% or so on my Bloomberg now.

But a lot of the straight-debt are general obligation bonds from investment-grade companies, so they are much lower risk (but not no risk) versus those same companies's stock. As you no doubt know the risk goes common shares - preferred shares - then bonds (Junior then senior). I have hardly done enough research to know which of these on the NYSE list are "safest" but they are all safer than their own stocks.

Sorry 5.6%.

of course,thanks.

IN_THE_KNOW, I stand corrected. Would you say it's restricted to post-war, pre-1990's buildings in general?

These preferred stocks, many of them (if not all), are attractive because their interest is taxed at the preferential rate of 20% federal, but to call them bonds is misleading.

Yes, they are junior at default, which is pretty unlikely for most, since they are issued mostly by investment grade companies.

The real problem is they have no maturity date, so have unlimited duration in theory and would get murdered in an extended rise of interest rates. The fall of rates is why most of them trade for above face value of $25, so a reverse rise would turn the prices around.

In the current environment where the default assumption is ok economy but rates are too low and have to rise, inflation or not, the strategy would be to limit duration and take corporate credit spread risk instead.

That points you toward high yield corporate bonds, rather than unlimited duration preferreds or municipals.

cresent. Re-read what I wrote. SOME are "preferred stocks" in the classic sense but MANY are in fact retail BONDS that are in every way shape and form bonds. I know. My company is on that NYSE list, and I run investor relations. Our retail bond is a bond-bond, traded on NYSE. Its senior to our preferred and common.

Notice in this release Fitch rates PREFERRED shares lower than RETAIL bonds. They are different

http://www.marketwatch.com/story/fitch-affirms-protective-life-corporation-outlook-stable-2012-12-11

Crescent,
Why do you lump munis with preferreds? I get the point re indefinite maturity and rates, but munis are not indefinite maturities and have long tenors like m,any corporates.

I think he means perpetual munis. Which have been issued ever. Not common though.

...but most are callable after say 10 years so a lot that were issued turned out to not really be forever.

Thanks Jason.