Rent vs Buy?

I think whoever was the buyer of this unit, was not too concerned with the rent vs buy math. Just saying.

Keith
TBG

How can you say that when it seems pretty clear it was purchased to rent out?

A one-bedroom for 3.5M. Well then good luck to them. I put this in the vanity purchase category or the we've got 3.5M dollars we've got to stick somewhere category.

Any way to tell lag time between contract signing and closing? We know a family who poured a ton of money into what they anticipated would be the condo where they’d raise their family but relocated to London shortly thereafter for a job that they deemed worth it. They have been renting the condo out for the past few years with the thought they will return to it some day.

Is that really a closed kitchen? Why would some one make such a blunder for this segment?

Weren't people just saying that seeing the kitchen from your living from at this price point is egregiously undesirable?

Judging by sales in the building it doesn’t seem to have been such a blunder.

AFAIK all the kitchens in this building are that way, and it's by a "Starchitect."

Finally a kitchen with a door! I don't want to cook food in my living room any more than I want to sh!t or shower in my living room. If they didn't ask $6 million for a 2BR, and if it wasn't on 53rd St, I'd be all over this.

https://streeteasy.com/building/53-west-53/48a?context%5Bcontroller%5D=%23%3CBuildingController%3A0x000055a8890377a8%3E&context%5Bcurrent_user%5D=1004028&hide_if_empty=true&section=sales

Hmm... they decided to show a woman in the kitchen. Did they also make her barefoot and preggo?

George, You are more of a townhouse buyer from your previous comments (essentially every thing separated) not for something like this.

MCR,

It seems highly likely to me based on the listing's history that someone foolishly took the advice of some brokers who were pushing the narrative last fall that it was a great opportunity for buyers, got a 6.42% discount off list, thought they were going to get a 4.4% return renting the unit because somebody assured them they could get $12,500/month, and now are being faced with the brutal realities I've been warning of for quite some time.

Odd because the picture shows a closed kitchen, but the floor plan shows it as one wall of the living room.
If it is totally open, that’s probably why it hasn’t sold

Ultra-luxury in a bad location!! Says it all. Buyers clearly paid 30-40 percent too much if paid ask.

300, indeed. I prefer old-school floorplans where functional areas are separated by walls. Open concept was foisted upon us by home renovation shows that want to attract a male audience by swinging sledgehammers to destroy walls. Personally, I'd even gladly buy an old-school coop with servants' quarters if they weren't all run by coop boards.

Meanwhile, upon further study, I see why you posted that floorplan -- the clean kitchen / dirty kitchen. They put a clean kitchen in the living room and a separate dirty kitchen for the staff. FWIW (which is not much), this strikes me as absolutely ridiculous. One can acquire money long before one acquires taste.

So please tell me who in hell would want to buy in Hudson Yards, which I think has to be one of the worst locations in Manhattan (if you can even consider it part of Manhattan)

Late 2015 contract, early 2020 closing, put out for rent immediately. Seems like foreign investors, a young pair of brothers who seem to have made the money on their own, and for whom this seems to be a sizable stake.

Keith, I always took you for seeing the best in people, but it seems you are even worse then crabby me. I simply postulate that people have genuine intentions betrayed by a poor sense for investment. You on the other hand suggest they are reckless with their intentions. What vanity is there in a view-less, corner-less 1BR that you rent out, when all you can do is talk about it from halfway across the world? Or else, some person needed to stick $3.5M somewhere without investment consideration and chose to go with the convenience of RE over a bank account?

Investors from many countries still may view NY real estate as a safe haven if forced to leave their home countries

And exactly why is 57th street a better location for ultra luxury?

ph41,
AFAIK many of the stores in "The Shops & Restaurants at Hudson Yards" have outs in their leases if the anchor tenant leaves. Given the anchor tenant is Neiman Marcus, which filed for bankruptcy last week, things could get very interesting over there. And if we see a fallout in the high end office market as well, things could get REALLY interesting. Apparently Related is already having some issues in the Israeli bond market.

>30 - went to Hudson Yards 3 times to try the restaurants. Could never figure out the logic of the mall where you couldn’t see stores from the escalators , and never saw traffic in the high end stores. I agree it will be very interesting (and sad) to see what happens over there. Except for the Jose Andres food places which will be sad to lose

>300 - desirability of location is different for everyone. My husband was the sponsor years ago for what was at that time a high end condo conversion on the best street in TriBeCa and he absolutely did NOT want to keep a unit for himself. He felt that nothing we like to do is in TriBeCa, except for eating at some restaurants.
Tho it did give me urges for larger spaces , which is why we wound up with large spaces in a more traditional layout.

Tho as the selling broker I did meet some incredible people .

@30yrs - It took me a moment as I thought to myself “even at 12,500 per month the ‘investor’ wouldn’t be netting 4.4%” and then I realized that was likely your point? Some naive “investor” didn’t think to factor cc and taxes into carrying cost?

Sometimes it’s not a really economic decision. I know someone from Singapore who bought property sight unseen in Soho (despite my warnings) just to divest from her other real estate holdings and then rented it at decidedly not favorable rents. She wanted to do it and she could afford it

Tho then again she has a property her father bought for her so she could have it for business school in NY right before the meltdown , and then she just kicked out the tenant to sell it right before this Covid happened.
I hate to say I sometimes laugh

Tho then again she has a property her father bought for her so she could have it for business school in NY right before the meltdown , and then she just kicked out the tenant to sell it right before this Covid happened.
I hate to say I sometimes laugh

Talking about a 1br 1/2 bth luxury condo for $1.5

@ph41 - It could also be a rational economic decision if you live in a country where the government might corruptly seize your capital and you want a safe haven for that capital. If I were a scrillionaire from a country without any reliable rule of law, I’d be happy to take a recurring annual loss on a luxury condo in Manhattan. I have not looked up these buyers, but based on Inonada’s teaser, I now want to.

This was from Singapore- one of the safest countries on the planet. She is just one of the top
1% in that country

@George - You really should check out my neighborhood. It is changing and young families are coming in. A super cool family moved in across the hall from us not long ago. They absolutely love the traditional floor plan and the nanny room that came with the apartment - it is on a separate floor and has an en suite bathroom.

I'm another one who loves kitchens with doors, totally separate from the living and dining rooms. In fact, my apartment had the wall between the kitchen and living room down, and I went through hell with the Board getting permission to put it back up, albeit in a better way. When I give a dinner party, I don't want to see the refrigerator or the pasta pots on the stove -- just the chandelier above the table and the sparkling city view in the distance. Candela, Roth and Carpenter knew what they were doing back in the glory days!!!.

> Dave

@ph41 - I was referring to subject of this thread. I am curious which country is the country of origin for these buyers.

MCR,
I think it's Israel?

ph41,
I feel like we must have crossed paths at some point.

davenezia,
It still amazes me how much people insist on buying prewar apartments and then removing absolutely every last iota of what's prewar about them.

>> If I were a scrillionaire from a country without any reliable rule of law, I’d be happy to take a recurring annual loss on a luxury condo in Manhattan.

Because you are too stupid to open up bank accounts instead?

ph41, perhaps your Singapore acquaintance wasn’t purposefully pissing away her / her father’s money. Perhaps she thought prices were going to go up.

ino- I don’t think she was purposely pissing it away, she was and is very spoiled . She could and should have just rented an apartment while at Columbia Business School, but was indulged , and she does believe in real estate. Then again, her family money does grow on trees (rubber plantations) and kept in family banks.

>30- N Moore Street?

@Ino - Chances are that if I am a scrillionaire from certain countries I did not come by my scrillions through good old fashioned hard work. There is an office in Treasury known by its acronym OFAC - Office of Foreign Asset Control. Bank accounts are all over their radar and much easier to freeze if sanctions are enacted by USG; a condo has a chance of flying under the radar.

>> her family money does grow on trees (rubber plantations)

Hilarious ;).

MCR, isn’t that what Swiss banks are for? Besides, proper unscrupulous scrillionaires have more money to hide than a puny $3M and grander tastes. They go for $20M purchases like this: https://nypost.com/2018/04/25/kazakh-presidents-brother-takes-nearly-4m-loss-on-plaza-hotel-condo/.

Foreigners accounted for 30% (?) of condo sales in the past years. Thousands of buyers. Most have their money by uneventful means. Game app developers. Rubber tree farms. Etc.

Nada, you just out crabbed me, lol.
"Because you are too stupid to open up bank accounts instead?"

@Nada - It’s more complicated than you might think. But all of that aside, it is not what is going on with these buyers. However, back to 30yrs original question, apparently it does not take much to convince “investors” to buy new dev, which, on the bright side, might bode well for NY real estate? (I am only half joking).

I really don't buy the narrative that "investors" of luxury condos in New York City can be convinced by a broker/agent that something's a good 'investment'. A residential Uber luxury new development purchase, not being used as a primary residence or pied a terre by some well-heeled Titan of business, can hardly ever be viewed as a best and most efficient use of money. Although I would love to be a fly on the wall during that presentation.

If any of these buyers do exist, please send them to me. At least they'll get 67% of the buy-side commission rebated to them at closing.

Keith
TBG

@keith - I think Nada’s point is that regardless of whether there was any broker influence or not, there are still a lot of purchasers whose purchases are hard to understand under any of the rationales we typically discuss here (consumption, investment, vanity, least risky haven for capital). This one leaves even me, the first person to defend quirky individual buyer preferences, scratching my head.

There will always be deals that leave somebody scratching their head. My work is certainly more in the realm of norms, for lack of a better word to describe my client base.

We're currently in our second 'multiple bidder' situation revolving around a townhouse. We're currently at ask, all cash, and it's not wrapped up yet.

Also my comment wasn't addressing anything Nada said.

Keith
TBG

@keith - fingers crossed for you on townhouse!

ph41, how was the food in hudson yard?

Food was good, not spectacular, and pricey. The Milos restaurant had a very good prix fix lunch deal and the fish was delicious

MCR,
As I've been saying for quite a while Real Estate buyers are largely lemmings. When they are buying they are blindly buying everything, and when they stop buying they blindly stop buying anything.

Keith & MCR, I think this purchases was made as an investment. Contract in 2015 with uncertain closing date, closed in pre-corona 2020 & put up for immediate rent. If it walks like an investor and quacks like an investor, it’s an investor.

You guys seem to have amnesia about the known fact that Manhattan real estate always goes up.

30% of new dev purchases in recent years went for rent like this one. See:

https://streeteasy.com/blog/nycs-unsold-condos/

8000 condos sold between Jan 2010 and mid 2017 showed up for rent within 180 days:

https://streeteasy.com/blog/condo-investment-returns-nyc/

How many condos sold per year across that time, maybe 4000-5000? 20-25% showed up for rent within 6 months. What do you guys think these 8000 people were doing if not investing?

Keith, the reason you don’t get any of this business is because you don’t believe in it. However, if an investor is prone to believing in it there are plenty of simpatico brokers. Unpaid hit #1 in Google for “ foreign investors in new york real estate” quickly led me to this: https://www.bloomingsky.com/should-i-buy-an-apartment-in-nyc

Buying an investment property in NYC is a secure investment. Whether you are buying under your personal name or under an LLC, New York City property laws are such that your investment will always be safe and secure.

New York City property values continue to increase. Year over year, NYC property values continue to surge. Every year continues to accrue large percentage growth in terms of property valuations. Here is data on the most recent quarter. YoY Manhattan prices are up 7.7% as of Q4, 2016. Whether you want to buy and hold for a long period of time or sell after a couple of years, you will be able to lock in your gains.

Apartments in New York City are liquid. When you ask yourself, "Should I buy an apartment in NYC?" because you are concerned about asset liquidity, remember that NYC real estate is sough by domestic buyers and foreign buyers across the world. If you need to wind down your property portfolio, it can be done just as easily as you acquired it.

Rents are high in NYC. New York City is known for being an incredibly expensive city. Many renters spend more than 50% of their income on housing costs. As such, combined with high property values, rents are high. This bodes well for apartment investors who are considering buying in the city to maximize their annual return.

New developments and resales to choose from. Whether you are looking for new developments in Manhattan or Brooklyn, or resale condos, you have many apartments from which you can select. Condos are investor-friendly for buyers and can easily be rented out. At Blooming Sky, our team works with investors to manage their investment properties and get them rented out immediately after purchase.

Where are you seeing the contract signed in 2015?

George,
I thought I had posted this earlier but don't see it:
Since no one cooks anymore what good is spending $200k and up on a kitchen if you can't force everyone who comes to your apartment to constantly look at it? And think what a Master Chef you must be because you have a $100,000 La Cornue stove.

People with money *and* taste would skip the showy kitchen and spend that sum on something like this:

https://www.sothebys.com/en/buy/auction/2020/impressionist-modern-art-day-sale-online/marc-chagall-devant-la-fenetre

@Inonada and @30yrs: You have both persuaded me with respect to this purchase’s almost certainly being intended as an investment.

>> Where are you seeing the contract signed in 2015?

It’s always in the deed filing in ACRIS. Page 11 on this one:

https://a836-acris.nyc.gov/DS/DocumentSearch/DocumentDetail?doc_id=2020012200440006

(Did I just teach the almighty 30yrs something about snooping around on NYC RE???)

MCR, interesting how these investors seem not to exist to you but are front and center to me as a RE-buyer archetype along with the others. These peeps are my patrons: without them, fancy apts that rent for half the cost it takes to build wouldn’t be possible.

Unfortunately after a disastrous decade-plus, I think the bloom has come off the rose and therefore I’m going to be weaned off my subsidies slowly over the next decade-plus.

@George-the truly wealthy have both.

@inonada I own investment condominiums and I'm always on the hunt for another. That said my purchases have been few and far between. Because I'm not only looking for something that cash flows, but I'm also looking for something that's undervalued.

I would be embarrassed to tell somebody that buying in a new development condominium is a 'good investment'. I would assume after I made such a statement to a potential client they would hang up the phone and never call me again.

And of course to be clear, I differentiate an investment purchase from a primary residence purchase. I have had pure investors call me up, in fact recently closed a deal in Harlem, the second deal he's done with us.

Keith
TBG

@inonada, I don't know if you schooled 30, but you schooled me. Many thanks. /ali

So glad Inonada is BACK! It took awhile for a thread to really push one of his buttons, but when one does, watch out.

You're right - I got lazy and looked at a few listing systems rather than going to source material. Also a lesson to mistrust data from listing systems.

@Inonada - thank you for that link. I needed that laugh:

"YoY Manhattan prices are up 7.7% as of Q4, 2016. Whether you want to buy and hold for a long period of time or sell after a couple of years, you will be able to lock in your gains."

Nothing like buying at the peak of the market. I wonder if any of their buyers came back to them over the past few years and asked them about their "gains"?