Sandy Silva, a 39-year-old sales director at Tulip Retail, a software platform for retail companies, with her seven-year-old son, Xavier.
In 1999, Sandy started dating her soon-to-be husband, Ryan, in Waterloo. She studied economics at Wilfrid Laurier University while he took political science at the University of Waterloo. In 2002, they got engaged, and Sandy’s father gave them an early wedding gift of $75,000. Sandy and Ryan used that money for a down payment on a $289,000 pre-construction two-bedroom condo in CityPlace. In 2005, they got married and moved into the unit.
Within a few years, they were thinking about having children, and being near family became a priority. At the time, they both worked in Toronto: she was a buyer for Sporting Life and he was a supervisor at an automotive manufacturing company. They used their combined savings, along with equity from refinancing their condo, to buy a $470,000 detached house in Brampton, where Sandy’s parents lived. Meanwhile, to make some extra cash, they rented out their CityPlace condo for $2,150 a month.
The value of their properties increased enough, after four years, that they decided to leverage their equity to scoop up more real estate. They knew, from having lived in the Waterloo Region during their college years, that demand exceeded supply in the area. Ryan also had family in Waterloo, which meant someone could take care of their investment properties. So they bought two detached houses in Waterloo for a combined $462,000 and rented them to university students for a total of $4,675 a month. The rental income was enough to pay their mortgage and turn a profit. In 2013, Xavier was born.
Three years later, Sandy and Ryan separated. Ryan sold the two Waterloo homes for a total of $540,000 and split the $78,000 profit with Sandy. He also kept the place in Brampton. Sandy held on to the CityPlace condo and took $250,000 in equity from the Brampton property, which she used to invest in Rent Frock Repeat, a designer dress rental company.
The bottom line
Sandy recently joined Tulip Retail as a sales director. She lives part time at her CityPlace condo, which is now worth $850,000, otherwise she stays at her parents’ place in Brampton with Xavier. And Sandy’s not done investing. She recently bought a one-bedroom condo in Vaughan—which she plans to use as a rental property—for $525,000. Her portfolio is now worth $1.375 million. Before the end of 2020, Sandy would like to buy a place in Brampton.
Source: Toronto Life – BY ALI AMAD | PHOTOGRAPHY BY GIORDANO CIAMPINI |
Knowing the best age to invest in real estate is one of the most frequent doubts that those who are beginning to think about their future have. Especially because they see in the real estate area a financial security that other types of investment as the stock market no longer offers.
The short answer is that there is no right age to invest, but the sooner you do it, the more opportunities you will have to make money – and your investment will last longer.
However, it is true that investing is not a habit that we have all been taught. Not all of us receive financial education, and some do not even have the habit of saving money. We know that it can be difficult to do when you are young and you are between your twenties or beginning the thirties: travel, shopping, transportation expenses and fashion technology tend to monopolize the attention of your money.
Unfortunately, this lack of financial education ultimately affects the future. Especially when you decide to start investing and you realize how much time you lost because you did not do it before.
Why should we start investing as soon as possible?
Something that guarantees the value of a property is the capital gain that it has, depends on the location in which the property is located. The capital gain acquires more value over time. That is why the big investors are those who can analyze the market and see beyond what is trendy. Imagine if 10 years ago you had invested in real estate developments in the Riviera Maya, or in real estate developments in Tulum, places that are currently a magnet for tourism and foreign investment.
That’s why we say that the best time to invest is now; the more time you spend, the less chance you will have of acquiring properties at a lower cost that guarantees a high return on investment.
We must also consider that the responsibilities we acquire over time can make it more difficult to become a real estate investor. Marrying or having children can make you reconsider your expenses and how much money you can use to invest.
Each individual has different priorities and opportunities. There are those who see in their twenties the opportunity to promote a future while there are others who can invest only after their 30’s or 40’s. It is also normal and natural for some to think about investing until after retirement, when they have the money to do so.
Nor can we deny that each generation has different perspectives on what we should consider a priority and what not. For example, while for millennials acquiring experiences is a priority -as traveling- for generation x and baby boomers, acquiring properties is more important.
However, this does not mean that millennials – who are between the ages of 23 and 38 – have a chip that prevents them from being good at investing in real estate, on the contrary it is they who are changing the notions of success and ways of doing business and even as we think about work and lifestyle, this makes them less incompatible in investing in real estate, they are the ones who are beginning to consider investing their money to obtain financial independence.
For example, for the baby boomers and generation X financial security meant having a stable job and a fixed salary in order to save for retirement or get their pension. Today the notion of working from home without the need to attend an office is a reality for many people, as well as the existence of jobs that 30 years ago were difficult to imagine.
30 years ago it was hard to think that ordinary people could make money using the internet. Computers and the Internet were exclusive to those who were studying something related to technology. Today you do not need to be a hacker to be able to use digital platforms to make money like blogs or investing in services like Uber.
The orange economy – that is, the creative economy – allows retirement to become more possible at an early age. Which has also become possible because more and more people decide to invest their money in a smarter way – and do it at a young age – to be able to live on their investments and not have to be dependent on a job.
Years ago we thought that buying a property was to live in, today thanks to applications like Airbnb, more and more investors decide to buy apartments and houses only to rent them on these platforms.
You do not need to be a millennial to start investing. The technological evolution has made both applications and platforms as well as access to them, are increasingly easier to use.
For example, since 2017 Airbnb host users over 60 years have increased by 120%, while women over this age have become the best rated on the platform. Which indicates that even baby boomers see technology as an opportunity to get a better return on investment with their property.
What is the best age to invest in real estate?
As we mentioned, not all ages or stages are the same for every person. For some it may be impossible to invest in their twenties and find the possibility of doing it later.
Our best recommendation is that rather than being guided byan ideal age you start doing it for the goals you have and the opportunities that come your way.
There are many myths around investment, especially when you want to do it at a young age, and one of the factors that keep people away from real estate investment is the lack of knowledge on the subject and investor stereotypes. We are not surprised when we hear cases of clients who want to become investors but fear not being able to do so because they do not understand numbers or be experts in the subject.
Knowing the real estate sector is one of the biggest keys to becoming a successful investor, this does not mean that it is a privileged knowledge that you cannot access.
Many millennials have the fear of investing in real estate because they think they need to buy a house to do so, and they ignore the investment possibilities that residential or industrial lots have.
For this reason, they fear not being able to do it because they believe that it is economically impossible for them, and they do not consider the possibilities of acquiring properties in other cities. For example, for some foreigners, investing in Mexico is a better option than doing it in their countries, but in the same way for some Mexican residents, investing in states such as Merida where there is increasingly strong demand in properties not only for housing but also for businesses and offices, it can be more accessible and profitable than doing it in places like Mexico City.
That is why it is important that you do not wait to have an ideal age and start thinking about becoming an investor or making an investment from now on. So the sooner you do it, the sooner you can designate your budget and create a work plan to invest or start saving money and then invest.
Otherwise, as you let time go by, you will be less likely to find suitable properties for yourself and especially if you have the opportunity to invest in places that are in presale in areas that will later have even more capital gain.
How to start investing in real estate?
One of the most common mistakes made by young people who aspire to become investors is to obtain immediate profits and be able to spend them on whatever they want. But as you know, this is not possible in the real estate market.
Being an investor is a goal of many to be able to have financial freedom and not be tied to a job or to live experiences like traveling or living in different parts of the world, investing to earn money immediately is not an actual goal.
This does not mean that you cannot earn an income in a short period of time. For example, apartments near tourist areas can generate profits if you decide to rent them. The same happens if you acquire property near schools, universities or hospitals.
What we really mean is that if you want to invest to enjoy the results you need to be patient and prepare constantly about the subject.
The preparation on the subject not only includes understanding how the market works, but also observing and analyzing where it is going.
That is why it is very important that you start to know very well and read everything about the area and the developments that are developing in the city you are looking to invest. Find out about the market and how real estate works in the place. About the papers you must have in order and the types of credits -if you’re considering obtaining one- to which you can access.
Begin to consume information and observe how other real estate investors are generating income with their properties. One of the advantages of investing in real estate is that it is a safe investment, but it also gives you the opportunity to take advantage of your investment.
There is a lot of information especially now that we live in the age of the Internet, but it is always good that you can approach the experts and work with a real estate agent to solve your doubts if you are already thinking about acquiring a property. Ask everything you need to know about the property and the area: the places of access, the maintenance fees, the projection of growth and the amenities with which the development has.
What factors should I consider when investing in real estate?
We already mentioned in our definitive guide of the real estate investor, if you want to be successful when acquiring a property you need to analyze the location and interests of your possible market without letting yourself be guided by the trends.
Actually, what makes your property acquire value is the capital gain of the area. This depends on external factors such as the location, amenities and even the roads that the property has.
Mérida is a city that we love to take as an example because the boom that is experiencing is related to the intervention of factors such as security and the excellent location in an area that attracts tourists and allows them to have access to beaches and archaeological sites.
In the best cities to invest in Mexico we have also mentioned the importance of decentralization that Mexico is living and Mérida is an example of how the diversity of industries can be an important factor in the development of the economy and in the demand for properties and offices, and therefore is another opportunity to ensure your future.
The more diverse of jobs and industries, the more likely you are to be victorious in your investment, as in the case of a crisis, for example, the closure of a factory or a big company that is in the area.
That’s why we emphasize the importance of not investing where everyone is investing, in the end -it may sound cliche- you get what you pay for.
Many new investors make the mistake of acquiring goods in areas that, although cheap, end up being insecure. In the end these investments end up being losses because they end up investing even in luxury finishes in areas where house prices are quoted in an amount lower than what they are thinking of asking for, whether they are rents or for sale.
The capital gain depends a lot on the area, the location and the amenities. And even if you get a very cheap property, in the end you will not be able to generate income if it is located in an area where there is no capital gain or the market cannot access the amount of money you propose. You will lose more money, unlike you decide to invest in an area with a guaranteed gain capital, thanks to all these external factors that we already mentioned.
Another factor that we highlight and that you have to take into account are pre-sales. There is no better way to guarantee your money than buying before, remember our example of the Riviera Maya and Tulum? Now imagine how much it will cost to buy a housing development once it is popular.
Acquiring properties in pre-sale is an excellent way to invest your money, since once the developments begin to acquire capital gain, your property will have more value than what it cost and you can adapt your income according to the costs of the area or decide to sell it to a higher price, or keep it to get more return.
So, if you’re wondering what is the best age to invest in real estate? It is better to start asking yourself; how can I start investing in real estate? And start making a plan so you can reach your goals and start creating a safe economic future for you.
Canadian snowbirds or real estate investors considering a home purchase in the United States can be confident in the state of the market according to a new survey.
Results of a poll conducted in the fourth quarter of 2019 have been released this week by The National Association of Realtors and show that 63% of American consumers felt it is a good time to buy (33% strongly) while 74% said it is a good time to sell.
The strength of the jobs market and economic conditions are boosting sentiment.
“The mobility rate has been very low as many have opted to stay put for longer,” said NAR chief economist Lawrence Yun. “However, this latest boost – Americans saying now is a good time to move – is good news. With mortgage rates low, the timing is indeed ideal for those who want to enter into homeownership and for those looking to move on to their next home.”
Older respondents (the Silent Generation and Baby Boomers) showed the highest confidence in buying conditions and higher earners ($100K+) and those in the West are more likely to feel that it’s a good time to sell.
“The Western region has seen home prices increase to the point that costs have outpaced income,” said Yun. “So, it is no wonder that those living in the West would think that now is a perfect time to place a home on the market. California especially is seeing some of the highest prices ever.”
The NAR survey has also asked about home prices with 64% saying their believe that prices in their communities have increased in the past 12 months.
More respondents expect local home prices to rise in the next 6 months (48% said so) than those that expect them to stay the same (41%) or decrease (11%).
On the economy, 52% believe it is improving although this falls to 47% among millennials and 41% of those living in urban areas (66% among those in rural areas).
“Whether it is a reflection of politics or true economic conditions, there is a difference of views between rural and urban areas,” added Yun. Source: Real Estate Professional – by Steve Randall 10th January, 2020
Is the white-hot fire of real estate investing burning in your heart? Do you solidly know within your gut that real estate investment will be life-changing? Do you have vivid pictures of the freedom owning property will offer you?
Hmm, now how to impart that passion to your spouse…
You want them to see it as you do. You want them to feel as intensely committed as you feel. You want them to be as excited as you are. You want them to see the vision for your future.
Why You and Your Spouse Would Make the Perfect Investing Team
You can do this together. You have a lot of practice.
Now let me say, this may seem different than other decisions in your relationship, but actually it’s not. Really!
I say this because all types of big decisions like this in a relationship require similar elements. Among these are a bit of understanding, a whole bunch of open-hearted listening, a giant amount of belief, and a huge heap of trust in each other. I mean it!
Planning a wedding, having a child, changing jobs, moving, buying a car together, taking out a student loan, purchasing your first home, raising your kidsâevery one of these requires discussion and negotiation. The point is, every big decision obliges you to be there for each other’s excitement. But it also necessitates being patiently present for each other’s fear and anxiety.
Where to Start the Discussion About Investing
So, let’s step this out.
First, have you already talked to them about investing? If you haven’t, then that is where you need to start. And then keep the tips below as tools in your tool bag to make the convo go smoothly.
However, if you have already talked to them—and they were less enthusiastic than you wanted or expected—perhaps the conversation had one or more of these possible outcomes.
You two discussed it and:
They seemed open, but they were not necessarily excited about the idea
They were fine with you doing it, but they don’t want to be part of it
They have no interest, and they do not want you to do it at all
OK, so none of these three scenarios are what you most want, but they are manageable. You have managed to work out compromises on other large events in your life, right? You can do the same here.
Think of it as excellent practice for negotiating a complex real estate deal. (I’m not kidding here.)
Why Don’t They See the Potential in Real Estate That You Do?
Let’s get into the reasons, the “why” they didn’t feel your same sense of sureness and excitement.
When you negotiate with a property seller, your first job is to find out what they really want or what is holding them back from saying “yes.” And honestly, when you first start talking with a seller, you cannot assume that they even know or are truly “in touch“ with what their hesitations are. Nor can you be sure that, even if they do know what’s bugging them, they will confide their reasons to you!
They might be too embarrassed or ashamed to say them aloud—or even to admit them to themselves. Or it might make them feel vulnerable to admit their hesitations to you. You have to uncover objections by asking questions. You have to listen carefully and openly. You need to pay very close attention.
This is the same process you will use with a hesitant spouse.
Focus on Problem-Solving
If they aren’t overly enthusiastic to talk about real estate investing, be patient. Talk with them in a setting that is quiet and relaxed. Let them finish their sentences. Ask questions without anger, accusation, or judgement.
Remember, you are collecting information so you can solve the problem. Don’t make this an argument. Use your best puzzle- and problem-solving skills.
The solution to this puzzle is one of the most important solutions you will ever uncover. So, I repeat, pay close attention. Listen to the clues.
You are not just a “spouse” in this situation, you are a detective, a troubleshooter, an analyst, an entrepreneur, a visionary.
You see, if you can truly get to the heart of what is making them uncomfortable, only then can you begin to brainstorm solutions. Those solutions need to be two-sided, because when you can help your spouse feel better and more comfortable, you minimize their negative reactions and you increase the likelihood of their participation and willingness.
You also increase the possibility you will engage your spouse in your excitement about the opportunities real estate offers your family.
OK, after years as a therapist, I will tell you that when it comes to real estate investing, there are some very specific stressors, fears, and anxieties that people tend to experience. These usually boil down to one or more of the primary concerns listed below.
That said, no two situations will be identical. Your situation with your spouse will be unique.
If you review these potential concerns before you have the conversation, you can develop some well thought out and realistic solutions for how you can alleviate your spouse’s specific hesitations. Anticipating objections and concerns this way should increase your chance for a successful conversation and positive movement ahead in your joint real estate investing future.
Pick out the issues below you are most likely to face (or have already experienced) when talking with your spouse about your desire for their participation in a real estate investing venture. Write out the questions you might encounter and how you might respond. Note the trigger words you might want to avoid with your spouse—you know, the ones that tend to spark an unfortunate outcome!
Then, pick a time and place, and go for it!
Consider Their Fears
Money fears: The fear of losing money and being left without security or unable to pay the bills.
Not enough time: In the beginning, real estate takes time and commitment. As with all skills and education, it requires study, reading, practice, and repetition until it becomes seamlessly familiar.
Afraid of failure: Whenever we start new things, we run the risk that until we master the skills and knowledge, we may not be as successful as we want. But practice improves everything!
Uncomfortable with change: Some people love change—even crave it—but there are others who abhor change. Most of us are somewhere in the middle. But in truth, fear of change is almost as common as the fear of public speaking, which is the highest reported fear. The best way to deal with this concern is to just jump in and try. The sooner you start, the sooner the transition is in the past.
Not knowing who to trust/fear of being taken advantage of: Being new at something means listening to lots of other people’s advice, paying attention to tons of new information, and not knowing which is trustworthy and which is not. Practice makes perfect, or at least very good. So, the more you perfect your skills in listening to your gut while really hearing the person opposite you, the sooner you will know “when to hold them and when to fold them.”
Fear of getting started: When learning something new, it can be very difficult to decide where or how to “jump in,” and those concerns can be intimidating.
Don’t think they’re interested: Sometimes when we don’t know a lot about a topic or skill, we perceive it as boring or uninteresting. Then, once we are exposed to it, we may recognize that we have lots of talents that would make us incredibly successful in that area. But we don’t know until we try.
Afraid of handling tenants: It can seem quite daunting to suddenly have so much power over people’s daily comfort and happiness, but it’s not as hard as it seems at first. Start by giving people the service you would want (just that good ole “golden rule” stuff). Over the years as an investor, I have found that communicating with tenants, sellers, and buyers in the manner I wish to be communicated with goes a long way toward creating positive results, happy tenants, and satisfied colleagues.
No experience/“I don’t know enough”: No one wants to look like they are clueless. It never feels good. Word of wisdom: sometimes the honesty of saying, “I’m new at this,” goes a long way in getting people to warm to you, open up, and be willing to help you deal with any of the hiccups occurring in any new line of business.
Other investors will always be able to find better deals: It’s true! My answer to that is, “Yes, because they keep trying.” They keep networking to meet more people, they make offers on more properties, they talk to more sellers. Does any of that mean you shouldn’t start? Nope. Why? There will always be a “Joe Investor” who will do a deal and make $60K. That doesn’t mean that a deal you do that makes $30K is any less a good deal. Your wallet will still be VERY HAPPY! (This I guarantee you!)
Scared to get it wrong and look foolish to family and friends: This is a really significant fear for a lot of new investors. But are those same family and friends taking risks to build wealth? Are they investing in themselves and their futures by learning new things and creating new investment opportunities? Probably not, and therefore your willingness to invest and trust yourself makes you something special. You and your spouse are pioneers on the adventurous journey of increasing your wealth and building your own personal future success.
So honestly, some of this list may resonate for you, while many of these concerns may not seem realistic or valid at all. It doesn’t matter. You yourself have your own unique worries and stresses in your heart and mind that your spouse does not share.
Your spouse has a different set of concerns.
We all have insecurities and deep-seated discomforts that can hold us back. But remember, if you can be there to provide support, if you can be present and caring for your spouse during these scary and exciting life changes, you are also very likely to discover the two of you are an amazing team that knows NO LIMITS!
As a home buyer, you braved the real estate buying circus when you bought your first home, and you have a great place to show for it. You’ve trudged through the open houses, experienced exactly how stressful closing can be, and dealt with legions of moving trucks. And still, a part of you wants something more: an escape in the mountains, a beach cottage, or a pied-à-terre in the city. You want to buy a second home.
With current mortgage rates at a historic low, you might be tempted to jump in. But beware; buying real estate as an investment property or second home won’t be the same as your first-time home-buying experience. Here are some differences and advice to keep in mind.
First things first: Can you afford to buy a second home?
If you scored a sweet deal on a mortgage for your primary residence, don’t expect lenders to give you the same offer twice.
“Second-home loans generally require more down payment and a better credit score than owner-occupied home loans,” says John Lazenby, president of the Orlando Regional Realtor Association.
You may have to pay a higher interest rate on a vacation home mortgage than you would for the mortgage on a home you live in year-round, and lenders may look closely at your debt-to-income ratio. Expect a lender to scrutinize your finances more than when buying a single-family primary residence.
“Lenders look carefully to ensure that second-home buyers are financially capable of paying two mortgages,” Lazenby says.
Make sure to review your budget with a second mortgage payment in mind, and make adjustments if necessary after you know what interest rate you will receive. And make sure you can afford the real estate down payment—a healthy emergency fund and cash reserves are essential if an accident or job loss forces you to float two mortgages at once.
Evaluate your goals
Understand exactly how you plan to use the property before you sign on the dotted line.
“Buyers should consider their stage of life and that of their children to ensure they are going to actually use the home for the amount of time that they’re envisioning,” Lazenby says. “A family with young children may find that their use of a second home declines as the kids grow older and become immersed in sports.”
If you’re certain you’ll get enough use and enjoyment out of your new purchase, go for it—but make sure to carefully consider the market.
For most homeowners, a second home shouldn’t be a fixer-upper. Look for homes in high-value areas that will appreciate over time without having to sacrifice every weekend to laborious renovations on your “vacation home.”
Buying in an unfamiliar area? Take a few weekend trips to make sure it’s the right spot for you. In the long term, you’ll want it to be a good investment property, as well as a place to play. Pay close attention to travel times, amenities, and restaurant and recreation availability, otherwise you might spend more time grousing than skiing and sipping wine. And make sure to choose a knowledgeable local real estate agent who will know the local real estate comps and any area idiosyncrasies.
Understand your taxes
You may be familiar with a bevy of home credits and tax breaks for your first home, but not all of them apply to your second.
For instance: You might be planning on using your new home as a vacation rental when you’re out of the area. If that’s the case, you need to calculate the return on your investment property purchase price that you can expect over the course of a year. How much can you charge per night or per week for your rental property? How many weeks will you rent out the property? And what expenses will you incur?
“Property tax rules and possible deductions for second homes used as rentals are complicated and vary widely, depending on both the number of days per year that the owner occupies the home and the owner’s personal income level,” says Lazenby.
A vacation home offers more flexibility to buy based on your potential property tax burden—for instance, if you’re looking to buy in an area of high real estate taxes, consider widening your real estate search to another county, which can save you thousands of dollars. Your real estate agent should be able to help you find property you as a buyer can afford.
Lazenby recommends consulting with a tax professional about tax implications, especially if you’re planning on renting out the house.
A vacation home you use part time and also rent out may be considered rental property for tax purposes, depending on personal-use days as the homeowner, and the number of days you rent it out. If you rent out the vacation property for more than 14 days in a year, you must report the rental income on Schedule E of your individual tax return, and you can deduct the rental portion of expenses such as mortgage interest and property taxes. However, renting out your home as a short-term vacation home for 14 days or less in the year means you cannot deduct rental expenses, but the income from your renters is tax-free.
When a series of tax and mortgage rules was introduced in Canada in 2016 to prevent a housing market bubble, activity slowed down significantly in the years that followed. Given the current circumstances, is it still viable to invest in property?
In a think piece in Macleans, market watcher Romana King said even with fears of a global recession, real estate is still a smart way to invest.
“For investors, the key to making strategically smart decisions is to consider the underlying economic factors that impact your investment,” she said.
King said the housing market could climb out of negative growth forecasts this year. Citing figures from the Canadian Real Estate Association, she said the national sales activity was on target to increase by 5% in 2019 and could expand further by 7.5% in 2020.
“Canada boasts strong population growth, and government budgetary decisions are acting as stimulants for the national housing market, all of which point to a healthy future for Canada’s real estate market,” she said.
Investing in real estate, however, is not without risks. For investors, it is crucial to know some strategies to lessen the potential risks, King said. The first is to be aware of additional debt. Investors must keep an eye on their credit scores and pay bills on time.
“Most investors will require a mortgage to purchase rental real estate. This can alter your debt ratios, which can impact whether or not you get the best mortgage or loan rates. Talk to an advisor before applying for new credit or renewing a current loan,” King said.
Another must-have strategy is budgeting. King said investors need to control how much they spend on maintenance and repairs to ensure that their rental properties are cash-flow positive.
“An investor needs to budget for a contingency fund. If the anticipated monthly rent covers all monthly expenses, including a repair fund, then the property is cash-flow positive, which is fundamental for a good investment,” she said.
Getting insurance could also mitigate the risks of catastrophic events.
“Virtually all insurance policies will cover a catastrophic loss of a building, but as a real estate investor, you must also consider the loss of income due to damage or destruction. A comprehensive rental policy will provide a landlord with income to replace lost rent at fair market value,” she said.
Overall, investors need to treat real estate investing as a business. Citing Edmonton-based investor Jim Yih, King said the key to successful real estate investing is positive cash flow, and not just the purchase price and the potential sale price.
Source; Canadian Real Estate Magazine – by Gerv Tacadena 12 Nov 2019
From 1948 to1970, close to half a million people from the Caribbean were invited to what was commonly referred to as the ‘mother country.’ Arriving as British citizens (despite never living in Britain) is a trait rooted in the legacy of the Empire. Whilst there were many reasons for their arrival in Britain, many were seeking superior opportunities for themselves and their offspring. Early settlers spoke about a five-year plan to save money and return back to the Caribbean. Prohibited to find suitable accommodation, many migrants were confronted with signs such as, ‘No Coloureds or Blacks’, which was routinely used alongside the use of ‘No Irish and Dogs.’
Where Caribbean’s were permitted to rent, the standards and conditions of the dwellings were typically unsavoury. Consequently, there was a determination to purchase one’s own properties using a system popularly known as pardner, which involves the collaborating of resources to provide access to funds. This system was particularly useful when banks would not loan to black people. Early settlers from the Caribbean owned houses in what are now some of the wealthiest locations in Europe, such as Notting Hill and Paddington. It was not rare for these residents to own more than two houses that were rented out, characteristically large three or four story Victorian terraced houses. As the decades proceeded, many of these houses were sold due to the owners returning to the Caribbean, or simply moving. Similar trends occurred in Shepherds Bush, Balham and more recently in Dalston, Brixton, Peckham, leaving a decline in property ownership amongst succeeding Caribbean heritage peoples within the UK.
While the cost of properties has been exorbitant in London, where according to the last Office for National Statistics’ (ONS) Census for England and Wales, 58.4% of black people reside, the cost of properties in locations such as the West Midlands (which is said to host the second largest population of black people) at 9.8%, is considerably lower.
Black Landlords UK (BLUK) in Birmingham aims to revitalise the calibre of not only black home ownership, but also the number of black landlords. Founded in late 2017, one of the committee members Garfield Reece revealed how the organization came into fruition. ‘’It evolved (BLUK) from conversations that Rod Shield (senior investor in Birmingham) had during his networking meetings. People were asking him the same questions wherever he went.’’ Some of the questions that Reece cited were ‘’How we got into property management? How to turn a single let property into a high yielding HMO (House Multiple Occupation)? How to resolve issues and conflicts with tenants.’’
Initially, Rod Shield decided to establish a Whatsapp group to address the myriad of questions he was bombarded with and to mobilize the engagement of black people within the community. The Whatsapp group quickly demonstrated the demand for such an organization and according to Shield, “The Whatsapp group numbers exceeded the allowable quote on Whatsapp; well in the excess of 200 investors in the group. So that’s really where it all started.’’ It was during this time that the committee (who volunteer their expertise for free) decided to galvanise all those that expressed an interest in property to congregate in one room. This lead to BLUK’s quarterly meetings; “The first meeting was held back in January this year,’’ declares Reece.
The first BLUK meeting in January 2019 had approximately 50 people in attendance, and numbers have been growing rapidly. At BLUK’s last quarterly meeting for 2019, the committee expect to have 120 investors. “We are giving service providers and businesses within the community, an opportunity to sell and promote their businesses,’’ Reminiscent of a market stall, there will be six tables with businesses each discussing topics such as finance and how to raise mortgages. Half of the meeting will consist of Keynote Speakers, who will talk about the process one has to go through when acquiring property. The other half of the meeting will be dedicated to roundtable discussions, “It will be like mini workshops,’’ states Reece. “Each roundtable is going to talk about a different investment strategy,’’ Reece adds.
The next BLUK meeting will take place on Saturday, November 23rd, 2019 from 14:00 – 18:00 at the Legacy Centre of Excellence (formerly known as the Drum) 14 Potters Lane Birmingham, B6 4UU.
Making money through cash flow versus capital gains
How do you currently make money? By going to your job every day and collecting a biweekly paycheck in exchange for your work? Most people make money this way, because it’s what they are taught to do by their parents or teachers. Also, it feels like a safe and secure path because it’s the traditional route.
Well, what if I told you that there’s another way? Another path in life that doesn’t require you to trade time for money? A path that allows you to follow your passion, achieve financial freedom, and reach your life goals? Now I’ve piqued your interest, right?
This path is precisely how the rich make their money — and it’s not from an hourly wage or salary. Instead, they make their money from their investments. In fact, the best way to make money is as an investor — but the question I’m often asked is: How do you make that money? If your monthly income as an investor does not come from a job, then where does it come from?
Making Your Money Work for You
If there’s one thing the rich do differently than the poor, it’s that they put their money to work instead of working for their money. What does that mean? Their money isn’t just sitting around in a savings account, accruing little-to-no interest, waiting for a rainy day. Their money is being invested — and delivering a return!
Different investments produce different results. The question is, what results do you want?
There are two primary outcomes an investor invests for:
Investor Income #1: Capital Gains
If you enjoy watching those “fix it up and flip it” TV shows, you’re probably already familiar with the concept of capital games — essentially, it’s the game of buying and selling for a profit.
In real estate, let’s say you buy a single-family house for $100,000. You make some repairs and improvements to the property, and you sell it for $140,000. Your profit is termed “capital gains.” Any time you sell an asset or investment and make money, your profit is capital gains. Of course, there are also capital losses (which occur when you lose money on a sale).
The same concept holds true outside of real estate. If you buy a share of stock for $20, and sell it once the stock price increases to $30, that’s also a capital gains profit.
The Problem with Capital Gains
While there is money to be made through capital gains, it’s also important to note the risks.
First, it’s a formula you have to keep repeating over and over again — you have to keep buying and selling, buying and selling, and buying and selling, or the game and the income stop.
Second, if the real estate market takes a nosedive, “flippers”— people who buy a real estate property and quickly turn around and sell it for a profit, or capital gains — can get caught with inventory they can’t sell.
Before the housing bubble burst in 2008, the mindset for many was that the market would continue to go up. So, when the market reversed and crashed, the properties were no longer worth what the flippers bought them for, and there were no buyers to flip the properties to. This led to a record-breaking number of foreclosures, and people simply walking away from homes.
Most investors today are chasing capital gains in the stock market through stock purchases, mutual funds, and 401(k)s. These investors are hoping and praying the money will be there when they get out. To me, that’s risky.
As long as market prices go up, capital-gains investors win. But when the markets turn down and prices fall — something nobody can predict — capital-gains investors lose. Do you really want that gamble?
Investor Income #2: Cash Flow
Cash flow is realized when you purchase an investment and hold on to it, and every month, quarter, or year that investment returns money to you. Cash-flow investors, unlike capital-gains investors, typically do not want to sell their investments because they want to keep collecting the regular income of cash flow. If you aren’t already familiar with my motto, cash flow is queen!
If you purchase a stock that pays a dividend, then, as long as you own that stock, it will generate money to you in the form of a dividend. That is called cash flow. To cash flow in real estate, you could purchase a single-family house and, instead of fixing it up and selling it, you rent it out. Every month you collect the rent and pay the expenses, including the mortgage. If you bought it at a good price and manage the property well, you will receive a profit, or positive cash flow.
The cash-flow investor is not as concerned as the capital-gains investor whether the markets are up one day or down the next. The cash-flow investor is looking at long-term trends and is not affected by short-term market ups and downs — what a great position to be in!
The Advantage of Cash Flow versus Capital Gains Investing
The best thing about cash flow is that it’s money flowing into your pocket on a continual basis — whether you’re working or not. You could be on the golf course, jet-setting around the world, watching Neflix in your jammies, or building a business, and your money is busy working for you. And generally, cash-flow investing is based on fundamentals that aren’t as susceptible to market swings like capital-gains investments, which means that even in bad times, money still flows into your pockets.
Additionally, cash flow is what is known as passive income, which is the lowest taxed type of income. This is not always the case with capital gains taxes, which vary depending on the type of asset you’ve invested in and how long you’ve owned that asset. In some cases, the taxes can be very high.
You’ve decided, for whatever reason, that you want to invest outside of your local area or state. Your next question is—where should I invest?
I’m going to offer you a list of things that you can consider when trying to figure out what market to invest in. These things are in no particular order, and some of them may not apply to you or your particular situation. My intention with each one is to give you something to think about and hopefully some ideas on where and how to start looking for a market that suits your investment needs.
Here we go!
Step #1: Narrow Down Your Market Options
First, if you are brand new to out-of-state investing and don’t have a clue where to start, your location choices are likely going to feel extremely overwhelming. I have two things for you to think about that will hopefully at least get you moving in some kind of direction.
Where do you have friends and family?
Are there any cities where you have friends or family who might be good assets to have on your “team” on the ground? I’m not necessarily saying go into business with your friends or family or make them an official part of the team. But if you already have ties to any particular cities, maybe take a little time to decide if any of those cities might be good ones to get started.
Even if your friends or family there aren’t part of your team, they may be able to occasionally drive by your property once you own it and tell you if anything crazy seems to be going on. It never hurts to have an extra set of trustworthy eyes on an investment property!
Where are other investors buying?
Thanks to technology and the internet (and websites like BiggerPockets!), you can easily and quickly network with other out-of-state investors. Ask people which markets they are buying in, and if they seem friendly and interested in chatting more, find out why they are buying in those markets.
Don’t struggle to reinvent the wheel when experienced investors are already out there succeeding with out-of-state properties. I did secretly throw a keyword in there—experienced. Don’t take just anyone’s word for what they claim to be a good city to invest in. But remember, you’re just trying to get a list started. You can dig into details later as you go along.
Start there. Make a list of the cities that come up when you consider those two things. Again, this isn’t your final list, but at least your list is much shorter now than it was when it had all 19,354 U.S. cities on it as investing options.
You may not have known you had a list of 19,354 cities on it, but if you were starting from scratch, the whole country was a possibility! That would have to be intimidating and overwhelming—and almost an impossible point to start from. Now you have a less intimidating starting point. Related:What Moving Out of State is Teaching Me About Remotely Managing Rentals
Step #2: Analyze Those Markets
So, you are looking at your list of some number of cities or major markets, and now your question is—how do I know a good city to invest in from a bad city?
In my mind, there are only two major questions I ask to determine whether I want to invest in a particular city:
Do the numbers work?
How likely am I going to be able to sustain those numbers?
If you don’t know what numbers I’m talking about, I’m talking about your returns. Returns (aka profits) can be generated in two major ways: cash flow and appreciation. This is at least true for rental properties.
If you are flipping out of state, some of this will not apply to you, and there are some slightly different considerations that you’ll need to incorporate into your analyses. You’re on your own, though, for those—I’ve never flipped, so I definitely shouldn’t be the one to tell you how to rock that method out.
Most likely, if you are wanting to invest out of state, you’re probably doing so because you want cash flow. Most of the investors who invest out of state do so because the numbers locally don’t pencil out. This is often the case in a lot of the bigger markets—Los Angeles, San Francisco, New York, etc.
And while those markets don’t usually pencil out for cash flow, they are the bigger players when it comes to appreciation. So, in thinking of anyone who lives there and wants to buy out of state, it’s probably because they want cash flow. See my logic?
Either way, let’s assume you are going after cash-flowing rental properties out of state because you can’t find cash flow locally. If that’s the case, the numbers need to work in the market you choose to invest in. Otherwise, what’s the point?
So, let’s think about the numbers. What kind of numbers do you need to understand when it comes to cash flow?
In addition to the equations in that article, a term you will want to be familiar with is “price-to-rent ratio.” This term compares the price of a property to how much rent it can collect. The reason these two things matter is because they will determine whether you can cash flow on the property or not.
As you saw in those cash flow equations, you need the rental income you collect on a property to surpass the expenses of buying and owning that property in order to have positive cash flow. If the expenses of buying and owning that property are higher than the rent you can collect from the property, you’re in a negative cash flow situation and losing money (on the cash flow front at least).
Knowing this term now, if someone asks you if you’re interested in a particular market for investing, your first question might be—how are the price-to-rent ratios there? What you’re ultimately asking here is—is there an option for cash flow in that particular city?
For instance, I can tell you that hands-down the price-to-rent ratios in Los Angeles are not supportive of cash flow. I can tell you that the price-to-rent ratios in Indianapolis are generally favorable for cash flow. In no way does that mean every property or every location within Indianapolis will cash flow, but it does mean there is an option for it—whereas in Los Angeles, there’s really no option for cash flow.
Now, let’s say a particular market has generally favorable price-to-rent ratios for cash flow.
Oh wait, I just heard you ask—how do I know if a market has favorable price-to-rent ratios? Great question.
The fastest way to find that out is to network with other investors. You can either ask other people where they are investing, which I already mentioned, or let’s say you have a family member in a particular city and you’re curious about whether or not you can cash flow there. Post in a BiggerPockets Forum and ask people if they have any knowledge of cash flow potential in said market.
Look for people investing there, and find out the best places for cash flow there. If all of that fails, start looking up properties and running those equations I taught you, and see if you’re coming out ahead on cash flow.
Let’s say a particular market has generally favorable price-to-rent ratios for cash flow. This is where that second question I asked comes in—how likely am I going to be able to sustain those numbers?
The answer to this question is lengthy, so I’ll just give you one basic thought to consider for now. Is the market you are looking at a growth market or a declining market? The reason this matters is because you can project cash flow numbers until the cows come home, but if certain factors come into play with your property, you may never see a single bit of that projected cash flow materialize.
Bad tenants, for example, can cause you to not see a penny of your projected flow because they can cost so much in expenses—IF they are even paying the rent.
Your list of potential markets should be even shorter now than it was when you narrowed it down from 19,354 cities to either cities you know people in or have ties to or cities other investors recommend. It should only include markets/cities where the numbers not only work but also where the numbers have good potential of sustaining themselves. (That last part is purely my own personal investment strategy preference—it’s certainly not a requirement.)
You may have one market on your list at this point, or you may have a handful. Which one you ultimately decide on may just come down to personal preference at this point—or it may depend on your situation and your resources.
At this point, here are a few more things you can look at.
You just might not have enough capital to invest in all of the good options out there. For instance, I know of some amazing deals in Baltimore and Philadelphia, but those particular deals require a minimum of $90,000 up front.
You may not have $90,000. You might only have $20,000. Well, good news—$20,000 can get you a great cash-flowing property in other cities!
So, for your budget, you may stay focused on one area over another. I used to work with triplexes in both Chicago and Philadelphia. At that time, you could get a good cash-flowing triplex in Philadelphia for $130,000. The triplexes in Chicago at the time were bigger and nicer, and they were around $270,000.
The cash flow on the Chicago properties was higher, of course, but not everyone’s budget would support buying one of those triplexes. But many of those people could get one of the Philadelphia properties. So, more than anything, your available capital may further limit you on where you can invest. This isn’t always the case, but it is a consideration.
This is simply a personal preference factor. For example, some markets like Philadelphia and Baltimore tend to have properties with more of an urban feel. They are often more of the row house-type of structure. Not everyone likes the urban feel, and not everyone likes adjoined buildings.
The other option would be properties with a suburban feel that are free-standing. You can find lots of these in the Midwest. Additionally, some markets offer a lot of multifamily (MFR) options, and some markets only have single-family (SFR) options that will cash flow. So, if you prefer urban or suburban over another, and if you prefer SFR or MFR over another, those personal preferences will steer you toward particular cities and away from others. Related:Forget the Demographics and Focus on Researching THIS Before Investing Out-of-Area
Look! You’re continuing to narrow down your list! Here’s how to further narrow it.
Returns vs. Risk
At the end of the day, some cities and property types will be more risky than others. Even if you are looking within stable growth markets and none of the areas you are looking in are majorly dangerous, some may have significantly better schools than others, etc.
Maybe one market is slightly more in a “gentrifying” stage than another more matured market. It’s always fine to take on a little more risk, but make sure the proposed returns are high enough to justify it. Or if you are more risk-adverse, you may choose to accept slightly lower returns in exchange for staying with a less risky market and property. That’s totally fine as well.
So, you want to have a feel for the returns versus the risk available to you in each potential market and weigh that against where you are on your own personal scale of desire. What’s more important to you: returns or playing it safer? That should help you further whittle down your list.
Ease of Commute
This one may be less significant than others, but it could play a role. If you have narrowed your list down to say, two markets, and those two markets are weighted pretty evenly against each other—which one is easier to get to? If a nonstop, not-too-lengthy flight is available to one and to get to the other would require a couple stops and a longer travel time (which would also probably be more expensive), go with the one you can get to easier!
Ultimately, the most important thing about whichever market you decide on is whether or not you will lose sleep over investing there. Maybe it’s because you can’t stomach your investment property being so far out of reach, maybe it’s because the market is a little riskier, maybe you hate single family homes and really wanted a multifamily. Whatever the situation, go with what will put a smile on your face (and hopefully some cash flow in your pocket).
A quick summary on the steps you can take to help you decide on a market:
Step 1: Narrow down your market options.
Where do you know people?
Where are other people investing?
Step 2: Analyze those market options to further narrow down your list.
Is it a good market to invest in?
Do the numbers work?
Will you be able to sustain the numbers?
Step 3: Choose what you like!
Decide on your personal preferences and see which markets fit those.
Then, once you have your market decided on, go shopping! Even if you only narrowed your list down to a couple of cities, that’s fine. Two cities is easier to shop in than 19,354.
And here’s one last tidbit for you. At the very end of it, no matter how or why you chose the market(s) you did, you need to confirm one last thing. Are you ready?
The last thing that matters is that you can form a good team in the market you choose.
If you can’t find good team members to help you with your property, go to another market. If you don’t have a solid team as an out-of-state investor, you’ll be up that famous creek without a paddle.
If you’ve narrowed your list down to a couple of cities you’d be willing to invest in, choose the one that offers the best team. If you’ve narrowed your list down to one city you want to invest in but then you can’t form a solid team of good people there, start over and choose a new market. You must have the team!
New York City’s reputation as one of Earth’s most expensive—and daunting—real estate markets is well-earned, thank you very much: $1.8 million studio apartments? Check. Full-cash offers everywhere you look? Check. Freakishly competitive open houses? You bet. Welcome to the big time—with the prices and killer views to match. It’s little wonder that housing is top of mind for just about all of the nearly 8.4 million folks who call the Center of the Universe home.
Everyone, it seems, is angling to hit the NYC trifecta: a decent space in a good neighborhood at an affordable price. That’s why it’s so important to get a handle of what’s going to be the next big neighborhood, before it explodes in popularity and prices get out of reach.
To find out which neighborhoods in this bellwether, nationally scrutinized market are seeing the biggest price climbs—and the biggest falls—we teamed up with real estate appraiser Jonathan Miller, co-founder of Miller Samuel. He compared the median home sale prices in all of New York City’s neighborhoods throughout the five boroughs in 2017 and 2018. We included only the neighborhoods with at least 25 sales in both years.
What we found is a city going through churn, much of it due to the flurry of luxury development in some areas that traditionally have had older—and more affordable—homes. Prices go up, an area gets saturated, the luxury stock sells out, then prices go back down. Rinse and repeat. Meanwhile, the megadevelopment causes people to search out nearby areas that might be cheaper.
It’s the NYC circle of life, and it’s accelerating.
“Developers have left no stone unturned and developed wherever they could,” says Miller. “They went everywhere there was an opportunity. And that caused a lot of price fluctuations, especially in more modestly priced neighborhoods that saw a lot of new, high-end development introduced.”
But New York City hasn’t been immune to national trends. The overall market is slowing throughout all of its five boroughs of Manhattan, Brooklyn, Queens, the Bronx, and “can’t-get-no-respect” Staten Island. The city has been particularly affected by the national tax changes that make it more expensive to own a home in pricier parts of the country, says Miller.
More fun still: This month, New York state’s new mansion tax went into effect, upping the amount of taxes on properties $2 million and up. Sales had been down earlier in the year, but the prospect of giving more to Uncle Sam resulted in a rush of higher-priced home sales. Going forward, the number of sales is expected to fall back down again. Phew … Dramamine, please.
High price tags are pushing many New Yorkers farther out into cheaper communities such as the Bronx, which doesn’t have the hipster cred or water views of Brooklyn. But dollars can stretch way further there.
“A large shift or decline [in a New York neighborhood] is generally not a reflection of weakness,” says Miller. “It’s more of a reflection of … now it’s back to business.”
So which neighborhoods are seeing the largest real estate price spikes? And which expensive communities are getting (a bit) more affordable?
Annual median price increase: 122.7% Median 2018 home price: $612,500
When folks think of the Bronx, the mix of grand Tudors, Georgian Revival estates, and midcentury modern homes and lovely winding streets in suburban Fieldston are rarely what come to mind. Homeowners in this privately owned enclave of tony Riverdale pay property taxes and fees to their property owners association, which maintains the streets and sewers and pays for its own security patrol.
Prices are surging because word has gotten out: Buyers are increasingly drawn to its seductive combo of urban and suburban living. The historically designated community is near top private schools, which include the Horace Mann School and Riverdale Country School. It’s also only steps away from the Hudson River and the 28-acre green oasis of Wave Hill Public Gardens in the northwest swath of the Bronx.
“In Fieldston, you are part of the city but you have the real suburban feeling,” says Chintan Trivedi, a licensed real estate broker with Re/Max In the City. “Here you’re getting a real home, a backyard and a private community.
“For a good house with a larger backyard, a complete renovation, and maybe a pool, you can expect to pay $1.5 million to $2.5 million,” he says. But there are six-bedroom homes listed in the $1 million range. Just tryto get that in Manhattan. (Spoiler: You can’t!)
Annual median price increase: 41.2% Median 2018 home price: $275,000
Just south of Fieldston are the middle-class communities of Kingsbridge and University Heights, where buyers can score deals for a fraction of the price. But the lack of homes for sale and little turnover are causing prices to heat up. And investors are buying up whatever lots and houses they can for new development or rehabbing.
“The Bronx is the new Queens in the sense that there’s been an expansion of demand moving out from Manhattan as consumers search for affordability,” says Miller.
The neighborhood’s become popular with 20- and 30-somethings looking for a reasonably priced community with an urban vibe. Hilly Kingsbridge is filled with century-old, single-family houses and midrise co-op and apartment buildings as well as plenty of shopping, parks, and public transit.
These buyers “are[part of] the new generation that’s learning that real estate should be part of their planning,” says Trivedi. “They want to feel like they’re in Manhattan—a place where they can still go right downstairs and get a smoothie.”
Annual median price increase: 38.7% Median 2018 home price: $1,535,000
Over the past couple of decades, lower Manhattan’s East Village has shed its image as a sketchy, open-air drug market to become a sought-after place known for lively bars, great restaurants, and a defiantly boho vibe—as well as a slew of new, high-priced developments, causing prices to jump. They’re going up everywhere you look.
Annual median price increase: 36.1% Median 2018 home price: $1,226,750
Like the East Village, Prospect Heights has been rapidly gentrifying. Professionals, families, and a few stray hipsters are drawn to its charming rows of stunningly restored early 19th-century, multistory brownstones on tree-lined streets. The neighborhood is near several main subway lines and in close proximity to the 526-acre Prospect Park and the Brooklyn Botanic Garden. It also borders Barclays Center, home to the NBA’s Brooklyn Nets (and soon the team’s new dynamic duo, superstars Kevin Durant and Kyrie Irving).
In recent years, Prospect Heights has become popular with folks priced out of neighboring Park Slope, a community long popular with upper-middle-class families. They gravitate to the brownstones as well as the new high-rises and the used bookstore, artisanal bakeries, and constant stream of new restaurants.
Not surprisingly, the Prospect Heights neighborhood has attracted a slew of developers putting up luxury condo and apartment buildings wherever they can. Those high-end housing developments are skewing the neighborhood’s median prices up to new heights.
This isn’t the kind of place where you’ll find buzzed-about restaurants—you’re more likely to stumble upon a dollar store than a bougie boutique. It’s a more down-to-earth community, populated by old-school Brooklynites, hipsters, as well as Pakistani, Orthodox and Hasidic Jew, Mexican, Chinese, and Latin American immigrant groups.
Annual median price increase: -40.7% Median 2018 home price: $915,500
Once grim downtown Brooklyn has been booming in recent years. It’s become home to a slew of glassy, luxury high-rises. So why are prices in such a vibrant area plummeting?
Well, now there’s a glut of new construction, giving buyers more negotiating power as buildings compete against one another to lure residents. Plus, builders are putting up towers with some smaller, less expensive units. But in NYC, less expensive is relative. Buyers might save themselves a couple hundred thousand on a million-plus-dollar condo.
But many of the condos here, some designed by famous architects, come with just about every amenity imaginable, including sun decks, hot tubs, dog runs, saltwater pools, and even music studios. This two-bedroom, 1.5-bathroom abode in a 57-floor building is going for $2,040,000.
Some believe developers overshot their market.
“Developers there created a mountain of homogenous product,” says agent Blumstein with the Corcoran Group. Buildings in the area “were built on the thought that people are demanding amenities. But the old-school, prewar neighborhood vibe is what’s in.”
Annual median price increase: -39.3% Median 2018 home price: $3,200,000
Even many lifelong New Yorkers have never heard of the Civic Center neighborhood in lower Manhattan. The tiny community encompasses City Hall and courthouses as well as some high-rise co-op, condo, and apartment buildings. It’s just west of ultradesirable Tribeca, where prices are sky-high, and just below Chinatown, guaranteeing plenty of good Asian eats.
Prices are down because the wave of development has pretty much played itself out, says Miller. Many of the older brick and limestone, midrise office buildings had been gut-rehabbed and turned into pricey condos. That led to a spike in prices. Now that those units have been bought, the real estate for sale is a mix of lower- and higher-end properties.
It’s “run its course,” says Miller of the wave of development in Civic Center.
Annual median price increase: -30.2% Median 2018 home price: $450,000
Like Civic Center, Javits Center as a neighborhood isn’t very well-known—but that’s likely to change. Named for the sprawling convention center on the west side of Manhattan where the community is located, it’s wedged between trendy Hell’s Kitchen and Chelsea and abuts Hudson Yards.
Even nonlocals have probably heard of Hudson Yards, Manhattan’s newest neighborhood, built on a formerly desolate stretch of disused train tracks. It’s a glam (and critics say overly generic) development of ultrahigh-priced condo and rental towers overlooking the Hudson River, complete with its own weird tourist attraction, the beehive-like Vessel. The Javits Center’s proximity to this buzzy development will likely have an impact on sales with prices shooting up.
But in the meantime, prices fell because there simply isn’t much of the first wave of luxury real estate left on the market. Now what’s selling is less expensive, older condos.
That’s likely to change as sales heat up in Hudson Yards.
“Sales [in Hudson Yards] will help to increase values in the surrounding area,” says New York real estate agent Matt Crouteau. The place “was designed so people don’t have to leave.” Ever.
Annual median price increase: -30% Median 2018 home price: $997,500
Just south of the Civic Center is the Financial District, home to Wall Street and the World Trade Center on the tip of Manhattan. Like all of the other neighborhoods on this list, FiDi (as it’s called) experienced a spike in development, then a market saturation.
“It’s not that prices are collapsing,” says Miller. “The early wave of high-end new development drove prices higher. … After that activity cooled, the prices for the neighborhood are less than what they were.”
But there are still plenty of new units to choose from, including this three-bedroom, four-bathroom condo going for $5,300,000. The unit features granite countertops, a waterfall island, high ceilings, and floor-to-ceiling windows. On the lower side of the spectrum, buyers can snag this studio with plenty of closet space for $480,000.
The neighborhood is home to a few cobblestone streets, giving it an old-world charm, as well as the South Street Seaport, a tourist fave.
Annual median price increase: -29.6% Median 2018 home price: $1,550,000
Thank the long-awaited Second Avenue Subway line for prices falling in the upper portion of the Upper East Side, from about 96th to 110th streets. Developers flooded the neighborhood putting up buildings near the new train extension, which opened in 2017 after being discussed, planned, and replanned for nearly a century. They believed—rightly so—that this least fashionable part of the Upper East Side would become far more desirable thanks to its close proximity to the new train line.
“That’s essentially East Harlem, which has benefited from a significant amount of new development,” says Miller. Now development is mostly over and there’s fewer sales.
“You’re not seeing the same amount of high-end [sales], because there’s not as much new housing being introduced,” he explains.
The Upper East Side/East Harlem now has a mix of sleek towers, brownstones, low-rise brick buildings and townhomes, and apartment and public housing developments. This new one-bedroom, one-bath condo clocking in at just 609 square feet, which is near the new subway line, is on the market for $786,161.