Investing in a New York City Condominium
There are few lower risk propositions than buying property in New York City; it is an investment that will almost certainly go up in value in the future. Once you decide this is what you want to invest in, the question becomes how much you should spend and where you should buy. We have compiled a list of advice and tips to help you decide whether, when, and where to invest in a New York City condominium.
- Are you seeking short-term or long-term gains? Most properties yield a return of around 3% annually, so if you invest $2 million, you can expect to net about $60,000 per year. Mortgage rates are at historic lows, however, so if you qualify for a loan, you can purchase two condominiums worth $2 million and net $120,000 per year.
- Do you want an existing condominium or a new construction? The newer it is, the more expensive it will be per square foot, and the price will be at a premium. You will have to wait a while before your investment shows gains if it is already priced at premium rates.
- Should you choose a building with low or high common area charges? You will see an increase in your return if you choose a building with low common charges, but you need to know if they are due to a tax abatement, which might be set to expire. Lower common charges and lower taxes obviously increase your returns. Many buildings in Harlem, for example, are tax abated, which also increases the bottom line. Tax abatements that are soon to expire are not the best investment, however, so we usually advise clients against buying condominiums with tax abatements set to expire within the next five years.
- Should you get a loan? Getting a loan obviously increases your options, buying power, and leverage, but it also puts you into debt.
- Do you need a broker? Maybe not a broker, but you need somebody. If you do not seek the advice of a knowledgeable real estate broker, then you should at least seek advice from a CPA as well as an experienced real estate attorney.
Before investing in a New York City condominium, please seek advice from a financial planner or CPA as well as a skilled real estate attorney to ensure that you make decisions that further your financial goals. Contact us today at (718) 347-6800.