Press Mentions
The Total Package
By: W.B. King
Published: 4/30/2012
Source: The Cooperator
The Buyer's Application Process is Changing
In the best of circumstances, qualifying an applicant for a co-op or condominium purchase can be a challenging process. Market conditions play a part in a board's consideration of applicants, and recent fluctuations have changed the way both buyers and lenders are looking at real estate acquisitions.
In January, Manhattan-based appraiser Miller Samuel Inc. and brokerage firm Prudential Douglas Elliman released a joint fourth quarter 2011 sales report, and the news was mixed. The report noted that as a result of the European debt crisis, New York City sales fell 12 percent in the fourth quarter from the previous year. The report also stated that purchases of condominiums and co-ops declined to 2,011 from 2,295 in the fourth quarter of 2010. However, there was some good news as well, as the median price of units climbed 1.2 percent from the first quarter to $855,000.
“Co-Op Envy”
When buyers are interested in purchasing, it’s usually the co-op board that holds the cards. They investigate prospective buyers and eventually either bet on the applicant or pass. Condominium boards don’t have as much power, but many are slowly moving toward the co-op board model in hopes of securing the best-financed owners. As a result, the approval process for each is different, from time tables to legal issues.
“From a theoretical starting point, the processes are completely different,” says Manhattan-based real estate attorney Ronald H. Gitter. “With a co-op, the board of directors has the ability to turn down a buyer, but a condo board can only either issue a waiver of its right of first refusal to purchase the unit, or purchase the apartment on the same terms provided in the contract of sale.” Needless to say, the latter scenario doesn't happen often.
Years ago, when it came to a condominium purchase, there was very little board oversight during the application process. Due to market shifts and the ongoing recession however, the approach is slowly changing—although Gitter notes that, “Even today, with new construction sales from a sponsor, there is no application; just the ability to close. Over time, a number of condo boards have tried to act more like co-ops by requiring extensive applications. If the buyers resist submitting all the documentation, the application can be deemed incomplete.” He jokingly refers to this strategy as a case of “co-op envy,” but warns that buyers should expect a comprehensive evaluation of their finances and references, regardless of what type of unit they're trying to purchase.
What Do You Want From Me?
Boards often have difficulty communicating their expectations and requirements clearly and effectively to the brokers who handle the sales for their building. As a result, the application process can often be cumbersome and lead to a lot of second-guessing and procedural headaches. Therefore, it is recommended that brokers meet regularly with the managing agents of buildings they do business in so expectations reflect the building's current reality.
“Co-ops [and condos] should communicate their expectations and requirements through their managing agent, and they should also list their expectations and requirements in their board package/application instructions,” says Mitchell Hall, an associate broker with the Corcoran Group.
Manhattan-based residential and commercial real estate attorney Adam Leitman Bailey agrees, and notes that a board should do its best to secure the most favorable price on sales units, as this improves the value of the building for current and future sellers. “Good boards are accommodating to the brokerage community and supply building information readily,” he says. “If a building has certain financial requirements, this should not be kept secret. In New York City where very few brokerages control the market, this information can easily be passed with a few phone calls or emails by the managing agent.”
Educate to Understand
As is the case with all board-related transactions, there is a learning curve when it comes to buyer applications. Variables such as new legislation or changes in the market must be taken into consideration. As a result, due diligence and a working understanding of all aspects of a building’s profile is essential to making sales transactions go as smooth as possible.
To keep the wind in the proverbial sails, during every application process, boards should be equipped with the information they need to make an informed decision about a prospective purchaser. First and foremost, they need to verify that the applicant can afford the unit and related fees.
“Boards need to know whether the applicant can afford the unit and the mortgage,” says Bailey. “They need a list of assets and liabilities and proof of every line...certified tax returns, employment documents independently verified by the employer, bank account statements, trust agreements, verified loan documentation, mortgage and verification of any other debt. Also, I would want to see two months bank account statements, references, housing and state Supreme Court searches to see if the applicant has been in litigation before concerning their home.”
Obtaining the aforementioned information is easiest when a board is comprised of members who have prior experience reviewing applications, or who were recent applicants themselves. Additionally, board members need to know who to turn to for answers such as brokers, counsel or the building’s managing agent.
“Brokers become educated in the process by successfully representing both buyers and sellers,” says Hall. “They should know their buyer client’s finances and qualifications before showing them apartments. They should discuss the documentation and financial requirements early in the process. Prior to the interview they can coach their clients and offer tips to help them pass the board interview. They can have their manager review the board package before submitting it,” he continues. “When representing co-op sellers, it is important for the listing broker to discuss the buyer’s qualifications and likelihood of passing the co-op board with the seller rather than advising the seller to only consider the highest offer.”
Avoiding Common Errors
Bailey’s firm, which handles hundreds of residential closings annually, says there are common protocol mistakes made on each side of the table. “I always tell my clients that if they have any questions about an applicant, make sure those questions are not asked at the interview. [The buyer] is at the interview to be approved, and any questions the board has should be determined from another source such as the broker, managing agent or seller,” he says. “The only function of the buyer at the interview is to convince the board that they will be good neighbors. Less talking usually leads to an acceptance while loose lips sink ships—and deals.”
“A few years ago, my office would see rejections because the sales price was not high enough,” says Bailey. “We would realize why the applicant got rejected, and in some cases we got the offer increased to get the client approved and the deal closed. Boards served as the housing police during the housing boom, keeping out buyers who could not afford to pay their maintenance, common charges or mortgages. This has led to very few cooperative foreclosures compared to the rest of the market.”
While a stringent board can be a good thing when it comes to defending and preserving the financial stability and market cache of a co-op, too many rejections can flag a building as unattractive or unapproachable. And while it is imperative for boards to review an applicant’s financial standing thoroughly, there are lines of inquiry that are considered infringements, explains Gitter. “Boards can’t discriminate based upon age, race, religion or sexual preference,” he says. “Other than that, the Business Judgment Rule gives co-op boards’ great leeway in requiring information.” Whereas a board can ask for employment records and salary history, it cannot discriminate due to an applicant’s specific occupation.
In an effort to streamline the application process, new software has been introduced into the marketplace, and while industry professionals feel it a progressive step forward, adoption rates are slow.
“I think the use of software and electronic applications is the way to go,” says Hall. “REBNY and the brokerage community have been advocating this for years along with a standardized co-op and condo application. Unfortunately, I have yet to see any co-op that accepts an application and board package online. Some co-ops and managing agents have websites where the application can be downloaded and typed on to but they still require it printed on paper along with copies and collated sets of copied documents.”
New Government Rules and Regulations
Even a “bulldog” board is only as strong as regulations and legislation which have changed in light of the foundering economy. “This is one of the biggest issues facing co-ops and condos right now,” says Gitter. “It’s not just FHA, but Fannie Mae and other lending guidelines that particular banks are imposing.”
“This has impacted the approval process tremendously, he continues. “There are many situations where the buyer signs a contract, puts in his or her loan application, a loan commitment is issued, then maybe two to three weeks later the bank might come back and raise an objection about the co-op or condo such as insufficient reserves, insufficient insurance, serious litigation issues or other variables.” As a result, Gitter says many co-op and condominiums boards do not want to deal with addressing the issues and will not complete the transaction, which is fundamentally changing the application and approval process. This is a “post-Lehman Brothers” market reality, he says.
Hall explains that most New York City co-ops require a 20 percent minimum down payment. As a result of this ‘restrictive covenant’—as well as others such as board approval and flip taxes—the FHA does not loan to co-ops. However, there are a handful of condominiums in Manhattan that have been approved for FHA loans. “They are primarily in new construction condos in fringe neighborhoods that have had problems selling, so they applied for FHA approval. Most New York City condos are not eligible for FHA loans because the right of first refusal is also considered a restrictive covenant.”
“Many banks,” continues Hall, “have their own guidelines but the new Fannie Mae requirements have had some adverse effects on the co-op and condo application and approval process here in New York. It is no longer just a matter of the borrower being qualified for a loan, the co-op and condo must qualify, too.”
In the best of circumstances, qualifying an applicant for a co-op or condominium purchase can be a challenging process. Market conditions play a part in a board's consideration of applicants, and recent fluctuations have changed the way both buyers and lenders are looking at real estate acquisitions.
In January, Manhattan-based appraiser Miller Samuel Inc. and brokerage firm Prudential Douglas Elliman released a joint fourth quarter 2011 sales report, and the news was mixed. The report noted that as a result of the European debt crisis, New York City sales fell 12 percent in the fourth quarter from the previous year. The report also stated that purchases of condominiums and co-ops declined to 2,011 from 2,295 in the fourth quarter of 2010. However, there was some good news as well, as the median price of units climbed 1.2 percent from the first quarter to $855,000.
“Co-Op Envy”
When buyers are interested in purchasing, it’s usually the co-op board that holds the cards. They investigate prospective buyers and eventually either bet on the applicant or pass. Condominium boards don’t have as much power, but many are slowly moving toward the co-op board model in hopes of securing the best-financed owners. As a result, the approval process for each is different, from time tables to legal issues.
“From a theoretical starting point, the processes are completely different,” says Manhattan-based real estate attorney Ronald H. Gitter. “With a co-op, the board of directors has the ability to turn down a buyer, but a condo board can only either issue a waiver of its right of first refusal to purchase the unit, or purchase the apartment on the same terms provided in the contract of sale.” Needless to say, the latter scenario doesn't happen often.
Years ago, when it came to a condominium purchase, there was very little board oversight during the application process. Due to market shifts and the ongoing recession however, the approach is slowly changing—although Gitter notes that, “Even today, with new construction sales from a sponsor, there is no application; just the ability to close. Over time, a number of condo boards have tried to act more like co-ops by requiring extensive applications. If the buyers resist submitting all the documentation, the application can be deemed incomplete.” He jokingly refers to this strategy as a case of “co-op envy,” but warns that buyers should expect a comprehensive evaluation of their finances and references, regardless of what type of unit they're trying to purchase.
What Do You Want From Me?
Boards often have difficulty communicating their expectations and requirements clearly and effectively to the brokers who handle the sales for their building. As a result, the application process can often be cumbersome and lead to a lot of second-guessing and procedural headaches. Therefore, it is recommended that brokers meet regularly with the managing agents of buildings they do business in so expectations reflect the building's current reality.
“Co-ops [and condos] should communicate their expectations and requirements through their managing agent, and they should also list their expectations and requirements in their board package/application instructions,” says Mitchell Hall, an associate broker with the Corcoran Group.
Manhattan-based residential and commercial real estate attorney Adam Leitman Bailey agrees, and notes that a board should do its best to secure the most favorable price on sales units, as this improves the value of the building for current and future sellers. “Good boards are accommodating to the brokerage community and supply building information readily,” he says. “If a building has certain financial requirements, this should not be kept secret. In New York City where very few brokerages control the market, this information can easily be passed with a few phone calls or emails by the managing agent.”
Educate to Understand
As is the case with all board-related transactions, there is a learning curve when it comes to buyer applications. Variables such as new legislation or changes in the market must be taken into consideration. As a result, due diligence and a working understanding of all aspects of a building’s profile is essential to making sales transactions go as smooth as possible.
To keep the wind in the proverbial sails, during every application process, boards should be equipped with the information they need to make an informed decision about a prospective purchaser. First and foremost, they need to verify that the applicant can afford the unit and related fees.
“Boards need to know whether the applicant can afford the unit and the mortgage,” says Bailey. “They need a list of assets and liabilities and proof of every line...certified tax returns, employment documents independently verified by the employer, bank account statements, trust agreements, verified loan documentation, mortgage and verification of any other debt. Also, I would want to see two months bank account statements, references, housing and state Supreme Court searches to see if the applicant has been in litigation before concerning their home.”
Obtaining the aforementioned information is easiest when a board is comprised of members who have prior experience reviewing applications, or who were recent applicants themselves. Additionally, board members need to know who to turn to for answers such as brokers, counsel or the building’s managing agent.
“Brokers become educated in the process by successfully representing both buyers and sellers,” says Hall. “They should know their buyer client’s finances and qualifications before showing them apartments. They should discuss the documentation and financial requirements early in the process. Prior to the interview they can coach their clients and offer tips to help them pass the board interview. They can have their manager review the board package before submitting it,” he continues. “When representing co-op sellers, it is important for the listing broker to discuss the buyer’s qualifications and likelihood of passing the co-op board with the seller rather than advising the seller to only consider the highest offer.”
Avoiding Common Errors
Bailey’s firm, which handles hundreds of residential closings annually, says there are common protocol mistakes made on each side of the table. “I always tell my clients that if they have any questions about an applicant, make sure those questions are not asked at the interview. [The buyer] is at the interview to be approved, and any questions the board has should be determined from another source such as the broker, managing agent or seller,” he says. “The only function of the buyer at the interview is to convince the board that they will be good neighbors. Less talking usually leads to an acceptance while loose lips sink ships—and deals.”
“A few years ago, my office would see rejections because the sales price was not high enough,” says Bailey. “We would realize why the applicant got rejected, and in some cases we got the offer increased to get the client approved and the deal closed. Boards served as the housing police during the housing boom, keeping out buyers who could not afford to pay their maintenance, common charges or mortgages. This has led to very few cooperative foreclosures compared to the rest of the market.”
While a stringent board can be a good thing when it comes to defending and preserving the financial stability and market cache of a co-op, too many rejections can flag a building as unattractive or unapproachable. And while it is imperative for boards to review an applicant’s financial standing thoroughly, there are lines of inquiry that are considered infringements, explains Gitter. “Boards can’t discriminate based upon age, race, religion or sexual preference,” he says. “Other than that, the Business Judgment Rule gives co-op boards’ great leeway in requiring information.” Whereas a board can ask for employment records and salary history, it cannot discriminate due to an applicant’s specific occupation.
In an effort to streamline the application process, new software has been introduced into the marketplace, and while industry professionals feel it a progressive step forward, adoption rates are slow.
“I think the use of software and electronic applications is the way to go,” says Hall. “REBNY and the brokerage community have been advocating this for years along with a standardized co-op and condo application. Unfortunately, I have yet to see any co-op that accepts an application and board package online. Some co-ops and managing agents have websites where the application can be downloaded and typed on to but they still require it printed on paper along with copies and collated sets of copied documents.”
New Government Rules and Regulations
Even a “bulldog” board is only as strong as regulations and legislation which have changed in light of the foundering economy. “This is one of the biggest issues facing co-ops and condos right now,” says Gitter. “It’s not just FHA, but Fannie Mae and other lending guidelines that particular banks are imposing.”
“This has impacted the approval process tremendously, he continues. “There are many situations where the buyer signs a contract, puts in his or her loan application, a loan commitment is issued, then maybe two to three weeks later the bank might come back and raise an objection about the co-op or condo such as insufficient reserves, insufficient insurance, serious litigation issues or other variables.” As a result, Gitter says many co-op and condominiums boards do not want to deal with addressing the issues and will not complete the transaction, which is fundamentally changing the application and approval process. This is a “post-Lehman Brothers” market reality, he says.
Hall explains that most New York City co-ops require a 20 percent minimum down payment. As a result of this ‘restrictive covenant’—as well as others such as board approval and flip taxes—the FHA does not loan to co-ops. However, there are a handful of condominiums in Manhattan that have been approved for FHA loans. “They are primarily in new construction condos in fringe neighborhoods that have had problems selling, so they applied for FHA approval. Most New York City condos are not eligible for FHA loans because the right of first refusal is also considered a restrictive covenant.”
“Many banks,” continues Hall, “have their own guidelines but the new Fannie Mae requirements have had some adverse effects on the co-op and condo application and approval process here in New York. It is no longer just a matter of the borrower being qualified for a loan, the co-op and condo must qualify, too.”
Mitchell Hall,
The Corcoran Group
By: Sonia Samuel and Emilia Ferrara
Published: 10/26/2011
Source: The New York Observer
Any wise New Yorker knows that two heads is better than one. Any smart real estate investor knows that two renters are better than one. Mixed-use townhouses across New York are becoming hot commodities for many buyers.
“The townhouses split for commercial and residential use are rare,” says Louise Beit of Sotheby’s International Realty, “especially on side streets of prime avenues in top, sophisticated residential or re-tail areas.”
According to David Kornmeier, the Vice President and Director at Brown Harris Stevens, “Traditionally, a renovated single family house tends to garner a lot of interest.”Mixed-use townhouses aren’t typically what a family has in mind when interested in buying a new home.
“The West Village and Greenwich Village often consistently obtain the highest average price per foot for various types of homes, says Kornmeier though, suggesting that this has not always been the case. “What unites all buyers is that they are looking for a good deal and decent value. The key is understanding the dynamics of a particular market or submarket in order to appropriately define value and position a home to become the most sought after. That being said, it is easier to obtain$3,000 plus per square foot in the Village for a finished single family townhouse than almost any other neighborhood in the City.”
Still, buyers of all townhouses tend to have similarities. “Most townhouse owners value their privacy and enjoy having control over the entire building,” says Kornmeier. “Many [buyers] also appreciate having multiple outdoor gardens and terraces along with a large amount of space, and often for a lower price per square foot than in a similarly sized apartment.”
This brings the location of mixed-use townhouses into question. “There are many areas that have wonderful townhouse blocks and the houses are highly sought-after in those locations,” says Kornmeier. “Typically the Village, Upper East Side, Upper West Side and Gramercy Park areas tend to obtain the highest prices.”
“Top selling single family houses usually have elevators and full floor master bedroom suites,” says Kornmeier, making the amenities more interesting. “Another key factor is an appropriately large and generous kitchen positioned correctly within the house.”
The economy does not really seem to have a hold on the mixed-use townhouse apartment. “Although the economy is causing some unease,” continues Kornmeier. “Uniquely positioned townhouses still sell very well and in some cases, new sales price records have been set. Notable recent examples of this are the sales of multiple single family homes on the Upper West Side that sold recently for right around$19M when the previous record sales price for an UWS single family house was $15,750,000.”
But if you manage to stumble upon one of these diamonds in the rough the benefits can be quite re-warding. “An owner can do whatever they want, they can own the whole townhouse and rent out part of it for professional use,” says Mitchell Hall from Corcoran. They can take two or three floors as their own, they can take one apartment and rent out the others, there’s a lot of possibility in it. I had a buyer purchase a brown-stone in Brooklyn and it was mixed-use. The ground floor was set up for professional use, he was buying be-cause he wanted to live in it, but the rent [from the ground floor] helped cover his mortgage and expenses,” says Hall.
“These mixed-use townhouses are hot because the commercial space rents for higher price than a residential space and the property is a good investment since it is rare,” says Ms. Beit. Jimmy Choo was privy to this real estate secret, his shoe boutique located on east 51st street between Madison and Fifth avenues is part of a classic mixed-use New York town house. “Some clients are looking for income producing property,” says Olga Neulist of Sotheby’s International Realty, “and therefore rent out part of the house to a commercial tenant or residential tenant who could cover all the house’s expenses.”
However, mixed-use townhouses aren’t for retail alone, Mr. Hall told The Observer, “A doctor’s office in a brownstone that would be one of the best uses of it. It’s usually a ground floor apartment, ideally there’s a separate entrance. My dentist is in brownstone—I normally see professional use like doctors, dentists or psychiatrists, usually they have a floor and a separate entrance.” Hall continues with a chuckle, ‘You don’t really want to have to go through the building up-stairs to an office.” Mixed-houses, even if unprofitable, are still great self-sustaining properties, especially when held onto over time.
“Beyond paying the mortgage, a lot of times there is not a huge profit, but there is growth over the years. Rents are going to continue to go up, so the value of the whole property is going to continue to go up,” Hall continues. The Corcoran realtor suggests the absence of townhouses in the Upper East Side is a common misconception. “The Upper East Side, you don’t see them on main Avenues like Park or Madison because those are big buildings, but when you go on the side streets like Lexington, you’ll see brownstones, usually they’ll be ground floors below, you’ll have to go down the steps, a lot of those are businesses, doctors, dentists, law firms, even a little real estate firm.”
Ground floor real estate firms are an easy investment for a mogul looking to diversify their portfolio. “A property can be purchased by an owner or user, which makes it an excellent investment,” says Ms. Beit. “A 4,000-square-foot, three level commercial space of Madison Avenue in a prime Upper East Side location, in need of renovation, can rent for as much as $400,000 per year,” she says.
Still “in my experience,” Kornmeier says, “most people that purchase townhouses as a residence typically favor more residential locations, such as the charming tree-lined streets and uniform rows of townhouses.” There are many factors that will stay at play.
“Houses that are mixed-use are not usually on these types of blocks and tend to sell as an investment, or to a buyer that intends to occupy the commercial space. I have had a few clients who were quite interested in retail cash flow and did not mind living above commercial space in a busier location,” Kornmeier continue. “But, in these cases, they expected to pay a reduced price per square foot.”
Published: 10/26/2011
Source: The New York Observer
Any wise New Yorker knows that two heads is better than one. Any smart real estate investor knows that two renters are better than one. Mixed-use townhouses across New York are becoming hot commodities for many buyers.
“The townhouses split for commercial and residential use are rare,” says Louise Beit of Sotheby’s International Realty, “especially on side streets of prime avenues in top, sophisticated residential or re-tail areas.”
According to David Kornmeier, the Vice President and Director at Brown Harris Stevens, “Traditionally, a renovated single family house tends to garner a lot of interest.”Mixed-use townhouses aren’t typically what a family has in mind when interested in buying a new home.
“The West Village and Greenwich Village often consistently obtain the highest average price per foot for various types of homes, says Kornmeier though, suggesting that this has not always been the case. “What unites all buyers is that they are looking for a good deal and decent value. The key is understanding the dynamics of a particular market or submarket in order to appropriately define value and position a home to become the most sought after. That being said, it is easier to obtain$3,000 plus per square foot in the Village for a finished single family townhouse than almost any other neighborhood in the City.”
Still, buyers of all townhouses tend to have similarities. “Most townhouse owners value their privacy and enjoy having control over the entire building,” says Kornmeier. “Many [buyers] also appreciate having multiple outdoor gardens and terraces along with a large amount of space, and often for a lower price per square foot than in a similarly sized apartment.”
This brings the location of mixed-use townhouses into question. “There are many areas that have wonderful townhouse blocks and the houses are highly sought-after in those locations,” says Kornmeier. “Typically the Village, Upper East Side, Upper West Side and Gramercy Park areas tend to obtain the highest prices.”
“Top selling single family houses usually have elevators and full floor master bedroom suites,” says Kornmeier, making the amenities more interesting. “Another key factor is an appropriately large and generous kitchen positioned correctly within the house.”
The economy does not really seem to have a hold on the mixed-use townhouse apartment. “Although the economy is causing some unease,” continues Kornmeier. “Uniquely positioned townhouses still sell very well and in some cases, new sales price records have been set. Notable recent examples of this are the sales of multiple single family homes on the Upper West Side that sold recently for right around$19M when the previous record sales price for an UWS single family house was $15,750,000.”
But if you manage to stumble upon one of these diamonds in the rough the benefits can be quite re-warding. “An owner can do whatever they want, they can own the whole townhouse and rent out part of it for professional use,” says Mitchell Hall from Corcoran. They can take two or three floors as their own, they can take one apartment and rent out the others, there’s a lot of possibility in it. I had a buyer purchase a brown-stone in Brooklyn and it was mixed-use. The ground floor was set up for professional use, he was buying be-cause he wanted to live in it, but the rent [from the ground floor] helped cover his mortgage and expenses,” says Hall.
“These mixed-use townhouses are hot because the commercial space rents for higher price than a residential space and the property is a good investment since it is rare,” says Ms. Beit. Jimmy Choo was privy to this real estate secret, his shoe boutique located on east 51st street between Madison and Fifth avenues is part of a classic mixed-use New York town house. “Some clients are looking for income producing property,” says Olga Neulist of Sotheby’s International Realty, “and therefore rent out part of the house to a commercial tenant or residential tenant who could cover all the house’s expenses.”
However, mixed-use townhouses aren’t for retail alone, Mr. Hall told The Observer, “A doctor’s office in a brownstone that would be one of the best uses of it. It’s usually a ground floor apartment, ideally there’s a separate entrance. My dentist is in brownstone—I normally see professional use like doctors, dentists or psychiatrists, usually they have a floor and a separate entrance.” Hall continues with a chuckle, ‘You don’t really want to have to go through the building up-stairs to an office.” Mixed-houses, even if unprofitable, are still great self-sustaining properties, especially when held onto over time.
“Beyond paying the mortgage, a lot of times there is not a huge profit, but there is growth over the years. Rents are going to continue to go up, so the value of the whole property is going to continue to go up,” Hall continues. The Corcoran realtor suggests the absence of townhouses in the Upper East Side is a common misconception. “The Upper East Side, you don’t see them on main Avenues like Park or Madison because those are big buildings, but when you go on the side streets like Lexington, you’ll see brownstones, usually they’ll be ground floors below, you’ll have to go down the steps, a lot of those are businesses, doctors, dentists, law firms, even a little real estate firm.”
Ground floor real estate firms are an easy investment for a mogul looking to diversify their portfolio. “A property can be purchased by an owner or user, which makes it an excellent investment,” says Ms. Beit. “A 4,000-square-foot, three level commercial space of Madison Avenue in a prime Upper East Side location, in need of renovation, can rent for as much as $400,000 per year,” she says.
Still “in my experience,” Kornmeier says, “most people that purchase townhouses as a residence typically favor more residential locations, such as the charming tree-lined streets and uniform rows of townhouses.” There are many factors that will stay at play.
“Houses that are mixed-use are not usually on these types of blocks and tend to sell as an investment, or to a buyer that intends to occupy the commercial space. I have had a few clients who were quite interested in retail cash flow and did not mind living above commercial space in a busier location,” Kornmeier continue. “But, in these cases, they expected to pay a reduced price per square foot.”