■REAL ESTATE “There are no deals!” – That is the cry you’ll hear from brokers and investors as the real estate market heats up and prices keep going up, surpass previous peak and eventually enter the time of bidding wars or levels so absurd that even the deepest pocketed developers put acquisitions on hold. If acquiring land or real property, combined with the cost of financing and construction, is so high that no reasonable projections for income can justify investment; smart investors will start to wait. Unfortunately for many, they also waited and played it safe between 2008 and 2011, even if they had the funds to invest. Some invested overseas, started new businesses or put their dollars into new alternatives in the by david dynak business they already knew. For example, taxi fleet operators purchased Neurorradiología Medicina Nuclear /PET Músculo esqueléticas Imágenes por Resonancia Magnética Mamografía / Imagen de la Mujer Radiología Intervencionista Transversal / Imagen de Cuerpo Orgullosos de ser el radiólogo O cial del New York Cosmos the then-novelty green medallions at a fourth per foot the price of the yellow cab medallion. But many stayed away from buying more real estate – and now regret it. The ingredients necessary for successful real estate investment are always the same: available funds for down payment and renovations, and available financing and inventory of properties at prices that allow for good to great return. But what if finding such properties is close to impossible and astronomical start-up costs create barriers for entry into investing? Or getting bank financing is difficult like was the case in the 1980s or in 2008 to 2009? Is getting any sort of edge impossible? Should everyone get out of the real estate business, besides established landlords and deeppocketed investors willing to pay cash? Like in any business, for those creative, patient and resourceful enough, there are always opportunities to get a little magic out of any market. Ideas like sweat equity (contributing own labor, expertise, materials, or services at or below cost), joint ventures, and minority equity partners are all tried-and-proven vehicles to get a deal done in any market. A commercial brokerage that had worked with principals of our firm in the 80s and 90s was led by guys who have become paper millionaires in the past 15 years – via passive minority equity ownership. When you buy for $800,000 and the value goes up to $12 million – you can do the math! How about barter? A contractor we use frequently does so much work for a landlord that he has a permanent free-of-charge office and storage space in a building he could never afford to rent, helping him establish a professional image. Sometimes it is pure luck: a property manager had asked for an apartment on the Upper East Side off Madison Avenue 30 years ago to more effectively manage a medical building next door. Now retired, thrice-divorced and long past his prime, he still lives in a nice brownstone (rent controlled) in the most expensive part of Manhattan and for only $400 per month. I just learned about a new way to generate more income from residential rental properties. If you own a property in rapidly gentrifying areas like Astoria, Long Island City, or Sunnyside, and would like to greatly increase your rental income, you must renovate the property to attract the kind of tenant that is comparing your apartment to luxury new construction or gut-renovated brownstones. If you don’t have the time, energy and cash to do so, why not partner with an established multi-location vacation (short-term) rental operator? They will renovate, clean, manage and rent the property in exchange for a chunk of the income and commitment for one to three years. Apparently the income generated via this concept can be up to three times traditional rental income, even after accounting for vacancy and operating expenses. I’ve never stayed in such a place and still have no idea how AirBNB works and I was certainly very surprised to see such an “upstart start-up” sponsor NYC Marathon, but my sources on this are quite reliable. Some find it amusing that I receive “free food for life” at a well-known local restaurant (terms of this agreement are “secret”), but I have learned it is a widely practiced custom for Manhattan landlords to negotiate the same perk at all food establishments renting in their properties. And those landlords hardly need the free grub. Hidden ‘DEALS’ David Dynak is a real estate broker at First Pioneer Properties and an LIC resident. He’s lived in Western Queens since 1993.
LIC052015
To see the actual publication please follow the link above