Monthly Archives: May 2017

New York City First time Condo Buyer and Investor Part 3 New Construction Condos – What I don’t Know

New York City First time Condo Buyer and Investor Part 3 New Construction Condos – What I don’t Know

  1. What is the Condo Market
  2. Getting a Mortgage Is Not All About You
  3. New Construction Condos – What don’t I know
  4. Buying as an Investment
  5. How do I figure out if this is a good deal or not in 2017?

New Construction Condominiums are definitely some of the most popular projects in all of New York City Real Estate, whether it’s the record breaking height of a new skyscraper, the innovative architecture from world renowned architects, or one of the new mega projects transforming a neighborhood, new construction condominiums are at the forefront of most Real Estate conversations.  

Did you know that as of Mid-May 2017, that approximately 25% of condo sales are made up of New Development, so despite the headline generating buzz it creates, new construction condos are just a fraction of the overall condo market.

What’s important to understand is that the New Construction Condo market shares a very important similarity to all other condominiums in New York City, which is that it is is made up of specific segments with their own unique characteristics.  

You have the top end of the luxury segment of new construction market, that gets all of the headlines, so people think that all new construction is mirroring those headlines.

What’s important to understand with new construction is that new construction buildings whether they are in Park Slope Brooklyn, along Billionaire’s Row across 57th Street, the Financial District or any other neighborhood, has their own market dynamics at play and you need to understand what they are before purchasing.  

When you are buying New Construction Condominiums there are a couple of definite Must knows and especially if you are an investor

  1. Closing Costs for New Construction Condos – Often the sponsor will try to have the buyer pay the Transfer Taxes which are approximately 1.825% of the Purchase Price
  2. Paying for Sponsor Attorney Fees
  3. Paying for a portion of the Resident Manager (Superintendent) Apartment, varies but can be significant
  4. Capital Contribution – Paying Upfront Common Charge to Build Reserves for the Building
  5. Mortgages- Will Often be Non-Mortgage Contingent

Please note, the above bullet points are not hard rules, but common practices and are definitely market dependent.  Whether you are reading this now in May of 2017, or some time in the future, the new construction marketplace will have changed.  


So What are some things that you probably don’t know about New Construction Condominiums: If you are closing in the first wave or batch of apartments, that they may not be  finished with the amenity spaces or all the floors when your apartment closes, so you could be living through construction or not have full access to the amenities .

Something that we saw and continue to see in the current phase of New Construction Buildings that should be especially important to an investor:

1-Some buildings are heavily marketed to overseas buyers or have large percentages of the building become investment rentals.

2-We have seen some buildings where 50-60% of the apartments instantly turn into rentals.  So you have large numbers of apartments hitting the market for rental all at the same time, all targeting the same tenants.  You have to put yourself in the tenants point of view, they are going to set up appointments to see all of the available inventory which is going to look the same because the building is brand new and they will decide on who will give them the best price.  

Pro Tip: If you are buying as an investment, ask about the mix of apartments, are their more 1 beds or 2 beds or 3 beds, so you can get an idea of the potential competition you may have when you close.  If you are buying in a building that is a majority of a certain type of apartment, you know that its likely that type of apartment will have the most competition.  

As an investor, if you are in the first wave of closings and the building construction and amenities isn’t finished yet, that will hurt your marketability to find a tenant.  Tenants want to have access to everything and often will ask for a better price to compensate the disruption.  

New Construction Contracts are routinely very straightforward – often there is limited room to negotiate, whether you accept the terms or not having an experienced attorney that is familiar with new construction condominium contracts is very important to understand what is the common practice what is not.  

Usually the initial contract deposit at signing is 10% and often a second deposit is required, often another 5-10%.  The timing of the 2nd deposit varies from project to project.

When you close on the apartment, you will often get about a 30 day lead time, so you will want to have the rest of your funds in place, whether its a cash purchase or a mortgage.

If you are obtaining financing, most new condominium projects will require a non-contingent mortgage, so you will have to be confident that you can obtain that mortgage before you sign the contracts.  


So you have your closing date scheduled, you are close to the finish line, it’s time for the walk-through of your new apartment.  So what exactly is a walk through? The walk through usually happens the day of or day before of the actual closing.  You will get to go through the apartment with the developers representatives and they will show you how everything works in the apartment and if any touch up or fix up needed, then there will be a “punch-list” which will be completed by the developer’s team in a reasonable time frame.

We’ve been selling new construction condominiums for over 15 years now, since they become really popular in the mid-2000s.  Each experience and building is different but we wanted to lay out for you some of the pitfalls, questions, and scenarios that many of our buyers have faced.  

We believe an educated buyer makes a more confident owner, which is what we are always aiming for.  We’ve found that people assume that because they are buying new construction there is nothing to worry about, which we understand, although that is not always the case. We are in the market place everyday and see the different changes in each new construction, when we work with buyers, we ensure the buyer is well aware of everything we wrote about and any new addition of changes or must know that take place in the current market place.

Call us (917)837-8869 or email us and we can help you to buy the new construction you want with confidence. 

This is a five part series blog posts. You can read about by clicking on the links below:

  1. What is the Condo Market
  2. Getting a Mortgage Is Not All About You
  3. New Construction Condos – What don’t I know
  4. Buying as an Investment
  5. How do I figure out if this is a good deal or not in 2017?

Or see our testimonials from Happy and Confidant buyers and sellers click here: http://manhattannycondosforsale.com/testimonial-past-clients/

New York City First time Condo Buyer and Investor Part 1- What is the Condo Market?

New York City First time Condo Buyer and Investor Part 1- What is the Condo Market? April 2017 Edition

In this updated series of buying condo in Manhattan New York, we prepared five different article post and each address different aspect of NYC condo buying. Below are the topics we will talk about.

  1. What is the Condo Market
  2. Getting a Mortgage Is Not All About You
  3. New Construction Condos – What don’t I know
  4. Buying as an Investment
  5. How do I figure out if this is a good deal or not in 2017?

What is the Condo Market in NYC

It’s been almost Nine Years since we wrote our first New York City First Time Condo Buyer and Investor MUST READ series, and we decided it was time to update it for 2017. First published in November of 2008, much has changed since then, but certain fundamentals still remain.

This guide may be titled New York City First Time Condo Buyer, at the same time, we want to add value for the seasoned buyer of New York City Real Estate as well.  Even if you have bought multiple properties over the years, we will add a new perspective or fresh ideas that will help you with your next buying or selling experience.

First things first, this guide is going to focus on the Condominium market, which makes up something around 30% of the total sales inventory in New York, the co-op market could be its own discussion. In this 5 part series upcoming articles, we will be discussing condo market only.

Why buy a Condominium versus a Co-Op Apartment?

To put it relatively easily, almost everything about buying, owning, renting, and selling will be easier to accomplish with a condominium versus a co-op.  

So you Want to Buy a New York City Condominium, where should I start?

Let’s Start off with the Basics:

Re-Sale Condominiums: These will make up the majority of the inventory for condominiums.  You will be purchasing directly from an individual owner.  The building age can vary dramatically with a re-sale condominium, you could be buying from an owner who just closed on a new condominium building that is just a few months old, or you could be buying in a pre-war condominium that was built in the 1920s.  If you want an apartment with certain features that will direct you towards the type of building that possess those features.  If you tell us you want to live in apartment with a ceiling height of 10 feet or taller with exposed brick walls or a working wood burning fireplace, then you will likely be looking at pre-war condominiums which are a very specific segment of the condo market. If you tell us you want a building with high end amenities, dramatic views and brand new renovations, well then you will be looking at new construction or very recently built condominiums. Resale condominiums will provide a wide degree of variety of price ranges and style of apartments.

New Construction Condominiums : Brand New, Be the First to Live in, New Construction Condominiums are a very popular segment of the condominium market.  So popular that we will talk about new construction in our part 3 article to explain it takes to buy a New Construction Condo. In New York City, new construction condos get a lot of the headlines because they are often the most expensive apartments on the market.  If you are interested in a new construction condo, we encourage you to read our post and talk to us about what new and exciting projects are available.

the CONDOP, a very small slice of the condominium market is a hybrid of the condo and co-op. As there are a few technical ways to define a ‘condop’, although for the purpose of this post, when we are referring to a condop we are referring to a co-op that has condo by-laws.  A condop building like that will operate much more like a condo than a co-op, allowing investor type purchases, allowing parents to buy for children, easier purchase requirements.  These buildings are worth mentioning because these buildings though not common, do exist and will come come up on some searches.  

So Where do you start?

Have you been renting and are tired of paying New York City’s infamous high rents and want to purchase now?

Are you looking to buy a condo because your son or daughter will be going to school here?

Wanting to buy an investment property in world famous New York City?

Relocating to New York or looking for a second home when you travel for business or with family?

Naturally, most people start with their budget and the size of apartment they are looking for. Neighborhood and type of building are close behind, but what we have found is even more important is figuring out what’s most important about owning a condo to you?

Do you want to be walking distance to work? Do you want to buy this as an investment to expand your portfolio and want a totally hands off approach to property management? Do you want a doorman building for your son or daughter who will be going to NYU or some of other in city universities?

Do you have a 1031 exchange and need to time your purchase carefully?
A lot of great reasons to buy and we’d like to help you. You can read through all of our blog posts and call us so we can talk and so we can have a better understanding of your overall goals and then we make our recommendations.

Or, if you want to skip all the reading, that is fine too. You can contact us and we can catch you up to speed over the phone or email!

This is a five part series blog posts. You can read about by clicking on the links below:

  1. What is the Condo Market
  2. Getting a Mortgage Is Not All About You
  3. New Construction Condos – What don’t I know
  4. Buying as an Investment
  5. How do I figure out if this is a good deal or not in 2017?

New York City First time Condo Buyer and Investor Part 2- Getting a Mortgage Is Not All About You

New York City First time Condo Buyer and Investor Part 2 -Getting a Mortgage Is Not All About You

  1. What is the Condo Market
  2. Getting a Mortgage Is Not All About You
  3. New Construction Condos – What don’t I know
  4. Buying as an Investment
  5. How do I figure out if this is a good deal or not in 2017?

So what are we talking about when we say Getting a Mortgage is Not All About You? We often hear the buyers say, “Oh don’t worry about it, I can easily get a mortgage.  I have a good credit score and we are pre-approved already, I did it online!”

So, what are we talking about when we say that its not that simple.   What’s not simple about it is there is a 2nd step, an often overlooked step that can be problematic.  That 2nd step is that the bank will also want to approve the condominium building you are purchasing in.

STEP 1, the Easy Step:  You the buyer gets qualified.  This is the straight forward step, you will speak to the mortgage banker, provide them with all of your personal documentation and they will tell you if you are qualified and for how much.  

This is straightforward because based on your down payment, income, debts and credit history, you will get a close idea of where you stand with the bank.

ProTip: Use a Mortgage Banker that is Experienced with the New York City Condominium Market.  Using a mortgage banker or internet lender that is not familiar with New York City market and the idiosyncrasies involved here is going to likely cause you trouble.  There are a lot of pitfalls and challenging scenarios that an experienced mortgage banker will know exactly how to navigate for you.

Now that you have gotten yourself pre-approved you are ready to buy that condo! Here is where most people make a frustrating mistake because you are missing a crucial step in the process.

STEP 2, the step that can cause you lots of frustration,  the bank will also be looking to qualify the condominium itself. First they qualified you, now they will be looking to approve the building.

Carriage House Condominiums for SaleSo what is so hard about approving the building? Each building is unique and different, no two buildings are the same. What is important to understand is that not all banks are as easy to work with.  The big conventional lenders often have the most strict guidelines and often have a conservative approach to approving buildings The process of getting the building approved involves asking for documentation from management companies, giving it to the bank underwriters, then waiting to see what they have to say.  Often you will submit the documents the underwriters originally asked for, and then they ask for more documents on top of that, now you are going back to the management again, Rinse and Repeat.  

Some Common Issues that Many Condo Buildings Run Into:  Too many Non-Owner Occupied Apartments, One Person Owns too Many Condos in the Building, Too Much Commercial Space in the Building, An Assessment or Lawsuit the Building is Involved In.

So What Should you do? This is where your real estate agent, and mortgage lender you are working with are worth their weight in gold to make sure this deal happens for you.

Pro Tip: Before you make an offer, run the address of the building by your mortgage banker and see at the very least if the bank has that building on their “pre-approved” list.  Even if the answer is Yes, it’s approved, the bank could still ask for more documentation or updated documentation.

If you went in alone in the purchase, already have a contract signed, they are sending out an appraiser already, which you are paying for, and you get a call or email that you may not get the mortgage because there is something wrong with the building, and your mortgage contingency is coming up really soon, this will become very stressful for you.

You assumed that you would have no problems because you had your pre-approval letter, which is a common mistake, but its likely this could have been avoided.  

A huge part of the value of working with an experienced condominium agent is that we take you, we are guiding you on the journey of buying a condominium.  We know where the typical pitfalls are along this journey, one of them being the common issues with getting a mortgage.  We fill in the missing pieces for you that you didn’t even know about.

There are many aspects of the mortgage process that can delay or affect on your purchase, let’s discuss this now and be prepared! Let us help you and make this process as easy as possible.  

This is a five part series blog posts. You can read about by clicking on the links below:

  1. What is the Condo Market
  2. Getting a Mortgage Is Not All About You
  3. New Construction Condos – What don’t I know
  4. Buying as an Investment
  5. How do I figure out if this is a good deal or not in 2017?

Call us at (917)837-8869 or email us by using the form below.