There are many reasons why everyone wants a piece of New York City real estate. From being the cultural epicenter of the United States to one of the highest-yield real estate markets in the world, New York City has something for everyone.
But whether you’re looking for your own slice of urban heaven or a long-term investment, all real estate buyers and investors face the same challenges when it comes to actually acquiring New York City real estate.
What are the barriers to owning New York City real estate? And what makes them so difficult to overcome?
In the land of billionaires
Currently, the average cost per square foot of a Manhattan apartment is $1,773, which means that even the most pint-sized apartments in New York can run upwards of $2.2 million.
There’s a reason why that stretch of 57th Street near Central Park is called Billionaire’s Row — the top two floors of building One57 sold for a record-breaking $100.47 million. Unsurprisingly, New York City itself is home to more billionaires than any other city in the world.
So where does that leave the rest of us? We don’t have hundreds of thousands or millions of dollars to invest.
In fact, the average investor is cut out of the New York market entirely, making one of the most attractive, highest-yield investment opportunities in the real estate market inaccessible to everyone but the top 1%.
A fish out of water
Before you can acquire investment property in New York City, you have to be prepared to answer a long list of questions. Here are just a few of them:
- Should you buy a commercial or residential property?
- If commercial, are you educated in the current trends and allowable uses of commercial space?
- Are you prepared to handle the increased maintenance and public safety concerns that come along with commercial property?
- If the company you rent to goes out of business, are you in a position to carry the costs of lost rental income?
That’s if you end up buying a commercial property. If you go for a residential property, the list of questions changes:
- What neighborhood do you choose?
- Can you afford a tried and true neighborhood like Soho and the West Village, or should you gamble on an emerging neighborhood in the outer boroughs?
- What apartment sizes have the best return?
- What are good resources for helping you learn what you need to know before purchasing a property?
The list of questions goes on and on. Unless New York City is your city and real estate is your business, you’re just a fish out of water.
That’s why having the right connections and know-how to successfully purchase New York City real estate is such an advantage. Not only do insiders spot the best deals, they also end up on the better side of all negotiations.
Tripped up by red tape
After finding a property you’d like to purchase, the application and approvals process can take three months or more.
First, there is the pre-approval letter you’ll have to obtain to show you are a qualified buyer. Then there’s the financial statement you’ll need to back up your letter. Some sellers may also require your credit report and your latest tax return.
In other real estate markets, this would be enough, but not in New York City. The approvals process also requires your submission of a board package, which may include your application, a signed financial statement, tax returns, bank statements, brokerage statements, personal and professional letters of reference, contract of sale, and if you’re financing, approved financing documents.
Think you’re done now? Not even close. Cooperative buildings, or co-ops, comprise 85% of all available apartments in New York, and they require not only the initial approval of your application but also an in-person interview.
What’s even more disheartening is that after this lengthy, time-consuming, and paperwork-riddled process, many would-be buyers are rejected. Between the sky-high prices and intense competition, it’s no wonder that only 31% of New Yorkers own their homes.
Long-distance relationship
While New York City is a great location for real estate investment, it’s not always the easiest place for would-be investors to visit.
That being said, an investment property should never be purchased before you see it. In today’s digital age, it’s easy enough to look at photos of a property online, but viewing photos won’t alert you to possible flood damage or show you how convenient the neighborhood is.
To this day, 90% of potential property purchasers visit the property in question themselves. But if this isn’t an option for you, then you should hire an inspector to examine the property, have a thorough look at the neighborhood, and advise you about renting laws and property lines.
This service isn’t cheap, and can cost you more than $400. And don’t forget that it’s only the first service you’ll have to pay for in a long line of middlemen that will be involved with your real estate purchase.
Too many middlemen
By now you’ve probably figured out that the process of purchasing New York City real estate involves not just you and your real estate agent, but entire teams of people who need to be paid.
You’ll have to hire a building manager, an inspector, and even a title officer to ensure there is no pending litigation or third-party claims on your desired property.
It doesn’t stop there. Bank and mortgage professionals as well as real estate lawyers also need to be involved.
Not only is managing your real estate team complicated and time-consuming, it’s also very expensive. Attorney’s fees alone can cost you between $2,000 to $5,000.
Hidden Fees In Every Corner
Unfortunately, your attorney’s fees are not the only cost you need to take into consideration when purchasing investment property. From appraisal fees to lien search fees, you need to be prepared to pay from 2% to 4% of the price of the property in closing costs and other fees.
It is during the negotiations process that your real estate lawyers are especially crucial. Your real estate team will need to understand the value, consequences, and possible risks associated with the property in order to negotiate the best fees and acquisition terms.
Finding financing is very difficult
Even those wealthy enough to be able to afford investment property in New York City will often require financing for their purchase. But finding appropriate lending sources and structuring a loan suitable to your purchase is another risk that can make or break your investment property value.
Not only is financing a complicated process that requires knowledge and the help of finance professionals, in the U.S. alone 1 in 8 buyers are rejected for the loans they need to purchase property.
NYCREC: Leaping Over Barriers in a Single Bound
Fortunately, there is a simple solution that eliminates all the barriers to entry for owning New York City real estate: the New York City Real Estate Coin (NYCREC).
NYCREC aims to decentralize ownership of real estate through opportunities for fractional ownership. With our ERC-20 token, you can own a piece of high-yield investment property in New York City and receive the dividends of that property without encountering any of the roadblocks that would otherwise block your investment dreams.
The NYCREC team is a group of seasoned real estate, finance, and crypto professionals who have managed or invested over $15 billion in real estate and who certainly have the expertise to navigate the complicated landscape of the New York City real estate market for you.
Our team members are on site in New York City to investigate, inspect, and evaluate potential properties. And when we find the right investment property, we’ll handle the heavy lifting of paperwork, middlemen, and bureaucracy while you sit back, relax, and prepare to get your dividend from your fractional ownership of the property.
With NYCREC, you don’t have to be a billionaire and you don’t have to jump through hoops for a loan in order to take advantage of the most exciting investment opportunity in the real estate market today.
If you’d like to learn more about NYCREC and our upcoming STO, please visit our website and join our Telegram community.
