New York - USA
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New York upgrade
 Jane Meadows gives us the low-down on buying property in New York, with a focus on renovation-worthy brownstones in Brooklyn and The Bronx
Published in Square Foot Magazine February 1 2007
At the luxury end of the market, New York is the fourth most expensive city in the world to live, coming in at US$1,796 per sq ft, after London (the most expensive), Monaco and Hong Kong.
And if you’ve ever aspired to owning your own slice of the Big Apple you’ll appreciate why it’s such a costly city in which to buy. Whether your taste runs to an Upper East Side brownstone overlooking Central Park or a converted SoHo loft, owning property in New York really is the stuff of dreams.
But New York City comprises four boroughs besides Manhattan -- Staten Island, The Bronx, Brooklyn and Queens -- and in your search for a home you might choose to look beyond the lights of Broadway. Outside the prime residential areas, investment opportunities have never looked better.
A GOOD TIME TO BUY
Nullifying fears of a cooling real estate market, the total value of all New York City property jumped 19 percent, to US$802.4 billion this year from US$674.1 billion last year, officials announced last month. The increases were greatest in Brooklyn and the Bronx and among apartment buildings and commercial properties.
The surging value of city properties — across all five boroughs and all four property classes — was the most striking aspect of the tentative property assessment roll that the City Department of Finance released for the fiscal year that begins on July 1.
Assuming that Mayor Michael R. Bloomberg and the City Council do not change tax rates — which is practically a certainty since the city’s short-term financial outlook is strong — the average tax bill on one-, two- and three-family homes will rise just 4.5 percent, to US$3,236 from US$3,098.
The average tax bills will rise 2.1 percent for condominium owners, to US$6,587 from US$6,449, and 6.6 percent for owners of cooperative apartments, to US$4,214 from US$3,952.
Finding a brownstone for under a million
In the heart of Manhattan, one million US dollars gets you around 557 sq ft, but if you are willing to venture into often overlooked neighbourhoods and tolerate extensive renovations, the market ranges from US$650,000 to US$700,000 for a real four-story brownstone.
 Buyers willing to wait for deals on townhouses might look in areas like Sunnyside in Queens and Mott Haven in The Bronx. A townhouse comes on the market in Sunnyside about every six months and buyers willing to rennovate typically pay about $600,000 for one-family houses and $800,000 for two-family homes.
The enclave of 100-year-old townhouses in Mott Haven also sees properties hitting the market at $600,000. Prices for these homes have doubled in the last two to three years because of the steep increases in nearby Harlem. What’s more in Brooklyn and Harlem, you have several thousand town houses, whereas in the South Bronx you have a fraction of that. The commodity itself is rare; so now’s the time to buy.
While most empty shell brownstones in Harlem fetch more than $1 million, you can get lucky. A property situated opposite public housing, for instance, can go for as little as $895,000.
Because brownstones in Bedford-Stuyvesant and Crown Heights have been less appealing to renovators than those in other parts of Brooklyn, like Park Slope and Carroll Gardens, many still have original details. Those into period charm will appreciate the fireplace mantels, tall parlour windows and high ceilings. Eight to 10 brownstones in Crown Heights typically come up for sale each year, but despite their obvious appeal, buyers should be warned that they tend to need extensive restoration.
Contractor work can of course be pricey and it’s a good idea to invest upfront in specialist advisers, who can identify all of the costly problems that inevitably arise. If a brownstone in a historic district needs a new facade, for instance, that alone can cost US$100,000. Restoring mouldings in a living room could raise your expenditure by US$40,000.
Restoring older properties can, however, be worth the hassle and the expense. If you bought a brownstone in Crown Heights in 2002, for US$350,000 and spent about US$150,000 on renovations, it’s likely that in today’s market you could sell your property for three times the purchase price.
INVEST IN A GOOD BROKER
The New York real estate market is one of the fastest moving in the world, so acquiring the right property for your needs and then securing that property requires careful planning and an ability to act quickly. Working with one New York-based broker, who will act for you, is key to achieving the right result and the best investment.
First make sure that your broker understands what type of property you want, along with all the necessary parameters, including the speed with which you can act and your financial situation. All reputable New York real estate agents share their listings of properties so, through your broker, you will have access to almost any property available for sale in the city. This process is overseen by the Real Estate Board of New York.
Your broker will also assist you in finding an attorney and getting a mortgage agreed in principle.
Once you have selected a couple of properties you wish to view, your broker will escort you to them. Communicate your likes and dislikes openly, remember - the broker is working for you. If you are making a whirlwind visit from Hong Kong, it is sometimes possible to view at weekends by prior arrangement.
When you have found the right property, your broker will submit your verbal offer. This should include all your preferences, including the purchase price, any inclusions (fixtures and fittings) and required/anticipated completion (closure) date.
Once the seller has accepted your offer, his attorney will forward your attorney a contract for review. After your attorney has made the necessary enquiries a signed contract is returned together with a 10 percent deposit, which is held in an escrow account until completion.
Until both parties sign the contract the seller or buyer may withdraw from the sale without penalty. Upon signing, application is made for your mortgage.
Either the day before or on the morning of the completion, your broker will inspect your property. Having closed the deal he will ensure that the title to the property is transferred to you. In (often) less than a New York minute, you’ll be set to bed down comfortably in the city that never sleeps.
EXAMPLE PURCHASE COSTS
- Your attorney: US$1,200 or higher
- Bank Fees: 2 percent of the loan value
- Appplication: credit check, approximately US$300
- Bank Attorney: approximately US$500
- UCC-1 Filing Fee: approximately US$30
- Bank underwriting fee: approximately US$350
- Appraisal Fee: approximately US$300-800 depending upon the purchase price
- Lien Search: approximately US$250
- Mansion Tax: 1% where the property value exceeds US$1,000,000
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