A Detour: TRUMP & ELIZABETH I

 

 

I sat at my laptop this evening with the intention of writing about the how the current economy and housing market influence corporate relocation this 2008.

However, my mind took a detour to the root of our pecuniary difficulties: MAN (and leadership).

This afternoon, I was with a client that relocated to New York via London with his firm. After, we looked at eight buildings during the London-like weather, I needed to stop for a quick pick me up at Starbucks. As I entered Starbucks, I noticed a building that was not on my itinerary – actually, I have never even been in the building before. So, I asked my client if he wanted to pop inside – he did. I must say the building was glorious; but, the unit was above his initial price-point and of course, he LOVED it. Post our viewing we stood in the misty light rain near City Hall to discuss all of the apartments we viewed and he was stuck on the last unit. As I drank the last bit of coffee, I voiced my sincere concern that if he chose the last unit he would not truly enjoy his New York experience because he would be taking funds from his daily “social” budget to enhance his monthly housing budget. This being said, he told me he “should” be ok…we got on the “R” train bound for uptown.

As I got off the train at 14th street, I thought about him; the “glorious” apartment and then had a quick flash to a conversation I had a month ago with a loan officer over a few Coronas.

The loan officer told me I was a bit “green” when it came to my clients and I offer too many favors. He told me that I go out of my way with them and should not worry about certain things like personal affordability, etc. Additionally, he was shocked that I have helped some individuals without a fee. Maybe, he was shocked because I am a single mother raising two children alone while working in the most expensive city in the US and could not comprehend my reasoning…He told me I was never going to be Trump. I responded by saying: “Actually, I am more impressed with the leadership and successes of Elizabeth I, Winston Churchill and Sydney Weinberg .” He was puzzled by why I did not strive to be like Trump and shook his head and said, “naive“…

Regardless of his reactions, I did not like the way he was advising me on how to perform my business or for that matter, how to make money. I explained to this loan officer that I am in this business for long-term relationships -not the quick return. So what, if I help someone and do not make a couple thousand dollars – I do the right thing and people trust me. Most importantly, I go home to my children at night with a smile that symbolizes that I am proud of my day with the comfort of knowing that I made a “small” difference in someone’s life.

As my mind was balancing these two events while briskly walking down 14th, I glanced over at a news stand. Headlines of Lehman’s fall; Hank Paulson wants your money; McCain has no plan to save us; America has poor leadership and so much more washed the front of the stand.

Quite honestly, I am tired and disappointed in it all. So many have self-indulged in their authority of leadership while not making the smallest investment of thought to the forthcoming outcome. I am tired of real estate professionals blaming bankers because their clients cannot get financing. Yet, the real estate agents are the same individuals that put their clients in over-priced homes with “creative” financing—Spinning this viscous circle everyone of us is enclosed by. As a public, we all aided in this state of economic chaos; as individuals we need to stop acting helpless.

Leadership is not just reserved for those that are in high levels within a business organization or in politics. Leadership starts at the bottom. As a real estate broker with no actual authority within an organization, I am at the bottom.

I choose to not make a quick profit for the sacrifice of another, I choose to stay true to my principles, I choose to take responsibility…

In closing, each summer, I work with many recent college graduates that are going into the finance industry. I always walk by Delmonicos with them and mention that it is the setting for the “power lunch” scene in the movie Wall Street. Believe it or not, they all say “great movie!” I love to ask them: “Are you more like Gordon Gekko or Bud Fox?” The few that respond: “Bud Fox” always put a smile on my face…

 

 

 

 

 

 

 

 

 

 

 

 

 

GREATNESS IS NOT RESERVED FOR THE GREAT. THE GREAT ARE SIMPLY THOSE WHO HAVE RISEN TO MEET THEIR DESTINY…Michael Berg

Renting in NYC

Renting in New York is unlike any other city in the country. At times my rental clients feel as if they are actually purchasing instead of renting. The process is somewhat tedious, which is why I have highlighted the steps for you (for a rental building).  Keep in mind condo rentals and co-op sublets may require more documentation (and an interview by the board).

Affordability A simple rule to keep in mind: you can expect to pay 25% of your gross annual salary for rent.

 Financial Qualifications Most landlords require that you annually earn 40 to 50 times the amount of the monthly rent. Outstanding loans and liquid assets are additionally considered.

Lease Guarantors For the renter that does not meet the Landlords financial qualifications, you may need a guarantor to guarantee the lease. Landlords prefer a family member who lives and owns property in New York, New Jersey or Connecticut. The guarantor must earn ample income.

Expatriates If you do not have a Social Security number and do not pay taxes in the United States, your eligibility is weighted differently. You will need to work closely with your employer, relocation coordinator and your real estate agent.

When you plan your home finding trip to New York City, you will need to bring the following items

Personal Documents

*Letter of employment and salary verification
*Names, addresses and phone numbers of previous landlords
*Names, addresses and phone numbers of personal and business references
*Bank account numbers
*Credit card numbers
*Expected bonus (employer to verify)
*Driver’s license or passport

New York Landlords will not accept personal or out-of-state checks

Required Funds

*Credit Check: $25 to $180
*Two months rent for the security deposit and first month rent (additional funds may be required for security). If you do not have a NYC bank account you may bring Traveler’s Cheques that can be converted.
*The Brokerage Fee: Is paid by the tenant and is typically 12-15% of the annual rent. The landlord does not pay the fee – the tenant is responsible.

Once you have chosen your new apartment an application will be submitted, credit check performed and your references will be verified. Upon approval: leases will be signed and certified checks will be submitted.

 

 

Big Brokerage Companies and the Small Giant

Many people question why I am with my current Firm.  I usually smile, and say “it’s a good fit for me”. However, a few (recently) do not think that is a good enough answer and want to know more than that quick answer.  And this week, a potential seller mentioned: “I am also looking at the larger companies in town”. 

So, here is the real story:I have been obsessed with Manhattan real estate long before I moved here from Cleveland. For fun, I used to read the NY Times real estate section daily, look at was on the market for rentals and sales, read every book I could get my hands on regarding architecture ….and of course the juicy ones that my ex-husband would pick-up for me such as “The Sky’s the Limit”.    

One day, I decided enough is enough, I am moving to NYC to be a real estate agent.  Even though I did not have the savings to do it right away, I was given an opportunity at the largest Firm in NYC as the Broker Referral Manager.  Before this position was offered to me (during the informal interview), I was very upfront with them and said I was going to be an agent in NYC and my long-term goal was not to be a staff member.   All understood and I accepted the position. I was so appreciative to all of them (and I still am today).  

When I arrived that 7^th day of August of that exciting year to start my life in NYC – I was thrilled. I was actually, making a step closer to my goal!  I was here and now I needed to make a difference.  I loved my duties at this Firm and truly enjoyed mentoring the agents on my team. So many of them used to say to me “well, it doesn’t matter Heather I will get the exclusive because I am with XYZ (Firm) and they will pick me to list their property over everyone else”.  My response:  “ I am glad you have such a passion for XYZ, but the Firm should not define you; You should define the Firm – the ingredient that is going to set you apart is -You”.  

Where am I going with this? Well, when my tenure as a staff member came to an end, I felt that I needed to “walk the talk”. I was offered a spot as an agent with this Firm. Actually, I was offered many spots on some of the highest grossing sales teams there.  My income today would have been so much greater than where it is currently.   

I strongly believe that an individual can make a difference and be successful regardless of their orientation with a company or group. It just takes longer!

Sidebar: my previous position was under the Relocation Division. Relocation is something I am an expert at (I am one of two agents in NYC with this certification). I did not want the agents or anyone at that Firm to think I was given business because of it. 

Furthermore, I never take the easy way – but I do take the “right-way”.  Yes, I know the “right-way” takes so much longer. But, it feels so much better on your way to great things in life and in work. 

I have always believed that it is better to be “the best” instead of being the “biggest”.  The quality versus quantity  philosophy…

So, in walking the talk: I joined DJK Residential (one of the smaller brokerages in NYC). My values fit nicely with theirs. There are no politics and some really great agents (floating under the radar) resulting in a really good business practice. 

Additionally, I am given the freedom to execute creatively and market properties well beyond what a larger company could offer their individual agents. Most importantly, they truly believe in my mission, values and goals.  This was KEY for me – to this day, they have not let me down on what they promised me. 

So, I am with a “small giant” and it is a good fit. 

Finding Your Way in NYC

Ever get lost in NYC when you are in the areas that do not have numbers for streets?  Streets like: Albany, Water, Sullivan, Jane, etc?   The best tool for me when I first came to NYC was HopStop!  

I still use it today – whether it is by foot, Taxi or subway. Many of my clients are foreigners and do not know the city well.  The first thing I tell them, “Use HopStop – you will love it!”

 Check it out: 

HOPSTOP!

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The Salon and NYC Real Estate

I was at the Salon recently… as Alma was cutting away (actually, this time it was just a trim), I was thinking about the real estate market.  This past week New Yorkers have seen the articles in The New York Times, 

The Real Deal , Blogs, etc. on NYC real estate. Everyone has a different take! 

HBise short-take (no pun intended):  

I have acted via third party (tax protection) in almost every state in the US.  I witnessed Michigan and Ohio thrive for years and then…tank.  I have seen similar appreciation shapes in Florida and California. However, the sunny states are on their way back.   

How does this effect NYC? Well, I have been through trends. This being said, I do think we are in for a little bit of a healthy “trim”. Even though sale prices were high, inventory was down for the last quarter of 2007.  Inventory influences appraisal values. If you do not have recent comparables (solds), an adjustment will need to be made on the report.  Now, as of March we have seen an increase in inventory—it will be interesting to see how this shapes the stats for 3rd QTR of 2008. Interesting because the appraiser is going to blend part of ’07 and ’08 when determining the subject’s value (even though one should use 3 comps that has closed within the last 6 months);add this to stricter lending laws and things are not going to be so easy.   

Another factor to keep an eye on here in NYC – Rentals: I have never seen so many owners offer so many incentives on rentals in a market that is driven by renters.  Recently, I was able to negotiate a 2 bedroom (in a full service luxury condo building) from $3500 to $2500! I would like you to think that I am a Master Negotiator – but, honestly the market deemed the $2500… 

Finally, let’s clear- up something:  I hear so many brokers saying “Did you hear the Fed cut rates – this is great for you!” to their buyers.  And I am always thinking “What?”!!!!! So, let’s try to keep this simple and how it concerns financing in real estate.The Fed determines the fate of short-term interest rates (like credit cards, auto loans), they do not directly call the shots on long-term interest rates (what you might pay on a 30-year fixed loan). When the Fed cuts rates it really has little affect on a 30 year fixed mortgage. However, this is better news for  a 5-1 ARM and a HELOC.  

In summary, the New York Real Estate Market is in for a very healthy “trim” over the next few months with market time being lengthier and prices stabilizing.

Follow-up to a Friendly Disagreement

Recently, I was debating with a friend, whom is a real estate agent with the largest real estate firm in Manhattan about the national market and how it affects NYC. I met him when I was at that firm as the Broker Referral Manager. For years I have heard brokers and their sales associates say: “This is New York, it does not apply to us”. Well, I disagree and it does affect NY.

Yes, Manhattan has seen a great deal of appreciation. However, many agents do not realize why or take the time to understand their statement “This is New York, it does not apply to us”.

Part of the upward growth in NYC is foreign investors, lack of land to expand (unlike Dallas), and corporate relocation.

I would like to expand on the relocation point of view:

In terms of appreciation:

The average term of a transferee’s relocation assignment is two years. Currently, I have eight clients that have been told by their companies that they will be in NYC for 18-24 months.
Prior to moving to New York, I handled the relocation for an investment bank in Manhattan. In addition to this client, I (and a team) managed fifteen other corporate clients throughout the US and Puerto Rico. This experience allowed me to really take note of how relocation affects the market. During my tenure (3 yrs), I relocated 40% of my transferees twice.

One transferee always sticks in my mind: a PMD for the investment bank I relocated from NY to Houston; from Houston to San Francisco; from San Francisco to New York. I was involved with six real estate transactions for this transferee within three years. Houston at the time was a really tough market. I actually, sold and closed the San Francisco property before the Houston property…

Yes, this example is a little extreme, but hopefully, you will understand the impact of corporations moving their employees in and out of a city that builds “up” and not “out”. Of course we are going to have appreciation if you are turning the same apartment -let us say, every two years…

In terms of “The Bubble”:

I do feel that the National Market does influence Manhattan real estate. Albeit, not severely…
One example: a homeowner in Detroit that is being relocated to Manhattan may not be able to purchase in New York and may have to rent in lieu of buying. I have heard many sales/rental agents ask and complain,

“My client makes $300,000.00 a year and only wants to spend $5,000.00 a month for a two bedroom rental. How am I supposed to do that and why does he not just purchase?”

My response, is always a question, “Where is he relocating from?”

Then, my response (depending on the city):

1. He may not be able to sell the home in Detroit for a year because the over abundance of homes on the market.
2. His company may not be offering him a Guaranteed Purchase Offer.
3. He may not qualify for a mortgage in NYC because of his home in Detroit
4. His company may not be offering duplicate housing because he is not purchasing in the new location.

So yes, the National Market does affect NYC real estate…

Another thing to think about:
Companies are cutting back on their relocation policies because of the Market Conditions in the rest of the country…this too affects NYC real estate.

Rating NYC Neighborhoods

Jonathan Miller of Miller Samuel, Inc. recently released data comparing the areas of NYC…interesting info. Additionally, Mr. Miller stated:

“The change from 2004 to 2005 (prior year) was characterized by an overall 25.8% increase in price per square foot for all of Manhattan with all but one of the markets experiencing double digit increases in price per square foot. The overall Manhattan price per square foot change would have been between the 9th and 10th ranked markets in 2005. The overall Manhattan average price per square foot change from 2005 to 2006 was 6.8% and fell between the 15th and 16th ranked positions indicating that the higher ranked locations were generally
smaller in size, carrying less weight.

In either year, none of the neighborhoods/markets saw negative price declines and judging by the early going in 2007, “more of the same” appears to be the trend. Of course, this is in distinct contrast to the national housing picture”.

Click graph to enlarge…

NYC Rental Market Ranked Top in the Nation

www.newyorkbusiness.com
By: Julie Satow
Published: January 17, 2007

All signs point skyward for New York City’s booming apartment rental market, according to a new ranking report from brokerage firm Marcus & Millichap.
New York City skipped four positions to claim the top spot as the country’s strongest rental market, according to the National Apartment Index released by the brokerage on Wednesday.The report expects asking rents in the five boroughs to climb 6.5% to $2,719 a month this year, slightly higher than the 6.4% spike in 2006. This rent increase will occur despite an uptick in supply, including an expected 50% jump in inventory in Manhattan.”There is still a huge affordability gap between renting and buying,” says Peter Von Der Ahe, the director of the national multi-housing group for the firm. For the rental market to weaken, “there needs to be two to three years of solid rental growth, and then people will start saying that owning makes more sense.”Not everyone is as bullish on the rental market. Jonathan Miller, the president of the appraisal firm Miller Samuel, says the market will remain relatively strong but the pace of growth in 2006 will not be sustained this year. “Mortgages rates trended down in the second half of 2006 and the condominium market remained strong,” he said. Some New Yorkers who rented last year to wait out a potential housing bubble will be returning to the sales market, he says.

Renting in New York City

Renting in New York is unlike any other city in the country. At times my rental clients feel as if the are actually purchasing instead of renting. The process is somewhat tedious, which is why I have highlighted the steps for you.

Affordability
A simple rule to keep in mind: you can expect to pay 25% of your gross annual salary for rent.

Financial Qualifications
Most landlords require that you annually earn 40 to 50 times the amount of the monthly rent. Oustanding loans and liquid assets are additionally considered.

Lease Guarantors
For the renter that does not meet the Landlords financial qualifications, you may need a guarantor to guarentee the lease. Landlords prefer a family member who lives and owns property in New York, New Jersey or Connecticut. The guarantor must earn ample income.

Expatriates
If you do not have a Social Security number and do not pay taxes in the United States, your eligibility is weighted differently. You will need to work closely with your employer, relocation coordinator and your real estate agent.

When you plan your homefinding trip to New York City, you will need to bring the following items

Personal Documents

• Letter of employment and salary verification
• Names, addresses and phone numbers of previous landlords
• Names, addresses and phone numbers of personal and business references
• Bank account numbers
• Credit card numbers
• Expected bonus (employer to verify)
• Driver’s license or passport

New York Lanlords will not accept personal or out-of-state checks

Required Funds

• Credit Check: $25 to $200
• Two months rent for the security deposit and first month rent (additional funds may be required for security). If you do not have a NYC bank account you may bring Traveler’s Cheques that can be converted.
• The Brokerage Fee: Is paid by the tenant and is typically 12-15% of the annual rent. The landlord does not pay the fee – the tenant is responsible.

Once you have chosen your new apartment an application will be submitted, credit check performed and your references will be verified. Upon approval: leases will be signed and certified checks will be submitted.