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Minyan Mailbag-Real Estate

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You'll always get our honest input.

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Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.

Dear Toddo,

Despite your reservations and cautionary words, I am determined to buy real estate in Manhattan. I'm about to close (so they tell me!) on a $40 million loan that will enable me to have 100% financing on real estate investment properties. I know you're busy, but I'd love your input if you have time. I'm currently targeting Harlem, the East Village, and maybe the Midtown east or lower east sides. If I'm determined to buy property, come hell or high water, do you have a favorite area? Do you have any buddies in real estate you could refer me to? Do you or anyone you know have a good handle on what rents different size apts. in different areas can command? I may have a realtor to work with, but I'd love your recommendation for a realtor if you know anyone. I'd rather go with a friend of a friend than a stranger.

I sent you a link to one of the buildings that looks interesting to me. Could you give me an idea of what type rents I could expect for these apts. if I bought the building?

If all goes well with the real estate, I expect to have several million to invest in the next couple of years. Pretty amazing, huh?

Hope all is well with you, and thanks in advance for your recommendations and insights.

Peace,

Minyan DS



Minyan DS-

We can't, as you know, offer advice on what to do with your money. That's subjective to your particular time horizon, risk profile and investment style. I will say, as I have said, that I believe real estate will face an inevitable crunch as money continues to tighten. The areas of greatest impact (compression), in my view, will likely be those areas with the most froth (read: high end real estate). Low income housing and low profile rural districts "should" be relatively buffered from the lion's share of the pain.

With regard to NY real estate, I will simply say that I still rent and won't buy an apartment in this city until much lower prices arrive. While I've watched different areas spike in prices over the years (SoHo, Times Square, Tri-beca, Chelsea and now the meat-packing district), I don't have the appetite to participate. My sense--and something that I've shared with friends in that business--is that the lower east side and Harlem seem like the next intuitive "migration." In other words, they're still out of favor and if (big if) the rotation continues, they could see an uptick.

I never "get involved" with other people's investments because financial choices should be shouldered by those most familiar with them. With that said--and with all due respect--I shivered a bit when I read your email as 1) you're a virtual friend and 2) I've seen this type of enthusiasm implode in the past. I will simply say that nobody should put all their eggs in one basket--regardless of the basket--and all potential outcomes should be assimilated before risk assumption. That's my honest vibe, anyway, and I sincerely hope that you find success and happiness in whatever you choose.

Kindly,
Toddo

R.P.

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