The much-awaited Wall Street bonus news have come out last week, with Goldman Sachs announcing the highest annual earnings in Wall Street history, allowing the investment bank to pay out a whopping $16 billion to eligible employees. That is over $600,000 per employee, with some high producers possibly earning as much as $100 million.  Other investment banks did very well also; Morgan Stanley said that it will pay its CEO John Mack $40 million in 2006, also a Wall Street record for a CEO.

Doing naked cart wheels are, of course, people who work at Goldman, and real estate brokers.  Salivating at the prospect of money that will be thrown into real estate, Pam Liebman, the CEO of Corcoran, a large NY real estate brokerage, said, “When these guys learn what their bonuses are, we are among the first people they call…. They call their mothers, and then their real estate brokers.” (The NY Times, December 13, 2006)

For people like me who have been waiting for prices to fall even further, this is not good news.  The real estate appraisal firm Miller Samuels has produced a correlation chart between Wall Street bonuses and real estate prices in Manhattan, and surprise, surprise, they are inextricably linked!

Brokers are already reporting brisk sales in as early as November (“Bonus Season’s Greetings,” New York Magazine, December 4, 2006).  A friend who is a broker confirms that the past two months have been “very, very busy” for her.

While the rest of the country is languishing in a so-called “real estate freeze,” New York defies that trend and sends its property prices through the roof once again, beyond reach of the likes of us, who did not earn those bonuses.

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Tags: bonuses, earnings, estate, Goldman, Morgan, New, real, Sachs, Stanley, Street, trends, Wall, York

An article in the Sunday issue of the New York Times (“A House Divided:  Uncivil War on E. 73^rd Street,” December 10, 2006) describes a dispute between a landlord and an unhappy tenant in a tony Upper East Side brownstone of New York City.  A battle like that is always a case of someone’s word against the other, but if you read through the article, it becomes easier to decipher who is in the wrong, so to speak. 

Mr. Pavia, the landlord, rented out some floors of his luxurious brownstone to several tenants.  Along came Mr. Couri the tenant.  Mr. Couri started to have problems with a longtime tenant, a gay designer, who lived above him, complaining of noises, music, and partying.  He sent the designer letters citing “lies… late p.m. homosexual escapades,” and threatened to disgrace him by writing to interior design agencies and magazines.

The designer, who never had problems with other tenants or Mr. Pavia before, moves out.  Mr. Pavia eventually sued Mr. Couri for obnoxious and harassing behavior, and Mr. Couri countersued by saying that his landlord refused to disclose the rent-stabilized status of the building.

The article, however, mentions that Mr. Couri, who dresses impeccably in a 3-piece suit, has a history of suing people (nearly 150 times since 1972).  He also has pleaded guilty in the past of defrauding a bank.  If Mr. Pavia had done a background check on him, the problems might have been prevented.

We’ve also had some issues with tenants.  Years ago, when my husband was looking to rent out his apartment, a friend of his who worked in theater introduced to him a young man who was an actor.  I even met the guy; he was good-looking, personable, a little jittery maybe, but seemed like a nice guy.  But jittery was the part we should have focused on.  He turned out to be a crack addict.  Luckily, his family stepped in and moved him out so we didn’t have to begin eviction proceedings.

Unless you personally know the potential tenant well, a background check on a potential tenant should be performed.  A check on credit history and from a tenant-screening agency can be done easily and should be done even when a tenant comes with a referral, as ours did.  For more information, check out on what landlords should know from the FTC.

Tags: biggerpockets, city, dispute, East, landlords, New, renter, Side, tenants, Upper, York

When I discuss with friends about buying real estate in Manhattan, and specifically about why my husband and I have not been able to find anything for years, I always blame him (out of his earshot, of course). He happens to be one of those people who want a perfect home, and we all know that “perfect” doesn’t exist. There’s always a little compromise here and there, but most buyers end up with a home that they love, after some renovation or what not. But he is unbending in his quest. Another problem he has, when looking, is that he’s always looking to buy something for nothing. In other words, if the property is listed at $1 million, he only wants to pay $500K. And another problem he has is…. Wait, I could go on forever!

But I have to admit that I, too, have little fixations that do not help. I’m a big proponent of Feng Shui, the Chinese art of interior design and placement which theorizes that the layout of a home can influence your life. It really does make sense: a layout of a home can give it a certain energy that will affect your chi over a period of time.

There are many schools of thought in Feng Shui, but the basic premise is that different spaces and corners of your home represent different areas in your life, such as love/marriage, money, friends/helpful people, career, education, and so on. If certain corners are missing from your home (if you have an L- or T-shaped home, for example), those parts of your life can be seriously affected. That’s why the first thing I do when searching for apartments in New York is to ask the broker to send me the floor plans. I then obsessively screen for “whole” apartments: no corners missing, front door in the right place, bathrooms situated in the right place, and so on. My favorites are apartments that are completely square or rectangular. Sounds simple enough, but surprisingly hard to find in Manhattan.

By the time I’m finished with my Feng Shui screening, about 95% of the listings are tossed out. Whatever I end up with, I show to my husband, who as previously mentioned, has his own real estate pathologies. Should anyone be surprised that we haven’t yet purchased our dream home?

Tags: apartments, chinese, design, estate, feng, interior, manhattan, New, real, shui, York

The million dollar question is, is it true that there is a glut of new constructions in New York City? When the word “glut” is used, it conjures up the image of empty apartment buildings with no takers, which is pretty extreme. But is there some truth to it?

Take 15 Central Park West, for example, a building that is going up right now near the Time Warner Center. There are rumors of many famous buyers there, including Sting, Denzel Washington, Google founders Larry Page and Sergey Brin, and the list goes on. I know of a real estate broker who represented a buyer who bought a 3-bedroom there for $6 million pre-construction and flipped it for $8 million. A $2 million profit without even seeing the apartment to its completion, that’s pretty good. 15 CPW is a glittering success by all standards, and it has a lot going for it: a Central Park West address, proximity to another high profile recent construction (Time Warner Center), which also houses Whole Foods, the organic food mecca beloved by many affluent New Yorkers.

Well, on the East Side, there is 995 Fifth Avenue, at the former Stanhope Hotel. You can hardly get more prestigious than Fifth Ave., and it’s across from the Metropolitan Museum of Art on 81^st Street. I had no idea that it was not doing well until I read an article in the New York Times (“A Candela with a Storied Past, but Few Takers,” November 19, 2006). The apartments are apparently not selling at all for a variety of reasons (high monthly maintenance, bad views for the middle floors, among others). But the developers, Extell, are hoping to reintroduce the building this winter. I’m curious to see how they will market and package it differently. Will they, for example, re-price the apartments?

Incidentally, Extell is also developing the property 151 East 85^th Street, a convenient location we happen to like. My husband is excited about the fact that Extell has so much unsold inventory at the Stanhope, hoping that it may try to “dump” the apartments at 151 E. 85^th St. at ridiculous prices. That is truly wishful thinking, but who knows? The prices there have not been made public yet, as far as I know, but I will be keeping an eye on this property.

There really are tons of new constructions in the city right now, and there are plenty of rumors of price drops and negotiations, formerly unheard of when buying into new buildings. Take the 3 BR at 170 East End Avenue priced at $5.395 million; it was $6 million a few months back. There are whispers that apartments are not selling there, and that deals can be made. I don’t know if there is a true glut, but with these rumors and news of disappointing sales, things are selling slowly, at least in some buildings. If only the prices will fall drastically, and fast.

Tags: constructions, glut, New, York

For city dwellers with children, there is always this dilemma of whether one should move to the suburbs. The case for the suburbs is pretty cut and dry: there are the obvious lifestyle reasons such as more space for children to run around, and also financial ones, like being able to send kids to great public schools where you don’t have to fork out private school tuitions in the $25,000-to-$30,000 range (per child, that is).

In our family, thoughts about moving to the suburbs always lurk in the background, even as we go apartment hunting in the city. In fact, one year, the lure of the suburbs was so strong for my husband that we even went house hunting in various towns in Westchester and New Jersey. Obviously in the burbs, you get more for your money. A spacious house, a nice yard, maybe even a swimming pool if you’re lucky. The pitfalls of moving to the suburbs seem so few, aside from the inconvenience of having to drive everywhere (it’s a given anywhere else, I know, but for Manhattanites, it’s a huge deal!). And oh yes, the high taxes. This is especially true in good school districts in Westchester and Long Island.

According to the New York Times (“Leaving the City for the Schools, and Regretting It,” November 13, 2006) however, there is an interesting upward trend of people who move to suburbs like Westchester choosing to send their children to private schools. That seems to defeat the whole purpose of moving to the suburbs in the first place. The high property taxes AND the tuitions? Apparently, many of these families did not plan to do this when they moved out there but decided to do so after finding public schools a little less than ideal, even in the good districts. The common complaints are that the programs are under-funded, too many kids in each classroom (many of them unmotivated), the administration is not responsive to parents’ needs, and the list goes on.

Guess you can’t have everything, even in the burbs. I’m just glad that we are still in the city, paying just the tuitions but not the high taxes. Of course, it’s not a given that you’ll find the schools in the burbs unacceptable; plenty of families are very happy there. But there is always that “What if?” You can bet that I will be showing my husband this article every time he muses about moving out of the city.

Tags: city, estate, manhattan, New, real, schools, suburbs, Taxes, Westchester, York

Thank you, Josh, for inviting me to join the Biggerpockets.com blog community! And I also wanted to congratulate him on his recent nuptials & honeymoon to Thailand & Hong Kong. I’ve spent some time there myself, & they are such amazing places to visit, Thailand with its exquisite beaches & Hong Kong with its fast-paced vitality. Speaking of fast-paced, vital cities, I’m writing from New York. Love it or hate it, there’s always something happening here! It’s fun to be living here, & although the competitive nature of the place gets to me sometimes, I still can’t imagine living anywhere else.

New York City has probably led the country in the real estate run-up, & though many say that prices are softening, I don’t really see all that much of it. Maybe the bidding wars of years past have subsided somewhat, but prices here can still take your breath away. There’s still a lot of new construction going on, & those prices are still astounding. Here’s 2 examples of some family-size apartments in these new developments that I have personally looked at for my family of 4:

170 East End Avenue: Apt. 12 B (3 BR, 2,716 sq. ft.) at $5,395,000

310 East 53^rd St.: Apt. 11C (3BR, 2,313 sq. ft.) at $3,550,000

Both are beautiful, glass-encased beauties, with the one in midtown (E. 53rd St.) slightly priced better, probably because of its midtown location, a less residential area that is further away from most schools. The developments downtown in the financial district are priced even better, but who wants to spend the whole day in transportation in getting the kids to and from school?

Of course, when my husband & I visited the sales offices for the properties listed above, our eyes sort of just glazed over. They are so far from what we are able to afford, but yet as middle-class citizens of Manhattan, is it so ridiculous for us to be interested in a nice, new 3BR apartment? The answer, unfortunately, is yes. Meanwhile, we retreat to the comforts of our cramped rental apartment & the search continues….

Tags: city, estate, manhattan, midtown, New, real, rental, York

I wanted to extend a warm welcome to Bea Chenowitz, a new contributor to our blog. Bea is a wonderful writer from New York, and will help share her unique views of this crazed real estate market.

Here is a brief bio she threw together for us:

“I have lived in New York City for 16 years, and sadly, my number 1 passion is looking at real estate ads and going to open houses for fun. Currently living in a rental apartment after having bought and sold real estate in Manhattan, I really would like to buy something again. If I can only persuade my husband, who seems pathologically unable to pull the trigger.”

Please help make Bea feel at home here!

Tags: blogger, estate, manhattan, market, New, real, York