All Forum Posts by: Jason Lee

Geez that ended up being a long post. Sorry!

I'm and agent in NYC.

There's a huge difference between being the listing agent who is a dual agent (represents both the seller and buyer), and being the listing agent who has the seller as a client and the buyer as the customer. When I have been the exclusive listing agent I have never been a dual agent. My fiduciary duty is always to the seller, any unrepresented buyer is just my customer (I owe them honesty, etc, but there is no fiduciary relationship). I have every buyer sign the agency disclosure where I tell them straight up that I represent the best interest of the seller and the whole time I'm trying to get the seller the best deal. If I had an existing buyer client that was interested in one of those properties I would have to do dual agency but that situation just hasn't come up and I'm glad it hasn't. I just don't see how I could have a fiduciary relationship with both the buyer and seller at the same time. Or, if another agent from my firm brought a buyer to my listing then it would be dual agency. That's probably the more common scenario but in that case both buyer and seller are at least represented by two different agents (albeit from the same firm) and so no one is confused. In the end most unrepresented buyers think they are being "represented" when in fact they are not. There's a big difference.

There's also a misconception that agents see unrepresented buyers at their listing and they automatically think dollar signs, thinking they're going to make twice as much. Not true. For one, listing agreements are often negotiated where the commission is different if it's a direct deal or co-broke. I've never made a deal for the seller that wasn't the best deal for them because of the commission. I'm not saying it never happens but I just don't see it. Next and perhaps more importantly, when a buyer is not represented I have no idea if they are qualified and very often they are not. There's a saying (I didn't make it up) that "buyers are liars." I've had all kinds of offers come in where the buyer ultimately didn't even come close to qualifying for the purchase and their true financials where no where near what they initially stated. In most cases they're not trying to be deceptive, they just have no clue how lenders or co-op boards, etc underwrite and look at debt-to-income etc. Also, in my experience, it's typically much easier to negotiate with another agent. There's usually no emotion involved and we're just trying to get to a meeting of the minds, and I know the buyer's expectations are being managed. It's typically a smoother deal.

When I represent buyer clients I'm 100% trying to get those clients the best possible deal and mainly trying to keep them from making both small and large mistakes. For inexperience buyers, buying real estate is a complex transaction and they want their hand held by someone who does it day in and day out. For my experienced or high net worth clients, I'm running numbers and screening through hundreds of listings because that usually isn't the best use of their time. I'm negotiating and navigating deals all day, every day, and so there's just not a lot that I haven't seen. I've talked my clients out of deals because I knew they would be making a mistake and I've convinced my clients to pull the trigger on deals they dismissed because they didn't have the vision to see how it could be a great deal for them. I'm also licensed at 3 different brokerages in 2 states (NY and NJ) with over 1,400 agents total. I regularly hear of pocket and off market listings that never hit the MLS and most of those deals have ended up being the ones that are most attractive to investors. Btw, in roughly half of my deals I am representing the buyer and my buyers get the properties they want, so I know my representing them is not working against them.

Lastly, if you're active on BP and the forums then you very likely know more about REI then most residential real estate agents (who mainly deal with retail clients). If you decide you'd like to work with an experienced agent in NYC who understand REI and how to analyze deals (brrrr, house hacking, ARV) then please don't hesitate to give me a shout.

With regard to the sublet policy and problems for buyers, I meant that if more than 50% of units are sublet then the co-op is no longer warrantable, meaning Fannie and Freddie will not back loans there. You see this more in smaller buildings with liberal sublet policies and it can definitely hurt resale values. Just something to consider if your long term strategy is to sublet a co-op apt.

As for NJ, I'm guessing you'll be priced out of downtown JC and Hoboken. Try JC (Heights, Journal Square, McGinley Square, or the Communipaw section of Bergen Lafayette). Union City and West New York should also provide some options and probably a faster commute for you.

Your apartment has appreciated over the past 3 years, not even including the renovation. You can sell now and cash out and avoid paying any capital gain. If you think you'd be a little cash flow negative renting out your co-op it could turn in to a lot. Timing co-op leases gets a little tricky since you have to wait for board approval and so you could end up with more vacancy than you expect even if you can line up new tenants quickly. You're also open to board turn downs. Your maintenance will go up, and any special assessments could ruin your numbers. And does your board allow open subletting indefinitely? If so that's great for now, but those buildings can get in trouble down the line with having too many sublets and becoming non-warrantable. If that happens, and you want to or need to sell in the future, that shrinks the buyer pool pretty dramatically. You want to get into real estate investing and your first investment property would be negative cash flow. I think that in and of itself answers your question.

House hacking in NYC is tough. Townhouses and MFH are very expensive and you're probably looking at a long commute to find something that pencils out. I'd think about continuing to hack co-ops. Depending on where you want to live there are usually a lot of options for co-ops that need work, that trade at a discount because of their condition, and can sell at a premium once they're renovated. Just like what you've already done. You can do this every two years and avoid capital gains AND you can try to figure out other MFH strategies at the same time.

This is an amazing deal! Priced well below market. Comparable 2 beds for sale in the condo are currently listed from $510K-599K. Low monthly HOA and RE tax. Excellent flip, buy and hold, or primary residence. Who says there are no deals in NYC??

SEE THE FULL LISTING HERE!!

Open House: Sun, May 13 1:00 PM - 2:30 PM

For more info please contact:

Jason Lee

Licensed Real Estate Salesperson

Charles Rutenberg Realty Inc

Tel: 917-238-4506

Email: [email protected]

New York / NYC / Queens / Jackson Heights / East Elmhurst / Flushing

Just came across this and so maybe the deal is gone already, but I'll add my two cents. The board could at some point change the lax sublet policy in the future to try to get it warrantable. How are the financials? When was the roof last replaced? The elevator and the boiler? How about facade repointing. All of this work has to be done at some point and usually leads to ongoing assessments that could cripple cash flow. Take a good look at the financials, bylaws, and board minutes. As far as location, for a studio, zoned schools don't really matter. Commute and proximity to amenities are key.

I'd take a look at GRO Architects. I haven't worked with them but the principles live in JC and I recently came across one of their house projects in Bergen Lafayette which was pretty impressive in terms of design/build and budget. Btw, I've sold condos recently in Bergen Lafayette so let me know if you have any specific questions about the condo market there.

Closing costs for buyers of co-ops does not work out to a percentage of the sales price. Most of the fees are fixed. There's your attorney fee, Co-op and management company application and processing fees, Mortgage related fees (appraisal, bank attorney, lien search, recognition agreement, etc). The only fee that works out to a percentage would be mansion tax if the purchase price is over $1mm. The co-op pays the real estate taxes on the property itself (which you pay indirectly through the monthly maintenance), so there are no prepaid taxes. If you are purchasing a sponsor unit then there would be city and state transfer taxes that are typically payable by the purchase (the seller typically pays for re-sales), and those are a percentage of the purchase price. Most co-ops will require you have a certain amount of liquid assets post close as a multiple of the total monthly housing costs (typically 1-2 years worth at minimum), they often have a formula for housing debt-to-income and total debt to income. Keep in mind, many co-ops don't allow investors. 

First off, source of income (including child support) is a protected class in NY and so denying housing based on that alone could be viewed as discrimination. Be careful. On the bright side, child support is not taxable and so I would actually consider her net income to be higher. I'd guess her housing debt-to-income would be around 26% which is good. If she's been a "great tenant" then I would want to keep her on. As mentioned above, you want to hang on to great tenants. How did you vet her initially? Did you ask for a landlord reference, or verification that she paid her rent or mortgage on time? If her housing payments were paid on time before her divorce, her income is high enough, and she's been a great tenant, then I would renew the lease.

I'm in NYC, on the Brooklyn MLS, REBNY, MLSLI, NY, Hudson, and NJ, and I can't say this is a common thing. Hudson uses an authenticator app which generates new passwords for each log in and so perhaps there are issues. I always assumed it was multiple users within the same brokerage. I'd be curious what kind of agent wants to jeopardize their standing with their board for this "easy money" when the fees are nominal.