The rental forecast for commercial spaces remains grim as city officials warn Manhattan’s abnormally high vacancy rate should persist well into 2026. As of August 2023, Manhattan is currently at 22.7% office vacancy with little hope of recovery anytime soon.

New York City commercial vacancy rates typically hover at a steady 11%, but as the pandemic continued into the early 2020s, those rates climbed to 15% and beyond. Currently, the national average for 2023’s first quarter is 18.6%, with cities like Denver and Seattle squarely at 20% vacant.

For many, these vacancies hit close to home- shuttered bodegas, struggling independent shops, and the loss of retail storefronts continues to alter the dynamic of neighborhoods throughout the city. Look closer, and empty offices bleed into transport as well; rush hour subways are only half full, a far departure from an overcrowded past.

Lower and midtown Manhattan and downtown Brooklyn have seen the highest turnover and climb in vacancy rate changes to speak of. Despite receiving the most COVID-19 grant and loan money, businesses and offices continue to empty out.

Manhattan’s Troubled Rental Landscape

Spikes in vacancy affect not only landlords and building owners but the city as well. One of New York’s most important revenue sources is property taxes. Nearly 20% of New York City’s total tax revenue comes from commercial property taxes, with 10% attributed straight to office building rentals. In the first quarter of 2023, 4.6 million square feet were leased in the city, while asking rents for offices in NYC were priced at $78.35 per square foot. In April 2023, the price was at an average of $75.13 per square foot, down 50 cents in a YoY comparison, according to a Colliers market report.

Officials estimate that over half of Manhattan’s 450 million square feet of office inventory is practically obsolete.

Manhattan isn’t an easy place to open a business. Especially for family-owned shops, the regulatory hoops, and hurdles of rising rent, taxes, and industry competition challenge even the most genuine intentions. Inflation has taken its toll and led to genuine change across the city landscape. Take a walk down Third Avenue in midtown and you can see for yourself. Empty storefronts and boarded windows have sucked the magic out of New York’s once-energizing presence.

How Much NYC Office Space Is Actually Being Used? How Much Is Under Construction?

A major contributing factor to vacancies is the underperformance of aged commercial spaces. The shift into remote working left many businesses reconsidering their needs and desires for office space. Pandemic downtime made room for major remodels and full or partial fit-outs as companies dreamed of an eventual return to normalcy. The demand for older buildings- many with poor energy performance and outdated design- began to plummet, leaving skyscrapers and roadside shops alike empty around the city.

Officials estimate that over half of Manhattan’s 450 million square feet of office inventory is practically obsolete. Newer buildings with energy-efficient systems are more desirable to renters than older buildings. With 14 million square feet of modern office space under construction, it’s anticipated tenants of older buildings will continue trickling into newer energy-efficient builds long past the vacancy crisis.

Remote Work Is a Major Contributor To the Decline In Commercial Building Values

Recent studies highlight remote work as a major factor in declining building values. Estimates blame the shift into remote work for cutting building values by half. What was once a temporary fix has become the norm. This trend is not unique to New York alone; nationwide, businesses and landlords struggle to find a solution to emptying spaces.

“We now estimate a more persistent work-from-home regime, which has more of an impairment of office values even in the long run,” Arpit Gupta, co-author of the study, “Work From Home and the Office Real Estate Apocalypse.” told The Real Deal.

Post-pandemic rates of office return have reached no higher than 50%, severely lower than anticipated and hoped for by employers and landlords alike. Because of this, official estimates that NYC office stock loss would be 28% have been updated to reflect a 44% loss in value. New York has been on track to recover by the second quarter, with 1 million jobs lost due to the pandemic shutdown, but this is not reflected in local rental markets.

A major decline in worker spending is another backlash stinging local business. Without workers traveling to their offices, who will buy coffee, lunch, and run errands nearby? Less commuting means less commuter-based revenue; workers have spent $12.4 billion less annually compared to pre-2019.

Landlords are defaulting on loan payments. With more than $16 billion in loans due this year, many landlords are in a bind for alternative cash flow as renters continue to dwindle. The Fed’s rising interest rates and tight lending standards jeopardize the ability for older office buildings to refinance, ultimately putting their ownership at stake. Nationally, this is a loss of $506.3 billion in value and has affected the state of local public finances.

Commercial East Village and Lower East Side Hardest Hit From Pandemic

The residential market has also experienced a major shift from the old norm. The residential vacancy rate is currently above 2%, where it has stood for nine consecutive months. The highest vacancies are concentrated within the East Village and Lower East Side with a rate of 3.25% compared to the lowest in the Upper East Side at 1.34%. That said, close to 3,704 new leases were signed in Manhattan by February 2023 compared to 1,000 in Brooklyn.

“In Manhattan, the vacancy rate ticked up from January to February as apartments took longer to find tenants and leasing activity slowed. These are all positive signs for apartment seekers,” says Chief Operating Officer Gary Malin of The Corcoran Group. “However, the median rent has remained unchanged since October 2022, which shows that owners still remain hesitant to reduce pricing.”

The median rent in Manhattan was $4,200 monthly as of February, unchanged since late 2022. Pricing is 12% higher than in February of 2022, making average rent higher than last year. In contrast, the median rent in Brooklyn was $3,500 a month in February 2023.
“Meanwhile, in Brooklyn, rents in February cooled just enough to encourage tenants to take action. In contrast to Manhattan, the number of signed leases in the borough increased monthly, hitting 1,000 for the first time since November.”

Sadly, areas with the highest concentration of low-income residents face higher vacancy rates than elsewhere as businesses and landlords struggle to maintain profit margins that are quickly falling out of reach.

What Is The Status of NYC’s Housing Affordability?

The 2021 Housing and Vacancy Survey, collected every 3 years, summarized the state of the rental landscape throughout the boroughs. The most recent report confronted increases in New York apartment vacancies since 2021. Rent regulation can be drastically affected by these numbers, and rates of 5% and higher constitute an official “housing emergency.”
These surveys help representatives defend low-income residents and their rights. Members of CHIP (Community Housing Improvement Program) have challenged the city’s rent stabilization laws in court. Low-cost apartments appear on the outs as the city lost 96,000 units at $1,500 or less since 2017.

But many are fighting. Vacancies in commercial space have advocates looking at new opportunities for affordable apartments and urban housing. Real estate groups, urbanists, and market experts wonder at the possibility of reinventing Manhattan and Brooklyn. Older buildings, in particular, seem nearly perfect for housing conversion.

“Landlords are being very creative trying to improve their buildings, amenitize their buildings, improve the air quality systems,” said Peter Riguardi, chair and president of real estate services firm JLL’s New York tri-state region. “But at this point, without any unforeseen change, there’s still going to be some empty [office] space when we cycle through this, and some of those buildings are going to be ripe for conversion to residential.”

Still, hurdles persist as Albany failed to pass legislation helping with the conversion of office buildings to residential use, stoking the anxiety of many. In some cases, banks may eventually gain ownership of the building should loans go unpaid. As affordable housing continues to slip away, many wonder at the persistent inflation present in rent prices but absent in wages.

In the last year, the city gained 107,000 units with rents of $2,300 and up, bringing the median asking rent of vacant apartments to $2,750 in 2022, up 46% from 2017. To afford this, a household would need to earn $110,000 or more. The 2021 survey found over 50% of renters paid upwards of 30% of their income toward rent. This severe rent burden signals an affordability crisis that is pinching the lowest earners in the city.

As buildings continue to empty and New York’s population continues to increase, pressure is mounting on the affordable housing market. As of July 2023, there are 8.948 million inhabitants, up 0.37% from last year.

The high vacancy rates are not present for low-income apartments but are found for the most expensive. Deregulation of apartments from pre-2019 rent laws and the focus on high-end apartment buildings are partially to blame. Despite all this, outsiders continue to move to New York City in droves, ensuring demand never falls too low.

The post City Predicts Building Vacancy Struggle To Persist Through 2026 appeared first on CitySignal.

This, of course, makes it harder for buyers to secure the financing needed to purchase new homes. As long as this continues, buyers will have to find creative ways to secure real estate deals—perhaps even open their minds to real estate solutions they hadn’t thought of before. 

The problem with waiting for the market to dip

Most buyers say that they are waiting for the market to turn. They prefer to buy when the market is low and will often pass up on properties they perceive to be overpriced in hopes that they will soon find a better deal.

The problem with this rationale is that no one knows when the market’s lowest point is until after it’s already passed. Buyers who bought homes in New York in 2002, shortly after 9/11, or in 2009 following the Great Recession, bought their homes at prices so low, we’re likely never to see them again.

There’s been a lot of talk of a potential recession in 2023. It’s normal for buyers to want to wait until after it hits. However, they should note that the dynamics of the market, specifically in Manhattan and Brooklyn, where buyers are most eager, have changed dramatically due to the large amount of condos constructed over the past decade. 

The influx of condos in highly-desired areas have altered consumer expectations. Back in the day, the only way to access the amenities offered by condos was through purchasing a co-op, a jointly owned building owned by a nonprofit corporation allowing its joint owners to live in the residence. We’re now seeing a return of the co-op in NYC.

What is the appeal of a Co-Op?

Co-ops typically come with demanding boards and strict regulations which turns a lot of buyers off. But in the ’90s, purchasing a co-op was one of the only ways New Yorkers could own apartments in the city. 

Although there’s no shortage of condos in NYC, there’s definitely a shortage of the money supply, which is making co-ops more enticing to certain buyers. Purchasing a co-op requires a different type of financing. You usually can’t finance a co-op with a mortgage. 

Instead, you’ll go through an application process involving interviews with the co-op board and financial vetting. If approved, you’ll be able to purchase shares in the company and become a co-owner of the building/nonprofit corp. The shares you purchase will determine the size of your apartment.

Given their convoluted ownership structure and sometimes lengthy approval process, fewer buyers seek out co-ops, which means less competition for the ones who do. If you’re open to it, purchasing a stake in a co-op may be your path to owning an apartment in one of New York’s historic pre-war buildings and prime location. Almost all pre-war buildings in New York are co-ops. 

Co-ops vs. Condos

Condos and co-ops share many similarities in appearance, but are fundamentally different in regards to ownership and financing structures. New York City is different from any other real estate market in the country. Co-ops are one of the reasons for this. 

Although co-ops technically outnumber condos in NYC by about 75%, you’ll find more condos on the market at any given time. The vast number of co-ops is due to the “co-op conversion boom” of the late 80’s, when developers converted a number of rentals into co-ops.

There are a few basic ways in which condos differ from co-ops. The first being that when you purchase a condo, your apartment as well as a part of the building’s common areas, belong to you. 

When you purchase a co-op, you don’t own the apartment. Instead, you own shares in the nonprofit corporation that is your building. Buying these shares allows you to occupy a unit in that building. 

If you’re thinking about purchasing a co-op with the hope of subletting your apartment in the near future, you might have to think again.

Every co-op has different rules in regards to who can utilize their living spaces. You may have to live in-unit for at least a year before being able to sublet, or may not be able to sublet your apartment at all. 

This is because the rental unit is not technically not yours. Ownership belongs to its collective stakeholders. When you close on a condo, you’ll get a deed. When you close on a co-op, you’ll get a proprietary lease.

Both condos and co-ops have a doorman and a superintendent on staff. Some have concierge, while others don’t. Amenities can range from lavish (gym, rooftop, children’s playground) to simple (storage room, laundry room, bike racks). 

Down Payment and Price

According to Castle Avenue real estate, the average sale price for a Manhattan co-op ranges from $553,734 for a studio to $5,109,433 for a 4+ bedroom apartment. Whereas, the average sale price for a condo in Manhattan ranges from $908,991 for a studio apartment to $9,846,869 for 4+ bedroom apartments. 

Condos tend to be more expensive than co-ops, but co-ops usually require a larger down payment than condos. You can put down as little as 10% on a condo, but a co-op will require a down payment of 20%-50%. Property prices ultimately depend on the neighborhood in which the condo or co-op is located. 

Closing Costs

Co-ops also tend to have lower closing costs than condos, usually between 1%-3% of total purchase price. Closing costs for a condo in NYC run between 8%-10%. The difference in closing costs between condos and co-ops is due to their difference in classification of property. 

Condos are considered real property, while co-op shares are considered personal property. It may seem insignificant, but it makes a difference when calculating closing costs for either transaction. 

Monthly Charges

Both co–op and condo owners pay a monthly fee for basic upkeep of their properties. But, co-ops usually come with higher monthly fees than condos. Co-op maintenance fees are higher because they often include part of the mortgage for the building.  

Take A Deeper Look At the Comparison of a Coop and a Condo

These two listings in the same area in the West Village have the same listing price, but you can see that the monthly costs are a bit different.

The post Growing Appeal of Co-Ops in New York City Real Estate appeared first on CitySignal.

The carried interest loophole, with all of its complexities, is best understood as a tax break enjoyed almost exclusively by the ultra-wealthy. Carried interest enables private equity and hedge fund managers to downsize their tax burden by claiming income from fund investments as capital gains instead of ordinary income.

In the real estate world, the portion of the profits that developers and fund managers receive from a real estate project or transaction qualifies as carried interest. Put simply, investment income for institutional investors, as long as it meets a certain profit threshold, isn’t treated as typical income, but as “capital gains.” 

2021-2022’s highest-income tax bracket applies to all individual income over $523,601 per year, with normal income in this bracket taxed at a federal rate of 37%. However, according to The Real Deal, institutional investors can claim investment income as capital gains. They only have to pay the 20% capital gains rate and an additional 3.8% percent tax, resulting in a 23.8% tax rate, a third less than the top-line federal rate for typical income. This amounts to huge savings for uber-wealthy institutional investors. 

Many professionals in the real estate industry defend carried interest as a way to incentivize more investment. The Real Estate Roundtable (RER), a public policy organization that advocates on behalf of the real estate industry, summed up this position perfectly.

In an article, the organization defended carried interest as a way to incentivize entrepreneurs to make risky investments. They also claimed that it helps small businesses and early entrepreneurs grow their ventures, especially in the real estate industry. According to RER, eliminating the carried interest tax would “make it more expensive to build modern shopping centers, offices, and apartments, especially in long neglected neighborhoods…as a consequence, significant higher-risk development simply will not happen.”

NYC-based hedge fund manager Bill Ackman, a billionaire who constantly took advantage of the carried interest loophole throughout his career, is also one of its most prominent critics. Ackman has made a lot of his fortune through investing in New York real estate — for example, last year he listed a Chelsea office building he co-owned with another investor for $630 Million. 

However, in a recent Twitter thread, the billionaire called the carried interest loophole “a stain on the tax code.”

These are harsh words from a man who is one of the tax break’s largest beneficiaries. However, according to Ackman, the carried interest tax only benefits the very wealthy. “It does not help small businesses, pension funds, other investors in hedge funds or private equity and everyone in the industry knows it. It is an embarrassment and it should end now.” 

The carried interest loophole is a stain on the tax code. It does not help small businesses, pension funds, other investors in hedge funds or private equity and everyone in the industry knows it. It is an embarrassment and it should end now. https://t.co/HCmODFjDvu

— Bill Ackman (@BillAckman) July 29, 2022

 In a separate Twitter thread, Ackman also claimed that investors don’t need the carried interest loophole to incentivize taking on high-risk investments. “The daily activity of investment management does not need the additional incentive of lower carried interest taxation to drive behavior”, he claimed. 

The post How the Carried Interest Tax Loophole Benefits Wealthy Real Estate Investors  appeared first on CitySignal.

The Metaverse is making headlines these days, and leading the pack in virtual real estate is the company EveryRealm, formerly known as Republic Realm. You may have seen their name in the news late last year for their record purchase of $4.3 million dollars for a plot of land in the Sandbox, one of the many realms, or worlds, in the Metaverse. Although the stock excitement of the Metaverse, NFTs (non-fungible tokens), and other cryptocurrency tends to fluctuate wildly, it’s not going away anytime soon. The fact is, it is next-generation technology, especially in gaming, that we will see via the internet – and its popularity is undeniable. So what’s the story on EveryRealm and why are they vested in the MV so heavily?

EveryRealm is a company that invests in, manages, and develops assets like NFTs, virtual real estate, metaverse platforms, gaming, and infrastructure. Their mission is to become the leading and most trusted metaverse & NFT innovation and investment platform by building or buying companies in order to grow.

They are one of the largest real estate developers and landowners in many popular MV realms, like the Sandbox, Decentraland, Treeverse, and Axie Infinity. They operate both here in the real world, to help guide savvy investors who want to get in on the ground floor of this amazing, unprecedented opportunity, and also in the metaverse. They’re hedging all their bets on virtual reality. And they aren’t the only ones, as is witnessed by Facebook’s name change to Meta Platforms this last October.

Previously, Microsoft announced their purchase of ActivisionBlizzard for $69 billion dollars, as part of their expansion into the metaverse. At the beginning of December last year, it was reported that goods and services in the metaverse were approaching a value of $3 trillion dollars globally. Stars are already marketing and performing concerts in the MV. With all this activity and attention from celebrities and tech giants, it’s sparking understandably intense interest from investors, businesses, and celebrities everywhere – all over the world. And just like that, even Snoop Dogg has NFTs.

How Does the Metaverse Work?

The metaverse, at present, consists of multiple different realms, or worlds, each with its own name, owner, and in most cases, its own cryptocurrency. To enter the MV, interact with these realms, and have the most immersive multidimensional experience, we need to have a combination of technologies as well as an AR or VR headset. Virtual reality or VR helps create an experience that simulates realistic situations, and by wearing a headset or goggles the user is transported more immersively to the MV realms. VR gloves are another asset likely to become popular.

The next type of technology is AI, or artificial intelligence. AI is necessary for helping the user create and develop avatars and build assets, as well as securing “smart contracts” on the blockchain (more on this below), enabling transactions to be carried out without the need for a centralized bank or authority. In addition, many of the characters users interact with will be created using AI.

Next is the main technology used in the metaverse – augmented reality, or AR. Augmented reality enhances parts of the physical world with computer-generated input. To augment reality is to enhance it. In other words, make it more realistic and lifelike. Augmented or mixed reality headsets are available but expensive, however, prices are expected to decrease in the near future as demand increases. Combined with sophisticated AI, it will help users navigate in both worlds. Currently, AR contact lenses and regular-looking eyeglasses are in the works.

What is Blockchain Technology?

By combining the technologies listed above, users get the best interactive experience possible. But there’s one more technology involved that has been coined the “DNA of the metaverse”, and that’s blockchain technology. Blockchain is a shared database allowing multiple parties to access and verify data in real-time, facilitating purchases and transactions with cryptocurrency. It offers a decentralized, transparent method of verifying things like: digital evidence of ownership, digital collectibility, value transfer, governance, accessibility, and interoperability. In the MV, it facilitates the ability for users to shop, trade and complete transactions with value much like in the real world. The blockchain is essentially a digital ledger that records information and transactions involving NFTs and other cryptocurrencies.

What are NFTs?

NFT stands for non-fungible tokens, which basically means a unique piece of digital information that can’t be replaced with something else. Unlike a cryptocurrency like bitcoin, Ethereum or dogecoin, where the “coins” have a certain value assigned, NFTs have no preset value and are instead kind of like trading cards. Some will become valuable and some will not, mostly depending on popularity and scarcity. Quality does not necessarily have anything to do with value when you’re talking NFTs, though of course, it may play a part in an NFT’s popularity.

Currently, the Ethereum blockchain supports NFTs. An NFT can be a piece of digital art, a photograph, a song or video, or really anything that you want that can be recorded onto a digital file. Anyone can create, buy, trade, or sell NFTs. The metaverse is run by cryptocurrency, and you can start turning dollars into cryptocurrency by obtaining a crypto wallet like MetaMask.

What Does EveryRealm Do?

One thing EveryRealm does is develop their own MV real estate NFT projects, like:

• Metajuku – the first shopping mall with retail tenants and leases in the Metaverse

• Fantasy Islands – a luxury, master-planned real estate development in The Sandbox, a popular MV realm
• Realm Academy – the first online university set in the Metaverse where you can receive a Metaverse education certificate NFT.

Additionally, EveryRealm has two gaming guilds being created, one of these is a DAO – a decentralized autonomous organization. They have holdings in 26 different MV platforms and own over 3,500 NFTs. Their CEO, Janine Yorio, seems to have a good handle on it. In an interview with Bloomberg, she talks about the volatility surrounding NFTs and cryptocurrency as part of the draw for people involved. She makes a good argument for the fact that volatility in the market is actually a part of the excitement and addiction of the whole experience in the MV. She also seems to realize that the only way to make the metaverse interesting is to have people to meet, places to go, and things to see when you get there.

The post Who is EveryRealm? appeared first on CitySignal.

This guide will help you figure out the best way to get started in real estate investing, depending on your goals and your capacities.

Establish Your Real Estate Investment Portfolio Goals

Have you decided to invest in real estate? Excellent news. However, real estate investing can mean very different things to different people. There is no right or wrong way to invest in real estate – as long as the type of investment you choose to make matches your abilities and expectations. Here are some of the elements you should take into consideration when you decide to invest in real estate and some of the options you may choose depending on your priorities.

Gain Real Estate Knowledge

Real estate is a very complex subject, with many ramifications demanding specialized expertise. If you are just getting started in real estate investing and do not have any previous experience in the matter, it can be intimidating. Reality TV shows can make real estate investing seem easy and straightforward, but in real life, that is rarely the case. This does not mean that you need to become an expert before dipping your toes in the real estate investing business, but you may need to hone your skills and stay informed as you build your portfolio.

If you have little time, energy, and interest to dedicate to your quest for knowledge but still want to take advantage of the benefits of real estate investing, your best bet may be to start with managed funds, such as Real Estate Investment Trusts (REITs) for example, where you provide the funds but have limited decisions to make on a daily basis. On the other hand, if you want to dive into a real estate investment career, you will need to educate yourself on the local market, real estate laws, and any related fields so you can start more involved forms of real estate investments – such as flipping houses, renting properties, and so on.

Time Commitment For A Real Estate Investment Portfolio

Real estate is often presented as a form of passive income. Although it can, in some cases, provide predictable revenues with little input, it is not necessarily true. Any landlord can testify that renting one or multiple units is an involved job, even with the help of a property manager. Flipping properties also require a significant time commitment, although it can be alleviated with the help of a trusted local contractor and real estate agent to handle many of the daily decisions. Renting properties is typically a long-term commitment while flipping houses is more sporadic. For example, you may decide to buy, renovate, and sell a home during the slowest season in your regular job.

If you would rather take the back seat to real estate investing, the best course of action is to invest in a mutual fund, participate in a limited partnership, or join an investment group or investment trust. These forms of real estate investments require little involvement on behalf of the investors, freeing their time for their full-time jobs or other occupations.

Cost of Real Estate Investment Portfolio

Real estate is expensive: it is the main entrance barrier for many would-be investors. Besides, most forms of real estate investments are not liquid. If you are just getting started in real estate investing, the chances are that you are hesitating to freeze a significant amount of capital for several years. The good news is that most forms of investment provide regular returns, such as rental income or dividends. In addition, you can use the equity you build in a property over time by contracting a home equity loan or line of credit.

Nevertheless, you will still have to examine your finances and make sure that you have enough cash or liquid assets to cover emergencies. REITs have the advantage of being more liquid than other forms of real estate investments. They may be a good option if you are looking to build or diversify your portfolio without committing fully. You can also start building your real estate portfolio by flipping a house for a relatively rapid return on investment.

Another consideration is the amount of money you are willing to invest in this venture. If you are investing in real estate alone, buying a property – to rent and/or flip, for example – represents a significant expense. Commercial assets, in particular, are extremely expensive, and financing options are limited for investors who do not have a tracking record. If you have limited funds, you may want to look into sharing expenses with other investors. However, beware that some investing platforms are only open to accredited investors.

How To Finance Your Real Estate Portfolio

If you are wondering how to build a real estate portfolio, you are probably unsure about how to find the funds necessary to get started since real estate is one of the most expensive forms of assets. Here are some options you may want to investigate.

Leverage your primary residence

Many real estate investors start building their portfolios by using their primary residence as a steppingstone. In some cases, they may use their property to produce extra rental income. Depending on the setup and lifestyle, would-be investors could rent part of their home, either to roommates or by using short-term rental platforms like VRBO or AirBnB. If they can find other living arrangements, they can also rent out the totality of their home.

However, renting your home is not the only option for building a real estate portfolio. Since a primary residence is often the most important financial asset of a beginner investor, you can use the equity you have built in your home to finance the rest of your portfolio by contracting a second mortgage such as a cash-out refinance, home equity loan, or a home equity line of credit (HELOC). The process of buying, rehabbing, renting, refinancing, and starting again (a.k.a. BRRRR method) has become a popular form of starting and growing a real estate portfolio.

Obtain an Investor Loan

Unless you purchased your primary residence cash, you probably contracted a mortgage. However, being approved for a mortgage as an investor is a different ballgame.

Mortgage lenders consider that investment properties are riskier than houses to be used as primary residences since a homeowner encountering financial difficulties is more likely to prioritize their mortgage on their roof over their head than an income property. Therefore, you can expect more stringent requirements, including higher down payments (20% or more), higher credit score expectations, cash reserves, and so on. In addition, many mortgages with advantageous terms (government-backed loans such as FHA, USDA, or VA, for example) are not available for rental properties.

Suppose you do not qualify for investor loans through traditional lending institutions. In that case, you may also seek out hard-money lenders who, unlike banks and credit unions, take the profitability of the property to be purchased into account. It can be particularly advantageous for would-be investors interested in flipping properties since you can repay the loan a lot faster than conventional loans without penalties. On the downside, hard-money loans have significantly higher interest rates than traditional mortgages, and they also have higher origination fees and closing costs.

Find Private Money Partners

When it comes to real estate, the best way to build a portfolio is sometimes to divide and conquer. Bringing in partners also helps alleviate the risks and financial burden. Beginner investors can join a local real estate investment club to network and find other individual investors willing to pool their funds before joining a venture. The terms of the loans, repayment, and so on will vary depending on the type of deal and each party’s input.

Private money lenders do not have to be other real estate professionals: you can also present this opportunity to friends and family members. However, beware that it is best to set up a contract in case the deal goes sour, regardless of your relationship with the other party.

Defining Your Real Estate Portfolio

Seasoned investors know that it is best not to put all your eggs in the same basket. The same goes for real estate investments. When gearing up toward starting a real estate investment portfolio, it is best to establish your long- and short-term goals to protect yourself and select a strategy from the get-go.

Choosing the Best Form of Real Estate Investment

In the first two parts of this guide, we discussed establishing your priorities as a real estate investor and finding the necessary funds. It is often best to start small to avoid unnecessary risks and learn as you go, especially if you are not familiar with the industry. Here are some of the most common forms of real estate investments for beginners and their pros and cons.

• REITs: REITs are publicly traded companies that own and manage commercial properties (hotels, malls, etc.) Investors can purchase shares on a stock exchange and receive yearly dividends. It allows them to diversify their portfolio and invest in commercial real estate without the high entry costs and expertise this type of investment typically requires. In addition, REITs are relatively liquid since investors can sell their shares on the stock exchange if needed.
• House flip: Investors purchase a property in need of repair and resell them within a short time (typically a couple of months.) They may choose to update them to resell them for a profit or simply hold them if the market is increasing rapidly. Investors need to have an excellent knowledge of the local market and construction industry to stay within budget.
• Rental properties: Rental properties come in many different forms, from vacation to long-term rentals, ranging from single-family homes to large apartment communities. Rental properties allow landlords to perceive a predictable income and hold the building until it increases in value. However, being a landlord – even with the assistance of a property management company – can be very stressful and time-consuming, especially if you own multiple units.
• Commercial real estate: Commercial real estate includes any form of space rented or leased by a business. It comprises industries as varied as office buildings, malls, retail spaces, gas stations, restaurants, etc. This type of investment provides predictable incomes since the leases are typically long-term. However, they also have high entrance barriers, including higher down payments and property management expenses.
• Raw land: Investing in raw land requires an excellent knowledge of the area you are considering, including the local residential and commercial rental markets, but also the local regulations such as building codes, zoning regulations, and flood plains. Raw land gives investors a wide range of exit strategies: dividing the plot for resale, leasing it to renters, developing new construction, and even holding on to it while it appreciates. However, it can be very speculative in nature.
• Mutual funds: Real estate mutual funds are managed funds that invest primarily in REITs but also real-estate stocks and indices. They give investors access to a wider variety of assets than individual REITs and allow them to diversify their portfolios for a relatively small amount of capital.

Diversifying Your Real Estate Portfolio

You have successfully started your real estate investment portfolio – now what? It may be time to consider diversifying your investments to take full advantage of the industry’s numerous benefits, such as tax benefits.

Diversification may include other types of assets but also investing in other areas of the country. As you expand your portfolio, you may also need to learn more about additional industries related to real estate – such as law or construction, for example. You will also build a team that can guide and support you so you can take your portfolio to the next level. Good luck on your real estate investment journey!

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Arrived Has Perfect Timing

Launching a proptech/fintech startup a year and a half ago, when the industry was booming but uncertain, would’ve been a challenge. But to still be in business and growing stronger than ever today, amidst record-high inflation and an unpredictable housing market, is nothing short of a miracle. Yet Arrived Homes seems to have arrived right on time, and is doing just that. The company stands out not as the first of its kind, but as the first SEC-qualified real estate investment firm to allow virtually anyone to invest in single-family rental homes, including non-accredited investors. To top it off, Arrived is a billionaire-backed firm. Besides Amazon’s founder Jeff Bezos, there’s Marc Benioff, co-founder and CEO of Salesforce, owner of Time magazine and multi-billionaire, who also backs Arrived. And someone else we know well: Spencer Rascoff, former CEO of Zillow. Arrived was founded in 2019 by CEO Ryan Frazier, Kenny Cason and Alejandro Chouza.

The company has big ambitions, and wants to make investing in real estate attainable to anyone, which is exactly what they do, with a minimum investment of just $100 bucks. And speaking of good timing, Arrived has gained popularity quickly, fully funding each group of homes first in hours, then just minutes. People, for the most part, understand the value of real estate and many would love to be able to invest. But there are barriers, not the least of which are time and money. Still, most people can scrape up $100 bucks, especially for a fairly solid investment. The homes are released every couple of weeks, the most you can invest in one home is $20K, and the only requirement is that you’re over 18.

Two homes that were offered up recently were in Birmingham, Alabama. The Stonebriar has 142 investors, cost $202K, has 3 bedrooms and 2 bathrooms, and is 1,162 ft².

The Grove has 95 investors, cost $225K, has 3 bedrooms and 2 bathrooms, and is 2,050 ft².

Each property showcased has a target rate of interest, and the homes are rented and managed by third party property management firms for 5-7 years, then sold. Investors get a check with their share of the rent quarterly, and one when the property is sold, according to the number of shares held. But as we said, Arrived might be the most talked about platform, but it’s not the only one of its kind. Still, it seems to be the most popular.

What Is Fractional Investing

Let’s talk for a moment about fractional investing. This is a type of investing strategy designed to help people who want to invest, but just don’t have the capital to buy the shares they want. It’s a tool to help beginners get a portfolio started with less money to start it with. It’s just what it sounds like; instead of buying a full share of a company, you can buy just half a share, or a quarter of a share. Not all brokerages allow fractional investing, and it’s sometimes difficult to transfer them, but the really cool thing about fractional investing is that you’re entitled to the same benefits and dividends as someone with full shares. Plus, with fractional investing you can diversify your seed money across several companies, owning your own slice – er, well, part of a slice – of the pie. It also gives you a better idea over time which stocks to put more into, and which ones to pull out of. Especially for the beginner, this is one of the best ways to start investing. Now let’s briefly look at the other companies that currently offer similar value to Arrived.

Arrived’s Top Competitor: Fundrise

First of all, the platform Arrived runs on is called Benzinga, and there are other choices there for fractional investing. One of the most popular is called Fundrise. With Fundrise, you can start with a $500 investment in single-family rental homes, multi-family rental homes or commercial buildings. Additionally, just like with Arrived, you’ll have a longer-term target range of at least 5 years, and the requirements are the same, no accreditation necessary. Fundrise was started in 2016 as an REIT (real estate investment trust), and this startup has secured a $300 million dollar credit line from Goldman Sachs to finance new construction for single-family investable homes. This company is the closest model to Arrived Homes out there, as they are singularly unique. Either of these options provide a great way to get your feet wet, and for the average income earner to get an idea of what investing is like, and what it can do to enrich and fortify your level of success in life.

Investing in REITs

A real estate investment trust is a company that owns and typically operates cash-producing real estate of any type. This is typically commercial real estate, including office and apartment buildings, warehouses, hospitals, shopping centers, hotels and commercial forests. There are two main types of REITs: equity and mortgage. The type we’ve been talking about, of course, are equity REITs, which were recognized as a distinct asset class in November 2014. Since then, investors have witnessed that they seem to be a solid bet, and are known to reduce risk in a diversified portfolio and increase returns.

Closing Remarks

The fact is, these companies are providing yet another way for smart people who know the value of real estate to get involved in investing. Real estate investing is not for the impatient, or the impetuous. It’s generally a long-term investment, but if you have the fortitude, it has the best outlook for appreciation. There are many ways to get involved in investing, and some require more money upfront than others. Talk to a financial advisor if possible, and be sure to research everything completely before investing anything. Once you are confident in where you want to invest, start small, but begin building your nest egg as soon as possible. It will pay off in the long run. Happy investing – and good luck!

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What Are New York City Timeshares?

First and foremost, timeshares in NYC don’t typically look like timeshares everywhere else. Timeshares in the city usually come in the form of a fractional ownership deal, where people can pay money to buy a set amount of time in a hotel or resort with the ability to choose one of several location options. They also usually come with additional perks like deals on similar hotels worldwide, fine dining, and even access to amenities like fitness centers.

While traditional timeshares try to tell you that you own land, most fractional ownership in NYC makes no such promises. Instead, the money you spend, usually between $30,000-$100,000 depending on the company, package, and location, goes toward a spot in an exclusive club that gets to know who you are as a person. You can stay in the same room or suite every time you vacation, and these options are usually larger than standard hotel rooms. It’s also a way to have a slice of the city without spending millions on real estate. You can say you own a small place in Midtown Manhattan, and it will only be a little white lie instead of a grandiose one.

Where Are New York City Timeshares?

Many luxury buildings contain timeshares. Some of the most popular in the city are:

St. Regis

The St. Regis is a historic Hotel built by John Jacob Astor IV, who opened the Hotel in 1904. This building’s claim to fame is inventing the Bloody Mary and throwing midnight tea events. Current ownership allows you one fixed week stay at St. Regis locations in New York, Aspen, or Scottsdale.

Owners also have 21 additional nights that they can book on priority reservations. While staying at St. Regis, owners will have access to the fitness club, butler service, and access to the exclusive Astor Court and King Cole Bar.

West 57th Street by Hilton Club

One of many hotels in the Hilton Club, membership to the West 57th will allow you to accrue points during various vacations and use those points to gain access to new perks. Club members automatically get access to all Hilton amenities, but points allow you to make priority reservations and extend your stay at the resort of your choosing.

Rooms are huge and usually have separate bedrooms, living rooms, and kitchenettes for owners. Some even have multiple bathrooms for larger families who need extra space.

The Phillips Club

Right next to Lincoln Square, The Phillips Club offers you a deed for 1/8th ownership of an apartment in the hotel. This fractional ownership differs from others in the city because you’re actually part owner of an apartment. Some of these places are multi-bedroom with full kitchens, and you can work out an extended stay.

Your stays aren’t fixed either, so as long as you’re not interfering with another owner, you can live here whenever you want. Owners have access to all the amenities in the hotel, like business centers and a dining area.

Are New York City Timeshares Worth It?

It truly depends. The fact is, each fractional membership offers you different things. It’s up to you to decide what you’re willing to pay for. The Phillips Club offers you a share in an actual apartment. This could be seen as an investment, albeit a small one. The room will grow in value over time if the real estate market does, at least in theory. In practice, prices might remain stagnant due to the Club’s policy. It’s hard to tell if a deed to the apartment actually means ownership.

For buildings where you don’t get a deed, the situation is even murkier. You’re essentially paying for a larger room, first dibs on activities, and more access to services and amenities, all of which are great. However, you don’t actually own anything. You’ve made no investment into a property, you just enjoy that property’s perks for a fee. This isn’t necessarily a problem, but it is something to keep in mind if you’re seeking to actually own something in the city. While hotels are offering a lot of goods, most still don’t offer you ownership.

Additionally, whether you have a deed or not, you have to work around the schedules of other club members. If these families get to the room first, your vacation might not be as flexible as you think. That said, fractional ownership deals can still be beneficial if you’re willing to make reservations far in advance. Most clubs will also allow you to cancel or transfer weeks with little to no cost, meaning that sudden changes to your schedule shouldn’t be an issue. Plus, these clubs offer services and amenities that regular hotel bookings don’t, so the levels of exclusivity and luxury are off the charts.

Timeshares are tricky situations because contracts can be confusing and what’s advertised isn’t what’s given. However, NYC has recognized this mistrust and is striving to correct the course by making this industry reputable. Some of the language is still unclear, but these clubs are nowhere near as bad as the full-on scams of the past. People who want to enter fractional ownership deals should still be explicit with what they want and what they will receive, but the industry is much more transparent in the city than it is elsewhere in the world. No matter how you travel, We hope you enjoy your vacation.

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Arrived Homes Arrives on the Real Estate Scene

Arrived Homes is the name of the new real estate investment company that Amazon’s founder is behind, and boy what an entrance it has made! One of the top-ranking billionaires in the world, Jeff Bezos, now backing a unique investment opportunity, brings a high level of excitement and enthusiasm to the real estate ‘investor-curious’ population. The platform made its debut on the investing platform Benzinga in early 2021, and its most recent set of highly anticipated offerings got such a surge in traffic upon release, it shut the website down for the first three hours! Additionally, for the first 8 months Arrived was operational, the company bought 51 homes. So what are we talking about, exactly? Well, if you’ve ever wanted to invest in a house and try your hand at being a landlord? – this is your chance to “pre-qualify” with a limited investment.

Investing in Real Estate

Arrived Homes has introduced an investment strategy designed to help the beginner in real estate investing get started. Every so often, the site offers a handful of single-family homes in several markets across the country.

This one is called “The Luna” and is 1,697 ft², with 3 bedrooms and 3 bathrooms. At this moment, it has just under $20K available for investment, with the total purchase price listed at $215K and 156 investors so far.

What Arrived does is find the houses, purchase them, then every couple of weeks the firm puts up a group of selections on a first-come, first-serve basis. But here’s where Arrived is different from others: you can invest with as little as $100, and there are no other qualifications (except being over 18). Arrived takes care of everything else – rents out the house once it’s fully funded, manages the property, and sends the investors a quarterly check, split between them according to the amount of shares held. After a target investment period of 5-7 years, Arrived sells the property and the investors receive another check. Each property has a target rate of somewhere between 8-15%, on average. Minimum investment is $100, maximum investment is $20K per house.

Many people of all ages know real estate is a terrific investment. After all, it is recommended that real estate should be 20% – 40% of your portfolio. It’s an asset class that rarely ever loses money, over time. However, it’s probably where the old adage comes from; it takes money to make money. While that is certainly a fair assumption for the majority of real estate opportunities, there are some which require very little, and fractional real estate options are now becoming increasingly popular. Arrived makes ALL of this as simple as the touch of a button, which has been extremely well received.

Amazing Results So Far

In the first 8 months, Arrived was operational and in 2021, the firm bought 51 homes with a property value of $18.5 million. This year, they’ve already surpassed that number with $20 million in property values so far, in less than 5 months. The site is wildly popular, with every group of homes offered being fully funded within just hours. Last month, the company offered a dozen homes that were fully funded in a record time of 6 hours, and the most recent group of 12 beat that record, fully funding within just 5 hours – and that’s including the first 3 hours of downtime! The incredibly successful model allows anyone over 18 to invest in real estate, for as little as $100 – and with no accreditation, a rarity that some say is the main reason for its popularity.

Final Remarks

Whatever the reason, we need more opportunities like these – to engage college students and young people, who have an interest in real estate, investing, entrepreneurship, asset management, landlording etc., as it presents a brilliant avenue for learning the art of investment. This type of investing is considered “alternative – fractional” investing, and these opportunities are rare. The platform Arrived offers their homes on, Benzinga, is worth exploring, as they have other types of fractional investments as well.

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Earnings Call Results

At first, the results for Q1 seemed pleasantly surprising. After all, revenue was $4.26 billion, meaning a profit of $16 million – up from $1.22 billion a year ago. Analysts expected earnings of around 24 cents a share with revenue estimated at $3.36 billion. Earnings per share were reported as 49 cents a share, up from 44 cents last year. The IMT segment (internet, media, and technology) reported a 10% increase in revenue of $490 million for Q1. The mortgage segment reported a revenue of $46 million.

The Q1 results overall were terrific, really – except for one huge, glaring problem. The estimated outlook for Q2 – and beyond, is bleak – the numbers the company predicted are far below what analysts and investors hoped. Zillow says it’s stronger than ever, now being able to withstand the uncertainty, volatility and rising-interest-rate environment of today’s market. Investors aren’t so sure Zillow should be this confident, which is reflected in the near-10% loss in stock prices after the earnings call, after the bell on Wall Street Thursday night.

The Rest of the Call

Barton began by segueing into the current state of the market, saying, “I’d like to spend a little time talking about the housing market, given it’s on everyone’s mind.” After some random comments about experts and analysts having variable opinions and predictions, he said, “The common thread across these forecasts is uncertainty, for the [2022] housing market. We continue to see low inventory levels down 23% year-over-year in March. New for-sale listings were less strained in March, up 36% from February levels, but still down 9% year-over-year.” Contradictorily, buyer demand still remains high, according to Barton, a big reason for uncertainty.

After that, the CEO brought up their failed iBuying venture, Zillow Offers. “With the rapid and successful wind-down of the excess inventory, Zillow has become a company with a nimble balance sheet, a large cash position, and a core business that produces strong positive cash flow,” Barton declared. Of the original approximately 20K homes needing to be offloaded, he reported only about 100 remain. He also spoke about how they’d reduced debt in that segment, which will be debt-free by the end of Q2, completing the Offers wind-down. Incidentally, the company is also authorizing an additional $1 billion in share buy-backs, after already buying back $2 billion in shares, for Q1.

Zillow Targets for Q2 and Beyond

Some of the target areas for Q2 the company identified were developing and integrating services for their “super app,” intended for both home buyers and home sellers. The company is devoted to enabling and empowering people with the tools they need to buy or sell a house – from start to finish. Since Zillow has identified ‘touring’ (showing) homes as the key selling point in the average buyer’s engagement with the site, it plans to improve and integrate services from other areas of the business to create the all-in-one “super app” they have in mind. They have set a lofty goal for 2025’s revenue of $5 billion and a 45% EBITDA margin.

Introducing ‘StreetScape’ for New Yorkers and 3-D Home Tours from Zillow

It’s no secret Zillow still wants to maintain its lead position in the real estate market, and why not? After all, they could disrupt the real estate industry, permanently changing the landscape and setting the bar much higher – perhaps by coming up with some new feature no one else has-? This brings us to StreetEasy, owned by Zillow Group Inc., and AR – augmented reality. If there’s one thing that would change the game significantly at this crucial time, it just might be the new feature Barton talked about. Introducing: StreetScape, exclusively for New Yorkers.

Zillow has newly introduced another cool virtual reality feature with their 3-D home tours, for home shoppers who want an experience both immersive and interactive, with a virtual tour that’s extremely lifelike and accurate. With StreetScape, augmented reality allows apartment hunters or home shoppers on the StreetEasy app to easily point their phone’s camera at any building they’re curious about. A floating map will appear, with floating icons you can click on that will give you all the information about any residential building in view, including whether there are any units available within it, plus building amenities and information on available units, virtual tours, and more.

However, Zillow has claimed that they still believe in the real estate agent and their presence in the transaction. But with their “super app” and essentially virtually on-demand apartment tours with StreetScape, it seems they may be shifting to a position that will box out the agent or make them less necessary in a real estate transaction. This comes at a tough time with agent commission structure under scrutiny with the latest NAR lawsuits.

Final Observation

We’ve certainly seen what can happen when real estate disruptors like Zillow become too confident and try to take over an entire market they know nothing about. Rich Barton may just take Zillow to new heights after all, and make the most dramatic comeback we’ve seen in decades.

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The Concept of Blockchain Technology 

Let’s start with the basic idea of the blockchain, why it’s far superior to the system we have now – and how if cryptocurrency and the blockchain are implemented in a widespread manner during our lifetimes, we can look forward to this incredible evolutionary step. And if you think I’m exaggerating, it’s only because you don’t understand how it works – which I will make a valiant attempt to remedy. Blockchain technology is a method of storing financial data [in particular] and transactions, that has significant advantages over any other system we have. It has an inherent “side effect” of positively manipulating other aspects, or you might say principles, of human behavior and the way we conduct our business. Let me try to explain. 

In essence, the blockchain serves as the foundation for a permanent, decentralized, completely transparent ledger of transactions that cannot be altered, deleted, or destroyed – in chronological order, and time-stamped. Security is achieved through the very nature of how it’s stored – in ‘blocks’ of data that are ‘chained’ together with cryptology, and in a way that cannot be undone or altered. These records are open-sourced, and so in other words are completely transparent, and can be accessed and viewed by anyone on the blockchain. This eliminates the need for any centralized governance, or need for any third-party authorization. Here’s what Forbes had to say: “[blockchain] is one of today’s biggest ground-breaking technologies with the potential to impact every industry.” Amazingly, nearly 15% of all financial institutions already currently use blockchain technology. It is designed very much like our Constitution is worded: “made for the people, by the people, and answerable to the people.” 

Cryptocurrencies

With financial transactions kept in this type of ledger, there needs to be a form of digital currency for exchange that is widely accepted. Cryptocurrencies are already used in a variety of ways, for many different types of transactions – and are accepted in a myriad of places globally. Bitcoin is by far the most used and accepted form of cryptocurrency, as well as the one with the highest rate of longevity. Bitcoin and other cryptocurrencies use blockchain technology, but the two have separate functions, and blockchain can be applied to countless industries and applications. In a unique way, each type of cryptocurrency has a different application and serves different purposes, making certain specific cryptocurrencies valuable to those purposes. But that’s an entirely different subject for another [lengthy!] article. For the purpose of this one, crypto, and more specifically Bitcoin is being adopted in an amazingly high number of institutions all over the world. 

There are several countries now that have either accepted and approved Bitcoin as an official currency or, have passed legislation allowing it to be utilized and regulated. El Salvador was the first country to accept Bitcoin as an official currency but has experienced a big problem with public acceptance. However, despite significant pressure on the Salvadoran President to reverse his decision, he remains defiant about the decision. The Central Republic of Africa also approved Bitcoin as an official currency. Multiple other countries have passed legislation regulating the use of cryptocurrencies, including Ukraine, the United States, Europe, and a myriad of others. 

Smart Contracts and the Introduction of Real Estate 

Smart contracts introduce the possibility of real estate transactions being done in cryptocurrency using blockchain technology, in a very real way. Using blockchain technology with real estate, according to Forbes; “significantly accelerates the usual processes of the real estate market,” and from the same article, “this technology is a real revolution for real estate professionals and investors alike.” So what is a smart contract? According to Wikipedia, it is a computer program or transaction protocol intended to automatically execute, control or document legally relevant events and actions, according to the terms of the contract. But how does this affect real estate? Good question! Let me explain.

A smart contract reduces the need for intermediaries in the blockchain’s well-designed peer-to-peer network, eliminating multiple transaction costs. It adds more liquidity to real estate assets and connects buyers and sellers directly. And because of the nature of blockchain, it eliminates fraud or any alteration of the record. The legal smart contract is legally binding, and self-enforcing, as well. Additionally, the speed of real estate transactions is much more efficient and quick. 

So far, the cryptocurrency Ethereum is actually the most valuable in regard to smart contracts, due to its intrinsic design for this. We’re not to the point of tokenizing real estate and getting rid of all the usual red tape associated with these transactions, yet. But what an exciting and transformative future that may present! 

Conclusive Remarks 

Blockchain technology is a way for people globally to take back their control, from corrupt governments and leadership, entities they did not endorse, and policies with hidden agendas they did not create. It’s a system that intrinsically keeps people both honest and transparent and holds people accountable to the records they create. And regardless of anything else, since it seems we are moving as a society towards a more and more technologically focused and advanced future, these topics are the next in line for serious contemplation. Let’s all do our part in researching and educating ourselves, to make the best, most conscientious decisions possible. In this way, we can ensure the best future for generations to come. 

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