Manhattan offers unparalleled residential real estate investment opportunities. Taylor Real Estate Group will expertly help you select and purchase high-value properties. Refer to our frequently asked questions below and contact us for further information.
Can an international buyer purchase residential real estate in Manhattan?
Yes, a foreign buyer can purchase residential real estate in Manhattan. Roughly 15 percent of apartments are owned by internationals. There are no legal restrictions you have to worry about with condo purchases but most co-ops require you to present United States tax returns as part of the application. For this reason, many international buyers purchase condo’s.
Why does everyone like to invest in Manhattan real estate?
Manhattan is an international city that everyone wants a piece of. Relative to other large cities like London, Hong Kong and Singapore, it is still reasonable. If you are looking to rent out your property, dependent upon the amount you put down, you can cover your expenses and make a profit. People believe that New York City is a sound market and a great way to diversify your investments. Besides all of that, the 3 most important things in real estate are “location, location and location!” Looks like we have all of that in just about every area of the island since we are the capital of cultural arts, business and fun.
Should I buy a condominium or co-op in Manhattan?
Roughly 70% of the people who own in Manhattan have a co-op vs the other 30% who have a condo. You will pay roughly a 15-20% premium to be in a condo since it’s easier to get in and out of when looking to buy and sell. For a condo you own the real property where with a co-op you own shares of the building and a board has to approve you moving in and the person you sell to moving in. Most new construction buildings in Manhattan are condominium. The nice thing about co-op board approval is you know who is moving in before it happens but the tough part is the famously complicated process of being approved. Boards can be challenging for foreigners who do not pay taxes in the Unites States since a US tax return is often required as proof of income during the approval process. It can take weeks to months to put together a board package and have it approved by the board. From start to finish you should expect it to last 3-4 months. You often must have a specific amount post savings liquidity in order to be accepted into the co-op as well where the same isn’t true with a condo. To learn more, click on our Buyer’s Guide link.
Do I need to have a real estate agent assist me in buying my Manhattan apartment?
You don’t have to enlist a real estate agent to help you find a home however it benefits you to have someone working for you specially when the seller is paying the both the buyer’s and seller’s agent fee. Further more, having an experienced agent on your side offers the benefit of having someone who has been there before helping to coordinate the process. There are many moving parts and different participants that come in to place when looking for a new home. An experienced real estate agent can greatly ease and expedite the process, and spare the apartment buyer plenty of unnecessary stress. Since the sellers will be employing their own seller’s agent, their job is to work on behalf of the apartment’s seller, it can help a great deal to have a similarly experienced agent on your side, whose fiduciary responsibility is to you.
What should I expect when buying a Manhattan apartment?
If you’re working with the right real estate agent, buying a Manhattan apartment can be seamless. It usually takes roughly 3 months for the contract process from signing to close once you have found a place.
Make sure to organize your finances so you are ready to put down the 10% down payment. If you from out of the country, you will have to open an US Bank account. It’s also wise to get pre-approved for a mortgage if you aren’t paying cash – this way you look like more of an attractive buyer. You should also have an attorney in place before making an offer so the contract can be sent to them immediately after you and the seller come to a meeting of the minds of the purchase price. Last but not least, find a tax adviser who can offer insight on the most advantageous purchase structure for you. Work with advisers you trust. If you don’t have an attorney or financial advisor, your real estate agent should be able to put you in touch with one who speaks your language, and with whom you feel comfortable.
Finding the Right Manhattan Apartment:
Once the pre-purchase requirements are taken care of, finding an apartment to purchase will be less complicated. Your real estate agent will be able to assist you with all of the steps with in the process after you narrow down your search to a specific location with in Manhattan along with type of building (new construction condominium, pre-war co-op, condop or townhouse). Once you have found an apartment that you are interested in, you make an offer to purchase it. When your offer is accepted, the buying process begins in earnest. The seller’s representative will send you the contract for your lawyer to review.
Negotiation and Signing:
The seller’s agent and attorney will let you know how long you have to review a contract. The industry standard is roughly 5 business days. The sooner you get the contract back the better. This way you don’t have to worry about someone else coming in with another offer. The seller’s agent can still show the property at Open Houses until the deal is signed and the deposit is given. Don’t rush the process though. Your attorney should help you understand the specifics of the contract. This is one of the largest investments you will make you need to know the terms. Once you sign your contract, your attorney will send it back with a 10% deposit of the final purchase price. This will go into an escrow account with the seller’s attorney.
With both condominiums and co-ops there’s a board approval process unless you are buying from a sponsor (developer). They are never fun but always necessary. Co-ops are notoriously more onerous than condo’s. With that being said, if you are properly prepared, the process will be more seamless. You will have to gather your personal and professional reference letters, bank statements, tax returns from previous years and more. As long as you have the right real estate agent and attorney you trust with the appropriate financial advisor, getting approved by your board should not be that difficult.
Closing the deal:
Once you have a signed contract, you can begin the process of working on your mortgage for the home. From the time a contract is signed it takes roughly 45-60 days for a bank to close. The bank will need to appraise the apartment and your attorney will need to make sure the place is free and clear of any liens or other issues. Once everything looks good, you are set to get the keys to your home. At the closing, buyers and sellers with attorneys and bank representatives are present to sign the necessary paperwork and make all payments. After everything is signed the title and keys are yours!
What types of expenses will I have to think about as a Manhattan property owner?
- Deposit and regular mortgage payments
- Manhattan co-op: you’ll have monthly maintenance fees or condominium: slightly less steep common charges and separate taxes (the amount depends on the size and type of your apartment) **Remember that real estate taxes can be deducted from your annual income for tax purposes, which can come in handy at tax time.
- Some new developments carry tax abatements. While this can be wonderful, remember if you are purchasing from a sponsor you have to think about the New York City and state transfer tax which is roughly 1.825% of the purchase price.
- Residence above $1 million in price are also subject to a 1% “mansion tax” at closing.
- Extra expenses at closing are: title insurance, assessment fees, mortgage tax and various attorneys’ fees, although those are one-time costs. A good tax advisor can also explain how some of the expenses associated with your new Manhattan apartment can be tax deductible, and a good real estate agent should be able to put you in touch with a good tax advisor.
Should I pursue a mortgage on my apartment?
Most people have a mortgage on their residence in Manhattan. International apartment purchasers can get mortgages from U.S. banks (usually they can finance roughly 60% of the purchase price). When applying you need the following:
- Verifications of employment
- Financial viability
- Four financial references.
There are different taxes associated with mortgages but it is difficult to overstate the advantages of a good mortgage for those looking to purchase a Manhattan apartment. If you’re buying a Manhattan apartment as an investor, obtaining a mortgage can have large tax benefits. This also makes your dollar go further.
What can I do to make sure that my purchase is safe and legal?
You must work with the right people. Having an attorney you can trust is essential since the attorney’s job is to investigate the title, tax status and other fine points of the property you hope to purchase. Your attorney should be able to explain everything in detail so that the experience is transparent.
What is a tax-abatement?
There are a fair amount of tax incentives that can be found in Manhattan. Although they aren’t as prevalent as they once were a couple of years ago, you can still find some buildings that has this incentive. Some conversions have what’s called the J-51 tax abatement while newly constructed condominiums have a 421-A tax abatement (this is the most common tax abatement in NYC real estate) and there’s also the 421-G tax abatement. A 421-A tax abatement benefits apartment buyers by phasing tax exemptions over the course of a 10-year period, with a large exemption from real estate taxes on the first two years of home-ownership, and abatements decreasing by 20% of the fully-assessed amount every two years until the 11th year of ownership when the apartment owner is paying the full real estate tax amount. This abatement is transferable to the next buyer, which can be a HUGE selling factor if you still have 5+years left on the abatement. Apartments with a 421-G tax abatement (usually available only to apartments south of Murray Street in Manhattan’s Financial District) enjoy even better terms, with tax benefits phased in over 14 years. Your real estate agent, attorney and accountant will be able to share with you the savings and benefits in greater detail.
Who pays my “closing cost?”
“Closing cost” can amount to roughly 5% of the purchase price. If you are buying in a new development you have 1.825% of the closing cost going towards city and state transfer tax. If the purchase price is over $1 million then you have to pay a 1% mansion tax. Some other fees you have to worry about in NYC when making a purchase is the mortgage recording fee, attorney’s fees (generally around $2,000 and $2,500 dollars), move-in deposits, title insurance among others and Manhattan co-op buyers have to deal with various co-op fees and bank fees.
How is the title recorded?
At the time of your closing, your attorney will file the title for the apartment with your information to the New York City Register. At the closing, the title for your apartment will be photographed and filled for public record so anyone is available to see them.
Can I rent out my apartment after I purchase it?
If you live in a condominium, you are free to rent out your place but if you purchase in a co-op it depends on what the board will allow you to do. Make sure your real estate agent educates you on whether or not your place can be rented before you make the purchase. Most people who are looking to rent out their home do purchase condominiums due to the latitude. Most Manhattan condos allow you to rent your home for a minimum of one year (they usually don’t have a maximum). A couple places do allow month-to-month leases.