By Colin O'Leary
November 29th, 2018
Far Rockaway, the Queens neighborhood long neglected by the city, is getting an extreme makeover. First, the City Counsel approved a plan to rezone Far Rockaway back in September of 2017, which they hope will bring thousands of new apartments and retail space to the area. Now a brand new futuristic looking library is in the works.
Architecture firm Snøhetta has revealed new artists renderings for a 17,500 square foot library, according to New York Yimby. The existing library, located at 1637 Central Avenue, endured both structural and aesthetic damage during Hurricane Sandy back in 2012. The new public library will include two floors, doubling the size of the existing library.
The silhouette of the new library will resemble a prism, incorporating a series of triangular forms throughout the structure, which will allow natural light to flow through the building. Its expected to be completed in the fall of 2020.
By Colin R. O'Leary
November 28th, 2018
John C. Maxwell is a leadership expert who has coached and influenced millions of people around the world with his educational speeches, videos, audiotapes, and books. Maxwell was born in Michigan in 1947. He has sold millions of books as a published author and has taught leadership principles at fortune 500 companies and military acadamies. I've put together a list for you of his greatest quotes on leadership. Here are some thought provoking quotes to help you become a better leader today.
1. "The leader's Attitude is like a thermostat for the place she works. If her attitude is good, the atmosphere is pleasant, and the environment is easy to work in. But if her attitude is bad, the temperature is insufferable. - John C. Maxwell
2. "When you live each day with intentionality, there’s almost no limit to what you can do. You can transform yourself, your family, your community, and your nation. When enough people do that, they can change the world. When you intentionally use your everyday life to bring about positive change in the lives of others, you begin to live a life that matters." - John C. Maxwell
3. "If you can't influence people, then they will not follow you. And if people won't follow, you are not a leader. That's the Law of Influence." - John C. Maxwell
4. "People never care how much you know until they know how much you care." - John C. Maxwell
5. “Change is inevitable. Growth is optional.” - John C. Maxwell
6. “The greatest day in your life and mine is when we take total responsibility for our attitudes. That’s the day we truly grow up.” - John C. Maxwell
7. "A great leader’s courage to fulfill his vision comes from passion, not position." - John C. Maxwell
8. “A leader who produces other leaders multiples their influences.” - John C. Maxwell
9. “Growth inside fuels growth outside.” - John C. Maxwell
10. "If you want to be the best leader you can possibly be, no matter how much or how little natural leadership talent you possess, you need to become a serving leader." - John C. Maxwell
By Dan Nuwash - Guest Blogger
November 27th, 2018
If you, your clients or people you work with are real estate investors, there is a high likelihood that you’ve heard of a 1031 Exchange. If you have paid attention to the process, you have probably learned that 1031 Exchanges are easy, hassle-free and have very loose guidelines… Said no one ever.
So, what is a 1031 Exchange? Well, 1031 just referrers to the IRS code that allows the tax advantageous strategy. When you sell an investment property and you have a profit, you normally are required to pay capital gains tax. A 1031 Exchange allows you to sell your real estate property and reinvest the proceeds in a “like-kind” investment, which defers any capital gains taxes. You also defer the 3.8% net investment income tax and the 25% depreciation recapture tax. We aren’t eliminating any of these taxes, we are just deferring them or “kicking the can down the road.”
See the below example:
I do need to point out that the under the Tax Cuts and Jobs Act the type of assets that qualify for a 1031 Exchange have become more limited. You can no longer do a 1031 Exchange on machinery, equipment, vehicles, artwork, collectibles, patents and other intellectual property and intangible business assets. If you or your clients happen to hold any of these assets, then stay tuned for our next article/newsletter over charitable LLC's which can be a great tax vehicle for those assets.
What are the rules, timing and qualifying variables for a 1031 exchange? The entire 1031 Exchange process must be completed within 180 days. The clock starts on the day the first investment property (relinquished property) is sold and the funds are escrowed with Qualified Intermediary (QI). It is essential that the seller never holds the proceeds from the sale outside of a QI. If you hold the funds at anytime during the process you eliminate your eligibility for a 1031 exchange and Uncle Sam will be collecting a check from you. I cannot stress the importance of working with an experienced QI and an experience real estate attorney to avoid this common mistake.
After the first investment property is sold, you have 45 days to notify your QI of potential replacement properties. To avoid any tax liability, you must identify a property(s) that are of equal or greater value than the relinquished property. You can identify up to 3 separate properties with no regard to their value (3 property rule), or you can identify an unlimited amount of properties that do not exceed more than 200% of the value of the relinquished property (200% rule).
Once you identify a replacement property(s), you must close on the sale of that property within 180 days of the relinquished property’s sale.
The non-timing related requirements to avoid a tax liability are: you must purchase a property of equal or greater value, reinvest all equity and maintain an equal or greater amount of debt. So, if you are selling a property that is worth $1,000,000 and you have a mortgage or loan on it for $500,000, then you must purchase a property for at least $1,000,000 and have a mortgage or loan on it of at least $500,000.
To reiterate the rules and timing at a high level:
To add some convenience to a 1031 exchange, you can incorporate a Delaware Statutory Trust (DST). A properly structured DST is recognized by the IRS as a qualified replacement property for real property. Therefore you need to use an experienced and reputable company that offers this vehicle, such as Cantor Fitzgerald.
Investors in a DST are not direct owners of the real estate; the property(s) title(s) are held by a trust. There are some great benefits to utilizing a DST, but also some restrictions. What I view as the greatest benefit is the flexibility a DST can add to a 1031 Exchange.
Some of the benefits:
One of the many ways a DST can add some flexibility to your 1031 Exchange is by making you a cash buyer after you relinquish your investment property. You must maintain equal amounts of debt and equity, and we can use a highly leveraged DST to satisfy the debt. For example, if your relinquished property was sold for $1,000,000 and you had $200,000 in debt, we could take $50,000 and put it in a DST that is 80% leveraged to satisfy the debt, which would give you $750,000 in remaining equity to purchase an investment property. If you’ve ever purchased a property, you know that cash is king. In addition, acquiring a loan to satisfy the debt could be difficult and time consuming, and failing to do so makes you ineligible for a 1031 Exchange.
See the below graphic for reference:
A DST could also satisfy any excess equity, or what is referred to as “the boot.” If you relinquished your property for $1,000,000 but in the 180 days you can only find another property that you purchase at $800,000, you could put the remaining $200,000 into a DST to defer any of the taxes.
The other great benefits a DST can add is negotiating leverage and a contingency plan. Real estate deals fall apart all the time, and if that deal happens to be a replacement property in a 1031 Exchange, you are in a bind. Using a DST as an “identified” property could be backup/contingency plan if the deal does fall through.
By creating a contingency plan, you have also removed leverage from any of the sellers you are working with. If the seller of one of your replacement properties knows or finds out you’re doing a 1031 Exchange, they have some leverage on you. They know you’re doing a 1031 Exchange to avoid a tax liability, and if you’re getting close to day 180, they might decide they don’t want to sell that replacement property for $1 million; they now want to sell if for $1.1 million.
There are some caveats to a DST, the primary one being a lack of liquidity. DST's are passive and very hands-off investments. You’ve removed the headaches of managing a property and you’re now invested into a professionally managed property(s), but you don’t get to decide when that property(s) you invested in is sold, and you cannot liquidate your position in a DST before the property(s) are sold.
The big takeaways from this article:
As always, if you have any questions, or would like to inquire about 1031 Exchanges or DST's, you can reach me directly at my contact information below.
Co-Founder, Finance For Thought
By Colin O'Leary
November 21st, 2018
Albert Einstein was a German-born theoretical physicist. He developed the theory of relativity, one of the two pillars of today's modern physics. When Einstein was visiting the United States in 1933, Adolf Hitler and the Nazi's came to power. Fearing for his life, Einstein never returned to his home country because of his Jewish ancestry. Einstein became an American citizen in 1940, before he passing away in 1955 at the age of 76. In addition to the sciences, Einstein left a huge impact on the philosophy world with his amazing insight. I put together a list of 10 great Einstein quotes to help you start the day.
1. "I have no special talents. I am only passionately curious." - Albert Einstein
2. "Try not to become a man of success, but rather try to become a man of value." - Albert Einstein
3. "Great spirits have always encountered violent opposition from mediocre minds." - Albert Einstein
4. "Anger dwells only in the bosom of fools." - Albert Einstein
5. "No problem can be solved from the same level of consciousness that created it." - Albert Einstein
6. "Life is like riding a bicycle. To keep your balance you must keep moving." - Albert Einstein
7. "Imagination is more important than knowledge." - Albert Einstein
8. "Look deep into nature, and then you will understand everything better." - Albert Einstein
9. "The important thing is not to stop questioning. Curiosity has its own reason for existing." - Albert Einstein
10. "It has become appallingly obvious that our technology has exceeded our humanity. " - Albert Einstein
By Colin O'Leary
November 19th, 2018
A Tulip may be sprouting in the skyline in London soon. An application was recently submitted to the City of London for a new skyscraper dubbed "The Tulip."
The key features of the proposed 1,000 ft skyscraper would include an education facility and public viewing gallery with unparalleled views of the London skyline. The public viewing gallery would futuristic features such as sky bridges, internal glass slides, and gondola pod rides that straddle the side of the building.
The plans also call for space for restaurants and a sky bar offering visitors epic 360-degree views of London.
The Tulip would provide the community with a new state-of-the-art venue for cultural, educational, business and technology events. Foster & Partners are the architecture firm behind the plans.
By Colin O'Leary
November 16th, 2018
The community board in Clinton Hill voted on Wednesday in favor of co-naming a street in Clinton Hill after neighborhood legend Christopher Wallace, aka The Notorious B.I.G. Christopher Wallace was born in Brooklyn on May 21st, 1972. He is considered by many to be one of the greatest rappers of all time. Local resident Leroy McCarthy initiated the proposal back in 2013. The application to rename the street in Clinton Hill will now go on to the City Council. After that it will be sent to the mayor for final approval. If approved, the street dedication should happen sometime this coming spring.
Checkout more details on News 12 Brooklyn
By Colin R. O'Leary
November 16th, 2018
What are the key differences between a condo and a co-op? They might look the same on the outside, but the legal structure is what holds the key differences.
1. When you own a condo, you own the actual physical space of the apartment, and shared use to any common spaces in the building.
2. When you own a co-op, you are buying shares or stock in the building. You will get issued a number of shares in regards to the size of the apartment. The more apartments you own in a building, the more overall shares and control you will hold in a co-op building.
3. With co-ops, you usually have to go through an extensive co-op board approval process. Co-op buildings usually have a much more in-depth background check compared to condo buildings when screening new purchasers. With condos, there is no board approval, fewer documents are required, and closing tend to happen much faster.
4. Condos are more investor-friendly compared to co-op buildings. Condos can be rented immediately upon purchase, for an unlimited period of time. Condos have long been an attractive option for buyers who don't plan to live there and are purchasing strictly as an investment.
5. Co-op buildings are much more restrictive owners or shareholders towards renting the unit. Some co-op buildings do not allow subletting at all, while others have more flexible policies. Some co-op buildings will allow the owner to rent the space, but its usually for a limited time period. Others have more flexible policies. Some co-op properties allow the owner to purchase as a Pied-à-terre, or second home, while others do not.
6. With co-op buildings, the properties management and financial decisions are made by the co-op board members. The co-op board members are voted in by the shareholders of the building. Condos are controlled by a HOA or Homeowners Association.
7. Condos are usually more expensive to purchase here in NYC, but they usually have lower monthly fee's in regards to taxes and maintenance, compared to co-ops.
8. In most condo buildings, you will pay the monthly maintenance fee's and taxes separate. With co-ops, you will pay one monthly common charge that covers all expenses including taxes and the maintenance of the building.
9. In New York City, there is a much larger percentage of co-op buildings compared to condo buildings, though the gap is closing because the majority of the new construction over the last two decades has been condos.
10. Co-ops in New York City typically require a minimum of 20% down payment upon contract signing, while lending is much more flexible with condos in regards to the initial down payment.
One Vanderbilt is a skyscraper under construction in New York City on the corner of 42nd Street and Vanderbilt Avenue. When completed it will rise 58 stories and 1,301 feet into the Manhattan Skiline.
By Colin O'Leary
November 14th, 2018
The Metropolitan Transportation Authority (MTA) is in the process of purchasing Grand Central Terminal in New York City for a reported $35 million. The deal also includes control of Metro-North Railroad's Harlem & Hudson Lines. According the Commercial Observer, the development rights along the Harlem & Hudson lines are also included in the deal.
Midtown Trackage Ventures is the seller. The holding company has owned the assets for nearly a decade. The company has been leasing Grand Central Terminal to the MTA for $2.4 million annually. This historic Grand Central Terminal first opened its doors to the public in 1913. It's one of New York's busiest transit hubs and most visited tourist spots.
By Colin O'Leary
November 14th, 2018
We're halfway through November and Thanksgiving is approaching us. The big Christmas tree has arrived at Rockefeller Center. The midterm elections are over. The real estate market is still in a state of flux and uncertainty. Right now the city is dealing with high levels of condo inventory brought on by the many new development condos. There has been a sharp drop in the number of closed sales happening year-over-year. These factors have created a buyers market the city hasn't seen in a decade.
According to the real estate data website Urban Digs, Manhattan is showing a nearly 24 % increase in listings available. There may be more properties available this year, but fewer condo deals are happening. Urban Digs shows a decrease of nearly 20% in the number of monthly closed sales year-over-year.
The average price per square foot for a condo in Manhattan is down 6.4% year-over-year to $1,482 per square foot. The median sales price for a condo in Manhattan is $1,640,00, down 3.6% year-over-year. The average time that a condo listing sits on the market before its sold in Manhattan has also increased. According to Streeteasy.com, there are currently 4,118 active condo listings on the market in Manhattan. More than half of all condo listings in Manhattan are brand new developments.
In Brooklyn, according to Urban Digs, the average price per square foot for a condo is down by 7.3% year-over-year to $1,100 per square foot. The median sales price for a condo has gone up though, by 3% year-over-year to $940,000. This could be because Brooklyn has much less supply compared to Manhattan, leading to a more stable market for sellers.
Still, fewer deals are happening in Brooklyn right now compared to last year. The number of monthly closed sales for condos in Brooklyn is down 27% compared to the same time last year. According to Streeteasy.com, there are currently 1,432 active condo listings now on the market.
Condo prices in Brooklyn & Manhattan have risen drastically over the past decade. The peak of the market has already occurred. What we are seeing is an extended market correction. Condo prices may continue to drop minimally for the lower-middle end of the market (under $2,00,000) over the next year. I expect prices on the upper end of the market to continue to drop more drastically because of higher levels of supply.
NEW TO MARKET IN BROOKLYN!
337 Smith Street
Brooklyn, NY 11231
3-unit brownstone investment property
Ground floor retail plus 2 apartments
Coming soon to market!
6-family renovated apartment building
Details coming soon
535 Bainbridge Street
Brooklyn, NY 11233
If you have any questions about what is published in this newsletter or if you are interested in buying or selling a property, please contact me.
Have a safe and wonderful weekend!
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