RENTING : Does it Make SENSE or CENTS?
It is a RENTER’S dream market.
If you work in Manhattan… You probably want to live close by… or close by to easy transportation…
Everything in life comes down to two factors, does it make money or does it make sense? When it comes to renting, usually it makes SENSE, not cents. Home ownership sometimes makes both, SENSE & CENTS. I’ve been personally lending in the mortgage business in all local NYC markets for quite some time now, all markets since about 2014, including the Bronx, Brooklyn, Queens, Staten Island, New Jersey, and Manhattan. What is very unique is that inside each demographic, take Brooklyn for example, prices range depending on the area and block in Brooklyn, as they do in every other area mentioned above. When asked, “How much does rent go for in Jersey City where you live?”, my answer is “What part of Jersey City”? There is downtown, which is high priced and luxurious, there is Greenville, Jersey City, which is a semi war zone, then Journal Square, right off the path, and Jersey City Heights, or THE NEXT BK (www.thenextbk.com).
Let’s first take a look at one of the hottest markets for both development and living, in which we spoke with Mirza Avdovic, CEO of BEYOND CAPITAL TEAM at COMPASS (also 2016 REBNY ROOKIE of the YEAR)… He says the following…
Astoria has seen a boom in new development over the last 5 years and much of that is due to the favorable zoning and relatively cheap land back then. However, things have taken a huge dip since the start of 2016 when the old 421-A expired. Many of the rental buildings that are going up now have the old 421-a tax incentives. In fact about 11,000 apartments are scheduled for Astoria and LIC for this and next year. The reason for that is that everyone was buying land and everyone thought they could build. Many people thought that bringing manhattanites into Astoria and lic like they did for Hoboken from downtown manhattan was thr answer but 11,000 is just too high of a number. Now many larger developments are incentivizing and spending more money on grandeur amenities such as rooftop salt water pools, full service concierge offices, full courts baskebtall gyms, restaurants and playrooms in the buildings.
The average rentals from new development for studios is around 2500 in high end luxury buildings and 1 bedrooms around 2900–3800. 2 beds can go north of 3500-up to 5000. We had a two and three bedroom in a new development which we rented at 5500 and 6300 respectively. As far as medium size new developments we are looking at 2200 for studios, 2500–3200 1 bedrooms and 4000–5500 for 2 bedrooms. LIC is seeing the worst of it because there is alot of turnover and many larger developments dont have stabilized leases so they usually bump up a tenants leases by 5–8% from the year before that. most tenants end up leaving because another building down the block is offering crazy incentives such as 1–2 month free rent, plus no brokers fee and that is attractive enough for a young professional to hop from a luxury amenity building every year.
Much of the building we are now doing are condos because the developers dont have the 421-A tax benefits, they are shifting and saying that for the price of a rental 1–2 bedroom , you could get a beautiful 600 sq ft condo for 750–800K and be able to break even on your mortgage if you decide to rent it out. This is the perspective we have been focusing on in AStoria and LIC. Many of these tenants are looking to be first time home buyers and they realize the advantages of LIC and Astoria, being 10 minutes from the city, having the luxury to have city views and also being able to afford a brand new development under a 1MM bucks.
Price per sq foot in Astoria to buy land was trading at 300–320 a sq ft and that died down to 275. I think its going to normalize at 250 which is a healthy market number once people realize that the new affordable tax act — “the new 421-A” will not qualify under their smaller or mid level projects.
Now let’s take a look at Hoboken, which is the same type of living, on the opposite side of Manhattan… In a different state even, New Jersey. I discussed with Tom Peters of Nest Seekers in Hoboken where prices are and specifically the scary inventory of rental listings… due to the PRICE of the listings.. So Let’s take a look.
As of today, March 7, 2018… There are 109 active one bed room rentals available, average price of $3,207 per month, 93 two bed rooms available, with an average price of $5,173 per month, and 38 3+ bed rooms available to rent… for $4,686 per month… No, that is not a typo… the average price for 3 bedroom rentals according to what is available is less than 2 bed rooms on average. One bedrooms range from $1,600 to $5,000 per month, and 2 bed rooms start at $1,700 and go up to $10,000, yes $10k per month! I asked Tom if the $10,000 per month rental came with him and I as an add on… he said no, and the tenant pays the broker fee… After discussing this incredibly staggering number of available apartments, 50% are vacant. So, I guess the questions are… 1) When will landlords start dropping prices? 2) How long can they afford to leave their units vacant for? 3) Does this make Hoboken only a primary residence market as prices continue to rise and rents continue to decrease or apartments remain vacant? Tom and I agree that the future is unknown, but based on these figures, there appears to be troubles that are ahead, especially for those who have high mortgage payments, and/or adjustable rate mortgages that will reset, causing monthly liabilities to go higher.
Since City Living may not be for all.. I decided to take a drive 20 minutes further in to Jersey to meet my friend and realtor, Caroline Farnsworth of Keller Williams Maplewood. Maplewood has been a Brooklyn renter’s dream for home ownership for quite some time now, and prices have sky rocketed simply due to supply and demand.
Caroline is one of the most honest and hard working realtors I know. It is probably why we are friends and do business. This picture of her couldn’t get any better… BE HONEST. So we got some honest feedback of the Maplewood Rental market… Caroline provided this insight and numbers.
One bed rooms range from $1,500 to $2,000 per month, two bed rooms range from $1,700 to $2,700 per month, and three bed room+ private houses range from $3,000 to $5,000 per month to rent.
She then said… “Pets can be a problem for renters they either aren’t allowed or there’s a weight/size limit and often an extra pet security. It can be difficult to get landlords to make repairs/upgrades. Rentals near public transportation are usually more $$. That all said it’s a great short term option while people are figuring out where to live and/or repairing their credit so that they can get a mortgage”
Before we go any where else, we have to take a stop in my old stomping grounds, the original birth place of “The Closer”, where I went to pursue my dreams of playing in the NFL, where my dreams were cancelled, and what got me here today… THE BOOGIE DOWN, the Bronx.
I met with Bryan Dale, CEO of THE GOLD TEAM at Keller Williams… here are some cheap numbers for rents! Have a look…
91 studio apartments available, average price is $1,200 per month.
488 one bedroom apartments available, average price $1,400 per month.
391 two bedroom apartments available, average price $1,700 per month.
383 three bedroom+ apartments available, average price $2,200 per month.
1,353 total apartments available, mostly 30% cheaper or more than Long Island City, Astoria, Hoboken and Maplewood combined, thus far. Bronx rents are soon to be rising, supply and demand, and over flow from other expensive areas of living will be the main cause of that. I tell all of my past clients in the Bronx, do not sell. Prices are rising and will continue to rise, and rents are rising, which will increase your cash flow tremendously. IF you are making money now, wait 2 years from now, you will be laughing straight to the bank every month.
Welcome to my hood. Now, where I live. Jersey City Heights. Yes, I own this website as well with my partner and best friend Zack Evans. If you know any developers that want to feature their listings or future developments here, let us know. Any way, the NEXT bk, the next brooklyn for those who can’t put 2 and 2 together.. is booming. It is still an unknown to many, as it is behind hoboken, so hoboken doesn’t like it, and it isn’t downtown Jersey City.. so they don’t like it… but for those that get it, see the bigger picture, and have some type of vision, GET IT. I spoke with Marge Fasciano, Broker/owner of Jersey Real Estate Co, (www.jerseyrealestateco.com) and she said there are 26 one bed room apartments ranging from $1,250 to $2,500 available, 52 two bed room apartments ranging from $1,350 to $2,950 available, and 56 three bed room+ ranging from $1,700 to $3,900 available… another HUGE range of pricing. It is only a matter of time before these rents continue to go up… the main reason for hoboken inventory and prices sitting available is because you get Hoboken and NYC views for half the price. Hoboken is still a baseball throw away… for cheaper cost. It still makes sense to rent in Jersey City Heights for cheap, which allows you to live more comfortably or save for your first time purchase.
LONG ISLAND… right outside of Queens… I sat down with my long time friend Amal Elsheemy, of Keller Williams Gold Coast to discuss rentals in East Meadow, her opinion and what to consider…
things to consider
a lot of long island rentals are illegal basement apartments.. a lot of people rent their basements to offset high taxes.
basement apts will include all utilities
hard to find because they hard to advertise
these affordable apts usually come through word of mouth
whole house rentals that are legal, and advertised will not include utilities are usually more than the actual mortgage.
most rentals are not pet friendly
my opinion on renting vs buying, people who rent don’t have the downpayment, most whole house rentals are the same monthly as a mortgage including tax and insurance.. but if you have no downpayment you have no choice (unless of course you give them options in your blog!) i personally feel there are rare occasions someone HAS to rent and it makes sense, but typically feel if you are grown with a good job, you should own and throw away that money every month.
rental market is hot in east meadow, hard to find a decent rental, and when you do it goes fast. people who are forced to sell (foreclosure, divorce, etc) are great rental candidates, and from speaking to many they find it very difficult to find something they love.
some data from mls, trulia, etc on what is advertised
MLS currently has 4 rental apartments on the market
1–2br $2100/month 2 nd floor of a house
2–3br $3,000/month whole house rental, $4000/month whole house rental
1–4 br $2900/month whole house rental (this is surprisingly cheap, and has been on the market since nov, which means something is wrong)
Trulia has 7 on market, 3 are not on mls
3 BR — $2800/month whole house (address not shown online) only one that is pet friendly
3 BR — $2950/month whole house
1 BR — $1250/month FURNISED month/month
Manhattan rental prices stabilized also while speaking with Louis Pulice, licensed sales person at Halstead in Washington Heights and Amela Kadric of Halstead in Harlem and Riverdale. They both definitely agree that the higher end luxury is taking longer to sell, but there are still buyers for it. The real sweet spot is under $1 million in their select markets… that is, if you can find it.
I believe Riverdale, which is the Bronx, Mount Vernon, and Yonkers are going to see crazy growth. Taxes are high in some areas, but you can still get multi family homes for a cheap number. Rents are fairly priced and values have significant room to grow.
Oh wait, Let’s not forget Brooklyn! We met with one of our favorite Brooklyn realtors, who also works at Compass, Alisha Anglin-Pagan.. here is her data.
Bed-Stuy
Studios:
- 30 active
- Average price: $2,000
1 Bedroom:
- 100 active
- Average price: $1,928
2 Bedrooms:
- 100 active
- Average price: $2,070
3 Bedrooms:
- 100 active
- Average price: $2,715
Park Slope
Studios:
- 25 active
- Average price: $2,118
1 Bedroom:
- 100 active
- Average price: $2,352
2 Bedrooms:
- 100 active
- Average price: $2,979
3 Bedrooms:
- 45 active
- Average price: $4,389
Clinton Hill
Studios:
- 14 active
- Average price: $2,315
1 Bedroom:
- 71 active
- Average price: $2,499
2 Bedrooms:
- 38 Active
- Average price: $3,245
3 Bedrooms:
- 19 active
- Average price: $4,544
Fort Greene
Studio:
- 25 Active
- Average price: $2,284
1 Bedroom:
- 40 active
- Average price: $2,806
2 Bedrooms:
- 19 active
- Average price: $3,696
3 Bedrooms:
- 5 active
- Average price: $4,329
Brooklyn Heights
Studios:
- 23 active
- Average price: $2,542
1 Bedroom:
- 57 active
- Average price: $3,153
2 Bedrooms:
- 38 active
- Average price: $4,777
3 Bedrooms:
- 4 active
- Average price: $7,086
SO, DOES IT MAKE “SENSE” OR “CENTS” for you? Where you live should be affordable. Whether you are renting for short term or long term, you always have to do what is best for you. Forget about what everyone else says. If you are comfortably, rent for as long as you want, if you have a dream of home ownership, let’s figure it out, together!
Coming soon is my site www.UreallyRent.com, which is a site that just shows you simply the tax benefit of home ownership based on NEW 2018 tax laws, your income, and your budget. You will be pleasantly surprised.
Thank you to all for the above feedback. Together, we will make a difference for many, and together, we will help those achieve their dreams and assist in their most important part of life, where they live.
Get in the game, when the game is real estate!
Don’t forget.. coming this spring, The Mortgage Playbook for Millennials
www.themortgageplaybookformillennials.com
Yours truly,
