New vs Resale Condo in New York
Posted by Wei Min Tan on April 24, 2020
New vs Resale condo in New York, which is a better investment? Each has it’s own advantages and when representing our investor buyer clients, the split between buying new vs resale (second hand) is about 50/50.
New condominiums refers to buying before or during construction. When the buyer closes (takes over the property), everything is brand new. Resale refers to buying an existing condo from an individual seller, who may be the second, third, or fifth owner, depending on age of the condominium. The analysis below looks at the advantages of new vs resale condos in Manhattan, New York.
New condos in New York – advantages
Booking at discount:
One big advantage of investing in a new condo in New York is that buyers usually book their condo before or during construction of the property project. Since the property is not completed yet, there is usually a discount to what the price would eventually be when the project is finished. This discount can range from 10 to 25 percent and it depends on the eventual marketability and demand of the project. As a project sells, eg 10%, 20%, 50% sold, the developer increases the prices of the unsold condos, thereby increasing the price per square foot of the overall project.
New condominiums often have very comprehensive facilities. For example, a fitness center, residents’ lounge, full-time doorman, roof deck and even a pool. These facilities are needed to make the property project more marketable and to justify the higher price per square foot. Having nicer facilities make it easier to rent out (for investors). For self use buyers, the condominium building feels like a club where everything is there.
Repairs and maintenance:
Since everything is brand new and appliances come with warranty manuals, there is less maintenance involved for both the condo owner and the building. The condo owner is responsible for whatever is inside the condo, most notably appliances and flooring. The building is responsible for the facade, heating, cooling, roof and mechanicals.
It’s so nice to live in a new condo:
New condos are desirable by renters and owners alike because of the wow factor. In Manhattan, after year 2000, most buildings are built with glass exteriors. This allows more light into the condos. The fancy facilities and newness target the segment of people who just want to be in a new property where nobody has lived there but them.
Weimin’s article, How to buy new launch property in Manhattan, New York
Resale condos in New York – advantages
Predictability of demand and supply:
The buyer knows how the building has been performing over the years with regards to appreciation trend, rental demand, price for rent and sale etc. This is easily viewed from public websites like streeteasy.com and trulia.com. For example, the buyer can know there are only 5 condos for sale in the 250 unit building and this shows the demand for the building is very high. Or that rent per square foot is $85 when competitors are renting at $75 per square foot.
Another advantage of a resale condo is the buyer will know the condo building’s financials and history of repairs, litigation, damages etc. For example, the building’s financial reserves shows how much financial cushion the building has and this provides a sense as to whether common charge assessments are coming up. In addition, the buyer’s attorney can review the historical common charge increases, repair history, litigation history, all of which gives the buyer a clearer understanding of the condo building.
Weimin’s article, Engaging a Property Agent in Manhattan
Price per square foot:
Resale condos, when compared to a new condo in the same neighborhood with the same facilities, are less expensive on a price per square foot basis. This is not because resale wants to sell cheaper. Instead, it’s because new condos need to sell for more to account for the higher development costs and land acquisition costs. Inflation is the reason whatever is built later will cost more than whatever was built earlier.
More options and negotiability:
There are a lot more resale condos than new condos available for sale. The split is roughly 90% resale and 10% new condos. This is because the island of Manhattan is fully built and there is very little land available for new condos. With resales, the buyer’s options are unlimited. Also, the buyer has more negotiability with a resale. New condos are less negotiable because the developer needs to meet financial commitments with the bank and there are investors involved. With resale, the buyer is dealing with an individual seller so the flexibility is much higher.
Read Weimin’s article, Buying Manhattan property to rent out
What We Do
We focus on global investors buying Manhattan condos for portfolio diversification and long term return-on-investment.
1) Identify the right buy based on objectives
2) Manage the buy process
3) Rent out the property
4) Manage tenants
5) Market the property at the eventual sale
1) The Sutton, Turtle Bay, Midtown East. This Toll Brothers development only required 10 percent reservation deposit. Represented multiple buyers at the $2 million price point. Location, classic style windows and luxury finishes make this a good investment. Close to United Nations, Citigroup Center, Blackstone, Blackrock. Rented at premium rents from the beginning.
2) 200 Chambers Street, Tribeca. Top quality building in Tribeca. Convenient location next to Whole Foods. Building is priced at premium but rents are also at a premium. This corner unit has dual exposures, maximizing sunlight. Purchased at around $1 million and has appreciated substantially since then.
3) Parc Vendome, Midtown West. Purchased at a great price and renovated entire apartment. Buy factors were south exposure with plenty of sunlight and proximity to Central Park. The photos below are the Before/After. Rented immediately after the renovation was completed.
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