How to Cheat Death & Taxes

So it’s almost everyone’s favorite time of year. The time of year when you consider doing your taxes, realize you forgot to tell your friend about what your other friend said to their maybe ex, put it off, and file an extension. DISCLAIMER: I AM NOT AN ACCOUNTANT AND AM NOT QUALIFIED TO GIVE TAX ADVICE.

Recently people who had considered buying a home in the past are lighting up my line saying, we have to buy something, we need write offs. What, pray tell, are they referring to?

Well as a US Citizen, you might not feel your Uncle Sam hooks you up that much. In fact if you are a resident of NYC, you might hate your Uncle Sam, and his cousin’s Andrew & Bill.

Some highlights of these deductions are (and I am not an accountant, whom you should consult for any tax advice):

At least 95% of a mortgage payments during the first 20 years of a 30 year fixed, or almost 100% of an Adjustable Rate, or Interest Only note is interest. The interest is a tax deduction. So if your mortgage payment is $4,000 a month, and $48,000 a year, you can write off most of that. It’s kind of a big deal. This is only true of interest on up to $1,000,000 of debt.

If you live in a condo, you can write off the property taxes. If you live is a coop, a prescribed portion of the maintenance is tax deductible (on average, 50%) So if you have a monthly payment of $1,500, over a year you would have an additional $9,000 deduction from your Gross Income.


One deduction that’s underappreciated, is depreciation. Commercial real estate depreciates faster than residential real estate, but residential real estate depreciates over 27.5 years. So if you paid $1,500,000 for a property, in the first year of living there you can deduct $54,545.45 off your taxes (again consult your CPA to verify.) The next year you can deduct $52,561.98  – a lower amount because you have a lower basis. This can be done until you have depreciated the property completely.

When you sell – you have to pay income taxes on the profits – which means you have to make the basis the depreciated amount. So if you depreciate $500,000, and you profit $500,000, your income from the sale is $1,000,000. However, the first $500,000 of profits in a real estate transaction for a married couple is TAX FREEZY.

You can also pad the basis by including all improvements you made to the property in the equation. So if you paid $1.5M, and then you spent $100K to improve it, you get to balance the ledger in your favor based on those costs.

So if you are renting, in addition to wasting money, and not building equity, you are missing out on interest deductions, property tax deductions, depreciation, and the tax exemption from the sale. If you do all these things you might also live longer.

In addition, here are some great tax deductions for:

And here is Johnny Cash singing “After Taxes”

Equity Firms Are Lending to Landlords, Signaling a Shift


Yanir Ram of DRI Holdings in California got a $36 million loan from Cerberus’ FirstKey Lending. He said DRI could then expand without borrowing from hard-money lenders. Credit Dustin Michelson for The New York Times

In the aftermath of the financial crisis, large private equity firms spent tens of billions of dollars buying foreclosed homes across the United States to operate them as rental properties.

Now some of those same firms are providing loans to smaller investors seeking to do much the same.

Three big private equity firms — the Blackstone Group, Colony Capital and Cerberus Capital Management — are betting that so-called landlord loans to small and midsize investors will become the next big opportunity to profit from the rebound in the United States housing market. The private equity firms are providing financing indirectly to hundreds of real estate funds buying single-family homes, something that until recently was not widely available.

Over the last year, subsidiaries and affiliates of all three private equity firms have lent collectively about $1.5 billion to smaller residential real estate investors, enhancing the capability of these firms to gobble up distressed single-family homes, said people briefed on the matter. All three firms are gearing up to bundle those loans into bonds — with the first securitization of landlord loans expected to come to market in the next few weeks with Deutsche Bank taking the lead underwriting role, these same people said.


Thibault Adrien raised a total of $82 million from investors to buy hundreds of foreclosed homes to renovate and rent out. Credit Jennifer S. Altman for The New York Times

The private equity firms see a rising demand for landlord loans — which can range from as little as $500,000 to $50 million — given that smaller- to midsize real estate investment firms historically have had to rely mainly on cash raised to make purchases. This new availability of credit comes as banks are still looking to unload 579,582 homes that the property research firm RealtyTrac estimates are still winding their way through the foreclosure process.

Blackstone, Cerberus and Colony are entering a market with little competition. Most of the banks that did make loans to investor-landlords left the market during the financial crisis. Currently, the only other significant lenders to single-family home landlords are Fannie Mae and Freddie Mac, the government-sponsored mortgage finance companies. But financing from Fannie and Freddie is difficult to come by because it is limited to true mom-and-pop investors — ones who typically own just a few homes.

Some small firms, called hard-money lenders, make loans to real estate investors, but these loans tend to be for short periods of time and carry higher than normal interest rates. For that reason, many real estate investors tend to avoid hard-money lenders if they can.

The market then would appear to be a potentially large one for the private equity firms, with individual investors and small investment funds owning 14.6 million single homes in the United States, according to analysts with the investment bank Keefe, Bruyette & Woods. But it is a fragmented market with 86 percent of all investors owning 10 homes or fewer. Leaving aside the giant institutional buyers like Blackstone’s Invitation Homes, Colony’s own Colony American Home affiliate and American Homes 4 Rent, analysts at KBW estimate that just 14 percent of investors own about 11 homes to 250 homes each.

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Housing advocates, however, are concerned that landlord loans from private equity firms could fuel the purchase of homes by investors ill-equipped to manage rental properties. The advocates are concerned about the due diligence the private equity investors will do to make sure investors are not just good credit risks, but qualified property managers as well.

“Property management capacity and performance of borrowers matters a great deal when we contemplate new financing streams for smaller and midsize investors,” said Sarah Edelman, a senior policy analyst with the Center for American Progress. “Providing financing to help put excess foreclosed homes back to productive uses could be a good thing, but it’s important to think of what an investor will do with their homes.”

Representatives for the lenders say they have strict due diligence standards with regard to making loans. Investors say that it is in their interest to improve the homes they buy and maximize the return on their investment.

“We think of our tenants as our clients,” said Thibault Adrien, who four years ago raised $42 million from investors to buy hundreds of foreclosed homes to renovate and rent them out. “If we provide them good service they will be happy and stay longer in our homes.”

With an $11 million loan from Cerberus’s FirstKey Lending, Mr. Adrien is now looking to double his purchasing power on a second fund that raised about $40 million in investor cash. With the financing, his Lafayette Real Estate, a firm based in New York, will be able to buy more homes in the half-dozen states it currently operates in than it otherwise could, he said.

Mr. Adrien, who formerly worked for the private equity firm Fortress Investment Group, said the availability of financing was vital for midsize investors like him who are not interested in flipping distressed homes for a quick profit but operating rental properties for the long haul. He intends to borrow $40 million more from either FirstKey or another private equity lender.

The developing market for landlord loans shows how large private equity firms are working their way deeper into the fabric of the United States housing market. They are doing so at a time when there is increased demand for rental housing and many people still have dented credit histories coming out of the financial crisis and do not qualify for a mortgage.

Blackstone, for instance, which emerged as the biggest Wall Street-backed buyer of foreclosed homes, now manages about 45,000 single-family homes in nine states through its Invitation Homes subsidiary. The firm’s Bayview Asset Management affiliate is buying nonperforming mortgages from the federal government. Bayview is packing the worst of those mortgages into short-term bonds that pay out based on the liquidation value of the foreclosed homes.

Now with its B2R Finance subsidiary, which began in summer 2013, Blackstone is lending money to landlords small to midsize. The firm has begun running online ads that say: “KaChing. Cash for landlords. Leverage equity to buy more rentals.”

Jason Hogg, chief executive of B2R Finance, who joined the company in November and most recently worked with American Express, said demand for loans from investors was steadily growing.

“The rental investor segment has been growing at an exponential rate,” said Mr. Hogg, who early in his career was an agent with the Federal Bureau of Investigation in New York. “We are seeing steady demand from professional rental property investors — a near doubling in the last month alone, equating to over a billion dollars in the pipeline.”

Many of those borrowing from the private equity shops have sprung into existence in just the last few years. Many investors smelling fat profits jumped into the distressed housing market in the middle of the crisis when the number of foreclosure filings peaked at 2.87 million homes in 2010, according to RealtyTrac.

Now that housing prices in many markets have recovered a good deal, the bargains are largely gone making it necessary for those investors that remain to borrow money to increase their buying power. Most of the loans the private equity firms are writing are two to five years in length and have interest rates of 5 to 6 percent. Financing is backed by mortgages on the properties and sometimes the rental payments on the homes.

In January, American Housing REIT said in a regulatory filing that it had secured a two-year $5 million loan from B2R Finance at an interest rate of a little more than 4.75 percent to purchase additional homes. American Housing, controlled by Heng Fai Enterprises, based in Hong Kong, said the loan from B2R Finance was backed by a mortgage on 72 homes it owned in the United States.

The push to securitize landlord loans is following a similar path that big institutional investors like Blackstone, Colony and American Homes 4 Rent took with their own large portfolios of single-family homes. Over the last 18 months, the biggest buyers of foreclosed homes have sold 16 single-family rental bonds with a combined value of $8.9 billion, according to Kroll Bond Rating Agency.

Yanir Ram, chief financial officer of DRI Holdings, a California real estate firm, was one of the first to get approved for a loan from FirstKey. He said the $36 million loan, secured by 300 homes his firm bought and manages in the Antelope Valley region of Southern California, would allow DRI to expand its business without borrowing from hard-money lenders.

“If these guys didn’t exist I’d be forced to pay higher rates to another lender and there would be less proceeds for my business,” Mr. Ram said.

Source: The New York Times

Expediters being charged in massive bribery scheme

In a case of serious déjà vu for New York City, a group of middlemen known as “expediters” are among those being charged in the massive bribery scheme centered around building inspectors.


Expediters receive money from developers to acquire building permits, address violations and fill out key paperwork — all as fast as possible, and often, through illegal means, the New York Daily News reported. The corrupt culture of expediters was first revealed fifteen years ago during a similar investigation, and prosecutors demanded that they be banned. However, the number of expediters licensed by the city has actually doubled since then, up to 3,200 from 1,600.

“Anytime you can’t interact with your own government without hiring someone to grease the skids, that means the system is broken,” said Daniel Castleman, a former Manhattan prosecutor who led investigations into expediters 15 years ago. “You’re going to see these cases every five or 10 or 25 years because the system is built in such a way that you gotta have an edge.”

Over the past several years, expediters have been cited for violations ranging from bribing officials with thousands of dollars to submitting doctored photographs. In most cases, the expediters are placed on probation and begin working again shortly after. In one case, a Brooklyn man named David Weiszer posed as an expediter paid a buildings department official $300,000 in exchange for clemency on code violations. He is now a fugitive.

Charges against 50 people including building inspectors, expediters and contractors were announced earlier this month.

[NYDN] — Tess Hofmann – See more at:

Interloping At The Ellie’s

The secret to my success is that I am a complete fake. This was most true when I was pretending to be Josh Rubin at the Ellie’s at Cipriani last Thursday night. Josh is an incredibly visionary, bold, hard-working and scrappy person. Whereas most real estate agents would auction off their children’s team sports trophies if it meant getting a listing, Josh spent the Douglas Elliman awards ceremony away from the action, and sent me in his place to bask in the spray tan. Of course Josh is my team leader and all the transactions I do, I do with him.

Our team won three awards, and two were pretty special. Before I get to that, let me explain what the Ellie’s are. The Ellie’s are a once a year event where 1,000 or so of the 5,500 agents in our company are in attendance and the top performers are recognized by our company’s President and Majority Shareholder, Dottie Herman & Howard Lorber. Dottie & Howard do a lot of presenting, and in addition Steven James, and my office manager Chris Peters emcee the event. After all the talking there is drinking and dancing and eating. All on the house.

Since Elliman has expanded a lot, each year they roll out something new. One year it was that they were dumping Prudential. Another year we had a new logo and we were expanding to Los Angeles (in a deal that Josh was the procuring cause of between Howard Lorber and head of Elliman LA, Cory Weiss.) This year we discussed the new App – Elli, and that we have partnered internationally with Knight Frank & also Joseph & Co. in Aspen.

So, to the awards. The 2 big ones that I got to go up on stage for and get hugs from Chris, Steven, Dottie & Howard were for the Top 10 teams. We were #10 in the big prize of the night, Gross Commission Income. So when I tell you I’m on a Top 3 Team (or my new thing which is just saying I’m the number one agent on the number one resale only team in NYC) is an embellishment. In the place where it matters the most to the company, we were number 10. 10 out of 5,000. But not 3, or 4, or 5. Fredrik Eklund and John Gomes are number one. Fredrik, of course, is the star of Million Dollar Listing NY. He received his award from The Altman Bros. who flew in from Los Angeles (who had just joined Elliman LA that day. Also of note, Luis Ortiz and I were chilling briefly, he was recognized for his efforts with awards as well, of course.) The Eklund Gomes team, themselves, probably sold more than Keller Williams NY, and a handful of other mid-sized brokerages probably sold combined for the year. Their commissions were over $10M for 2014.

Before that grand finale award was our big award. We were Top THREE AGAIN in transactions. Now transactions aren’t as sexy as commissions, but we did 116 transactions in 2014, which was good enough to stay at 3. The Eklund Gomes Team was #2, and the Hoffman Meier Team was #1. Sometimes, if we are forced to compare ourselves to those teams (who work in the same office as us and whom we see every day) we make mention of the fact that ALL of our business comes from marketing and referrals, and those two teams are larger than ours and work with developers, which accounts for a huge portion of their transactions.

DavidRosen Rubin Team

I am part of approximately 30% of my team’s transactions. I am not the reason we were on stage, just a part of the reason. I was really jazzed to be up there with the big shots. And all I can say is thanks Josh for the opportunity. It’s been fun this last 4 years together, and I hope this year is even better. I may not be on TV, may not have a huge awards ceremony where I was the grand finale, but I was standing next to that guy (Fredrik Eklund, congratulating him like he needs my props,) and let me tell you something – those guys are great. The whole company is actually filled with fun and friendly people. Some are pretty good looking too! The Ellie’s was a ton of fun, from the Tuna Tartar to the DJ and the dancing girls. The most fun thing is the security of knowing now, that at my fourth visit to them, all of this hard work is recognized, and I am proud to have had the opportunity to have represented 116 families (times two!) directly or as part of a team, who needed to move, and succeeded.

Is Times exposé a NYC story?

Bad guys from around the world are buying up the most expensive apartments in New York to launder or protect their ill-gotten fortunes and hiding that fact through mysterious shell companies. They can do this because real estate interests blocked efforts to require property transactions to have the same strict scrutiny that comes with bank accounts and other financial dealings. This is hypocritical because the U.S. is insisting that other countries change their laws so the feds can pursue people who have hidden money and avoided taxes in places like Switzerland.

That summary seems to be the bottom line of the five-part New York Times series that anyone interested in New York real estate has been dutifully devouring in the past week. Yet the implications of all this remain somewhat mysterious—especially for New York.

The series points out that the luxury apartments these bad guys own pay very little in property taxes and that the individuals probably escape the income tax, too. That’s not exactly news.

The Times itself has published many stories about how the city’s controversial 421a tax abatement program reduces taxes on the most expensive luxury condos to absurd levels. So has Crain’s. I’ve written a lot about it, too, and about how the entire system for levying property taxes is unfair and benefits owners of pricey condos. The Independent Budget Office’s work on the issue is exemplary.

The bad guys in the Times series pay no income tax because they don’t spend half the year in New York City or New York state. They probably escape federal income tax, too, because they don’t spend half the year in the country. The Times’ own James Stewart has written a series of insightful stories on this and explained how other global cities are moving to impose taxes on the global, mobile rich by broadening their definition of residency.

Of course, Americans who buy luxury condos at places like the Time Warner Center, the focus of the series, usually benefit from both tax breaks. Ownership through a shell corporation makes no difference, either. Whatever the real estate taxes are, they have to be paid by someone. The bad guys would have to pay income tax if they lived in the city long enough and generated some income here.

Except perhaps for the developers building the super-luxury towers, virtually no one believes condos like this should get 421a abatements that phase in real estate taxes over as long as 25 years. Many people support an overhaul of the property tax system, though it appears to be an impossible task politically. Broadening residency rules make sense. But none of this has anything to do with bad guys and shell companies.

In the end, the Times series may be set in New York, but tells us little about the city.

NYC building inspectors, contractors surrender to authorities over bribery scheme

Nearly 50 city building inspectors and construction contractors — some with alleged mob ties —turned themselves in Tuesday as part of scheme in which builders paid off city employees to fast-track projects. Inspectors also routinely took cash to overlook building code violations, authorities said.

BY ERIK BADIA , GREG B. SMITH NEW YORK DAILY NEWS Published: Tuesday, February 10, 2015, 8:20 AM Updated: Tuesday, February 10, 2015, 10:47 AM

A big takedown of corrupt city inspectors Tuesday uncovered a disturbing pattern: Inspectors routinely took cash to look the other way on serious building code violations, authorities said.

By late Tuesday morning, 49 of 50 defendants were in custody, paraded out of the 1st Precinct stationhouse in Tribeca in handcuffs to await arraignment on a variety of corruption charges in multiple schemes dating back to 2012.

The tainted crew included eight building inspectors, two Buildings Department borough chiefs, five Housing Preservation and Development inspectors, and a Small Business Services employee, according to a source familiar with the case.

Also arrested were multiple contractors and property owners or managers. A handful of defendants are associated with the mob, the source said.

One building inspector arrested a month ago by the city Department of Investigation and the NYPD was caught with cocaine and guns, a source said. The worker was in city uniform and getting into a city car, where cops discovered bags of cocaine packaged for apparent sale. A search of this worker’s home then turned up illegal firearms, the source said.


The investigation began two years ago and over time investigators uncovered multiple unrelated schemes — an indication of just how pervasive the bribe-taking was.

Perhaps most disturbingly investigators with DOI and the Manhattan District Attorney’s Rackets Bureau caught property owners who’d been cited for serious code violations during renovations paying off inspectors to claim the problems were corrected — even when they weren’t.

All told more than 100 buildings are implicated, mostly in Brooklyn and Manhattan, the source said.

The perfidious parade of suspects began early Tuesday as dawn broke and a slight snow fell. They were led out of the police station in handcuffs and loaded into four vans.


The suspects said nothing as they passed reporters. Most lowered their heads and tried to cover their faces with their coats as they were taken to court, where bribery charges are expected to be filed against them Tuesday afternoon.

The arrests were first reported Monday afternoon on

Investigators uncovered a disturbing pattern of give-to-get, where building inspectors would expedite projects and sign off on certificates of occupancy — for a fee.

The Buildings Department is tasked with approving all new construction and major renovation work in the city, ensuring it is safe and up to code.


If an inspector withholds approval, a project can be delayed indefinitely, running up costs. Sources said contractors made regular payments to multiple inspectors to make sure their jobs received fast approval.

The bribery scheme hatched by the contractors and Buildings employees has been playing out across the city for years, sources told The News.

Construction in the city has increased dramatically in the past few years, with a 14% jump in job filings in fiscal 2014 and a 35% increase in new building permits, records show.

At the same time, there’s been a spike in complaints to the Buildings Department, up nearly 20% in fiscal 2014, to more than 70,000 from 58,900. Because of the increase in complaints, the department made an extra 10,000 inspections and issued more than 47,700 building code violations — a 10% spike.

The department currently has 185 inspectors, 169 associate inspectors and 49 administrative inspectors, records show.

How’s The Market

Hi! Happy 2015, and back to work for the Apple Sauce family. 2014 had some incredible things happen for me, David Rosen, my team and my partners. If this is the first time you are reading Apple Sauce – it’s a place to find out my perspective on what’s happening around town in the real estate market and everything related. As a member of the top resale only team in NYC at Douglas Elliman in terms of the amount of transactions, I guess I have a unique perspective. And since real estate is hyper-local, we take time to talk about Small Businesses, Artists, Restaurants, Theater, Sports Teams, Politicians, Gossip, Sex, Drugs, Rap, Graffiti, Yoga, Dogs, Pigeons,  and everything else with regards to living in New York City, you know – Apple Sauce.

Everywhere I go, people ask me, “How’s the market?” As of late, I have been selling a few listings and showing them a lot, each of which is beautifully staged and well-priced. Given the lousy weather, it’s often nice to take a moment inside with the buyer looking for a new home. When people ask me how the market is when I’m out to brunch, of course, it’s a little different. Sometimes people ask me how the market is when they are considering selling their home, and have invited me over to discuss the value of their property. And now, more than ever, people are asking me how the market is, when considering renovating their home – because I have teamed up with my cousin Ben and started Leopold City Construction.

On Rentals

70% of people living in the City are looking to rent a place. This is true for the rich and the not rich enough alike. There are inexpensive rentals and incredibly expensive ones. The most expensive unfurnished rental is in The Berwind Mansion at 828 Fifth Avenue, a 4 Bed, 5 Bath affair on 3 floors for $150,000 a month. Oh wait…. Update coming in. Rent was just lowered to $80,000 a month. That’s right. 47% discount in the last week. Also notable is 57 E 64th St, which despite being on the market for 315 days as of today, RAISED the asking price from $90,000 to $125,000 a month.

Obviously those are unique situations. The bigger rental picture for the overwhelming majority of people is a lot different. December is typically the best month for any tenant to rent a place, followed by January, as 40% rent discounts are not unheard of, even in much lower price ranges. Places that are $4,500 a month in the Spring can go for $2,900 with lower broker fees, for example.

It’s hard to find a good place to live in the 5 boroughs. Driving from Queens the other day, I commented that the rents in Manhattan, all things considered, are the same as those in the outer boroughs. The Brooklyn discount is long gone. Maybe the Bronx is the next spot – likely will be, but really, the City is the place a lot of people will be returning or staying in I think this year. Ask Vince from Entourage.  Even though the rents in Brooklyn and Queens are usually less than in the City, transportation costs often make up most of the difference. Rents will continue to climb in Brooklyn and Queens at a slower rate than last year, and stay flat in the City. Affordable housing continues to mean having a family friend who can let you stay and not much more.

The big buzz in the real estate rental conversation is about Air BnB. People are really torn about Air BnB. On the one hand, I think many people have experimented with using Air BnB while travelling with mixed results, often favorable. And many people have had a neighbor doing AirBnB, and it’s usually unsettling. Politicians are now frequently weighing in against Air BnB with the amount of available rooms in NYC increasing from 2,500 in 2010 to 16,500 in 2014. Here is the thing – you are unlikely to be able to really stop this kind of vacation rental activity through the law, whether it’s on one platform like Air BnB or another like craigslist.

Does it really hurt New Yorkers? I don’t think so. Does it deprive the market of rental units? Yes, I think commercial operators (people with multiple leases) are really exerting an unwanted upward pressure on the market in general. They only can do that in cooperation with shady brokers. A broker has to be a willing participant to rent to such an opportunistic tenant, and those brokers should be punished.

People should be able to Air BnB their own place, but that’s it, in my opinion. I think the buzz is more sensation than substance, and it does drive up rents, but you know what else drives up rents? Landlords. With lower oil prices I have to hope heating costs were as low as ever this Winter, and I think rents need not spike this year. There are also more good places to rent by a small margin than in past years, with many new buildings having been completed recently and more on their way. So good news!

On Sales

No matter what, if you own a home, and are committed to being a home owner, even if you move periodically, you will enjoy a lower housing cost than a renter. With respect to apartments and houses that people live in, 2015 marks the start of a totally new time in the real estate market in New York City.

For years, certain trends have been on the horizon. Here they are in no particular order: new development, retiring baby boomers, affluent millennials, strong dollar, low gold prices, high stock market, strong profits amongst the wealthiest, low unemployment, and little housing inventory…

What does this mean? Well if you on a home and you want to sell. Congratulations. Life is good. But many people own apartments in Manhattan, and can cash-out, but can’t buy within their own neighborhoods. If they don’t want to relocate neighborhoods, they can’t afford to sell. So much of what will sell are properties that sold last in the past 10 years, and properties that haven’t sold in the past 10 years, often only sell when the person is very old. So, a large portion of the market are properties that need significant updating. And often that renovation cost depresses the value quite a bit.


Buyers are looking for new and clean, and sellers are offering old and crappy, half the time. As a result, Douglas Elliman reports that the average property sold for 5.2% less than it originally asked for in December, an increase from 4.7% in November. Of course November and December closings were Late Summer contracts. So it’s not a seasonal depression, it’s an ongoing tension of people asking top dollar for subpar properties.

Another highlight of the Manhattan Elliman Contract Signed report is that while you hear a lot about the big $100M apartment sales, properties selling for more than $5M made up 11% of closings in December, quite a large portion historically, by the way.

7% of the market was $3M – $5M, 15% was $2M – $3M, 27% was $1M – $2M, and 30% was less than $1M. So more than half of all properties selling are selling to people paying less than $2M properties, on average those properties sold for 3.0% less than the last price they asked.

Apple Sauce Monthly  Market Overview:

So when people ask how the market is the answer is as of January 2015 it follows that:

  1. Landlords: don’t look to pursue rents that are higher than last year’s, with low heating prices, unfavorable foreign exchange rates when applicable, and other factors will keep rents stable with last year across the board.
  2. Tenants: Don’t expect big discounts in the outer boroughs, and if you know you are going to move, it might be cost effective to find a cheaper lease in February and cancelling your lease at a penalty as some landlords are giving big discounts right now, but less so then they were in December.
  3. Buyers: It’s a jungle out there. Nothing seems available and everything is asking much more than it did a few years ago. Find an expert who can help you negotiate 3% off the asking price when possible, as that is the market average. Don’t be afraid to look at places outside of your budget, they might come down in price. Lastly, if you don’t want to do work on a property (as most don’t) expect to pay 25% more per foot than similar properties in worse condition.
  4. Sellers: If you play your cards right you can’t miss. So why did 270 properties listed as of December 31, 2014 fail to sell, and fire their agents? It always comes down to price, presentation, and platform. If you can’t sell in this market it’s because your expectations are too high, because there has never been a better time to sell. The offers you are getting are the best you will see – and if you want more money, ask yourself, is my property really in move-in ready condition? Are enough people seeing it? How is it being marketed? Therein lies the answer.

Will This Take Long?

Hi Reader,

Apple Sauce has been getting a facelift (coming soon!) and I have had some great things happen to me business wise. Future posts will be authored not only by me, but introducing my Cousin Ben! Ben is my business partner in Leopold City Construction, online at Ben and I also have a lot of other exciting things to share. You will see that this first post, and my first market-related post, will be the backbone of our column, which will also utilize our completely unique perspectives in less traditional commentary as well.

So stay tuned… David Rosen 1/26/2015

Will This Take Long
By Ben Leopold, President, Leopold City Construction

As the owner of an NYC construction company, I am repeatedly asked two questions, “How soon can you start” and “How long will it take”. Time, like most things in Manhattan, tends to be in short supply and fairly expensive.

My responses to these questions will oftentimes determine if I am asked to quote the job. I have learned to avoid over-promising, and when pressed with these questions I do my best to give the prospective client some basic indications of what to expect. Most importantly, I’ll try to establish whether or not there is a clear understanding of the process we are getting ready to embark on together. Laying the foundation for realistic expectations by establishing a clear roadmap of the pertinent steps is paramount to a smooth construction project. I will lay out the steps here and explain the purpose of following them right from the beginning.

Step 1 – Choose an architect:

Now that you’ve decided to take on a construction project in your home or business, it’s important to know what the rules are. The prerequisites involved in your specific project will vary by location. However, generally speaking, you will need a work permit provided by the applicable building department anytime you move a substantial portion of wall and/or modify your plumbing or electrical services.

The permit application will typically require a set of plans (including a complete Scope Of Work) stamped by an architect. There are varying degrees to which you might utilize an architect’s services ranging from a very basic floor plan to an all-inclusive design package. In NYC, we often include the permit application process in our architect’s purview. We do this because they have a deep knowledge of the building code and can, many times, “Self Certify” the job freeing us from the scheduling constraints of dealing with DOB inspections throughout the process.

A complete set of plans should include detailed lists (schedules) indicating all of the specific building materials (cabinets, countertops, floors, tile, trim, doors, paint, etc.). Getting estimates from General Contractors without these material schedules will lead to inaccurate pricing, unrealistic timelines and more often than not, change orders (aka billable change extras). In certain instances, a client will have very specific and well defined material selections and will act as their own designer. Even in these cases, I strongly recommend that the architect be involved in assembling the actual schedules and getting them on the plans.

Step 2 – Finding a General Contractor:

When selecting a General Contractor, there are various factors to consider. Let’s start with the obvious, quality and cost. Establishing a prospective GC’s level of quality should be your primary concern when shopping for a construction estimate. Try to consider the wasted money and heartache of a job completed in a subpar fashion: materials being torn down and re-installed, time wasted, and collateral damages during repairs, to name a few.

Next, with complete plans in hand, your potential GCs (3 is a safe number) should be able to provide you with a comprehensive and easily readable job estimate. It’s very important that you read through these estimates line-by-line. Oftentimes, the more detail-oriented a contractor is while pricing the Scope Of Work, the better prepared they will be to carry your project through completion without cutting corners, stalling timelines and billing for extras which should have been on the estimate to begin with. The old adage, comparing apples for apples is critical when reviewing multiple estimates. Look closely, the devil is in the details. Remember, avoiding change orders is the best way to keep your project on-budget.

Another important characteristic to look for when making your selection is basic conduct and demeanor. When embarking on any construction project, it’s important to consider the interface with neighbors, building officials, managing agents, coop boards, etc. This applies whether you’re upgrading your kitchen in the suburbs, doing a gut renovation of your two bedroom apartment in the city or building a municipal parking garage. Your GC and their team will be interacting to some degree with the surrounding environment, and the benefits of having competent, courteous and professional individuals in charge and on site can make or break a job. From the moment each prospective GC shows up for their initial walkthrough, be cognizant of their attitude and the basic gut feeling you’re left with. Throughout the estimating process, try to gauge the responsiveness and consistency of the various candidates. Ask yourself, how might you envision this individual responding to unforeseen issues with the neighbors, building inspectors, etc? Of course, it’s not possible to predict. That having been said, I believe that instinct should not be left out of the equation.


Step 3 – Tracking progress and budget during the project:

Although it may seem much easier to sign, scan and email your contract back to your GC, I have found that meeting in person and reviewing the entire job together on paper is the best way to start with everyone on the same page. Take this opportunity to review the payment schedule along with as detailed a timeline as your GC can provide. Discuss contact numbers and any pertinent contingencies. Depending on the size and scope of your project, I would recommend scheduling periodic review meetings. These meetings are your opportunity to stay abreast of any challenges, time/cost improvements, unforeseen expenditures, etc.. Like it or not, it is unrealistic to expect that nothing unforeseen will occur throughout the duration of your project. The best anyone can ask is that due process and careful consideration have gone into mitigating the extent of the unforeseen. A competent GC will have no problem reporting any such events to you promptly and providing you with legitimate options for course correction. Through communication, you should be able to avoid surprises. Don’t hesitate to check in with your GC and ask them how the timeline and budget are looking. No one likes being micromanaged but a professional should be open and ready to provide accurate reporting on a reasonably regular basis.

Step 4 – Closing out the job:

You’ve almost made it and the light at the end of the tunnel is getting brighter every day. We call this punch list time and it can either be hugely stressful or a celebration depending on how well the job was scoped. Either way, painters doing touchups after the brand new floors have received their final clear coat tends to be a little tense.

By this point, you can expect to have paid the bulk of the contract with some sort of final payment left for completion. The little things are getting finished up and the crew is focused on the finish line. You’ll want to take some time to do a punch list walkthrough with your GC and carefully go over the entire written scope to make sure neither one of you will have any surprises coming to you. Talk about where your leftover (attic stock) paint, flooring, etc. will be stored. Discuss any final cleaning that may need to take place prior to their completion. This is also a great time to share any positive feedback you might have in an effort to boost moral through the finish line and remind everyone of how proud they are to be doing such fine work.


Construction is a kind of controlled chaos. We take rough materials and turn them into finished spaces. We make a huge mess and (hopefully) create the pristine environment of your dreams. Indeed, a lot could go wrong, but if you follow the proper steps and chose the right teammate (GC) a lot can go just right and yours can be a success story. Before starting this process, it’s important to understand that choosing a GC needs to be a decision made from an educated standpoint. Taking a little extra time at the beginning to understand exactly what you’re looking for will save you exponentially in the end.