A Stunning East Village Day

A few weeks ago my Dad was in town and he is a bad influence. While I want to obsess about real estate transactions, real estate transactions, sports, my fitness, and real estate transactions, he wants to talk about history, eat good food, and waste time with so called interesting people.

To mollify him we went to my Barber Jay, and then to B&H Dairy, which this week was notable in that it did not explode.

So another time we will talk about B&H and my Dad, and his telling of the Jewish history of Second Ave, the East Village, the LES. My Dad is an NYC Jew, just like myself, my sister Yoshi, and B&H Dairy, the best place for blintzes, whose tagline is CHALLAH! por favor. This is important to point out. To me- hearing about my ancestors struggles and immigrant experience, has always been a source of pride – and it is a heritage that is inquisitive, open minded, and appreciative of diversity.

I sell a lot of real estate in the East Village. Josh Rubin and I are among the top selling agents in the neighborhood. It’s notable because the apartments are quirky, and have certain idiosyncrasies that make sense if you have a sense of the history of the neighborhood. As a matter of fact in 2 weeks I will be releasing a PH (walk-up) One Bed with a private roof deck asking $700,000. Email me to see it first.

So this week, on the day that three buildings exploded, on Second Avenue, I was closing on an apartment at 347 E 5th St PHA where I represented the seller and buyer. It was a weird transaction in a weird building. Shout out to Michael Bensimon at Sterling National Bank for getting the loan done, despite 60% of the building being rentals.

On the day of the closing, we do the walk through, and there is evidence of a roof leak. This leads to conflict, negotiation, etc… Then on the way to the closing the Second Ave explosion happens so we are stuck in traffic. So we get to the closing late. But you know what – in the end we got the building to repaint the apartment (they had already patched the leak) and buyer and seller ended a curt business deal with more smiles that had been evident than at any point prior.

Then I go and check out something I have been meaning to see for quite some time, a jewel of the East Village, the art show Polar Opposites currently at NOoSPHERE ARTS at 251 East Houston St. Now, mind you, I didn’t actually know about the explosion and the fire. So while I am getting a private tour of the show, an infantry of fire trucks is going past me on Houston St. Later on I would catch wind of the news. Dramatic to say the least. And sad.

The art show was very dramatic in its own right. In fact with all the bullshit, traffic, leaks, nags, sirens, etc… that plague our New York lives, being able to see incredible creativity is one nice thing we can enjoy.

The show is made up of three artists, two photographers and a painter. As an artist myself, I am a harsh critic. I am also a loving critic. I really liked all the artists.

Here is what to look for when you go to the show (open now until 4/12.)

Kordan

Daniel Kordan: Thomas Kincaid-ish…. I hope that’s not a dig. Kordan is a magician. His idyllic Arctic Circle villages do remind me of Kincaid’s paintings though (which is like the kiss of death for an NYC artist, but it shouldn’t be.) Anyway Mr. Kordan is from Moscow (like most Brooklynites – jk/lol.) His use of exposure and surface really is evocative – in a way Kincaid is not. The juxtaposition of light, ice, and flowing water are painterly, luscious, and beautiful. These images are not ashamed of bold composition and clear moments of interest. A renaissance of the beautiful landscape emerges.

Christine Kjelsmark: the lone painter in the show, her work is plein-air meets street art, meets the Faro Islands. She has a fun style and includes legion birds doing cute things in their Mountain River Arctic Oasis as the clouds roll along. Her artwork shows a connection to the splendor of green and character of white and ice that only a Northern artist would be sensitive to.

Jeff Orlowski: Jeff’s photos are a bit political (sadly) and are an outgrowth of his Academy Award nominated film, Chasing Ice, chronicling the melting of the glaciers. Jeff identifies himself as a photographer and a filmmaker, and his work is cinematic and rich. Lively icebergs on Mountains give way to a feeling of adventure, and almost magical fantasy, made richer by the understanding this is documented majesty, not photoshopped fiction.

I want to thank Kirsten Wildfang for arranging for me to see the show, and I really recommend it if you want something new to do in the East Village / Lower East Side. Like all historic moments, it won’t be around forever.

The Sexiest Thing Happening Behind Closed Doors

Text from my friend’s girlfriend: Dave!! The company I work for is having a benefit tomorrow and a showing, its 7 – 9pm , 25$ but drinks and food and music, cool peeps. I’m making XXXX come, but he would probably enjoy it better if you came hahah!! And there will dancer hot ladies!! Please say you’ll come!! :):):)

So… I went.

My buddy meets me and looks like a million bucks, which is cool, and I’m not dressed as nice, but nice enough. We sprint to get there by 7:00, find the building, and once inside are told directions by a stunning woman in an otherwise blah lobby, and take the elevator up to a high floor, where we get out in a non-descript hallway, make a few turns, and find more stunning / sexy / pierced / cleverly shaved and fit people sitting in a hall, and we then proceed to wait.

After some time the door opens on to the physical headquarters of Sidra Bell Dance New York, and we enter.

I use the words physical headquarters because Dance can truly transcend a space, and over the course of the evening, I would learn how powerful and intense the company is, which wasn’t immediately apparent, as the door opened into a dance studio with a DJ and speakers, a stage positioned 20” high off the ground, and a table set up with wine, crudité, and a raffle.

Ever the supporter of the arts I partake in the crudité and raffle tickets.  For $20 I purchase 12 tickets. The tickets are for 4 different categories, and range from a $50 iTunes gift card to illustrations of the dancers, tickets for future performances,  and Knicks tickets (for next year, obviously.) I spread my action over all 4 categories. This was a useful strategy which yielded a good ROI, because while there was only 1 Knicks ticket gift available, there were a lot of $50 iTunes Gift Cards, and so I actually won! (The End)

Sidra Bell

 

Continued – Anyway, before my victory, the company presented the first of three dance showcases. Look, I am not going to pretend to be a dance critic. I am going to share what I saw.

The Sidra Bell Company is made up of four dancers, and the highly lauded Artistic Director Bell is supported in her organization by a team including a vibrant Board, a sophisticated General Manager, and a team of support staff who are obviously creative, and function as the glue. Before the first of the dances, they were also “on stage,” metaphorically. Our hosts were mingling, sharing, and making us feel welcomed. A projector looped performances on a wall, and the mood was very inviting.

Jonathan Campbell, Austin Diaz, Associate Artistic Director Alexandra Johnson, & Rebecca Margolick are the performers. These are four human beings who do something they may call dance. For me, it was not so much a performance as it is also an intimate experience. Each of these unique creatures brings a wisdom and vivaciousness that lets the viewer know without doubt they are in the presence of a master.

The first number is incredibly sharp, as the company uses their 4 elements in a sequence of solos, building as multiple routines are happening in a way that the eye has to focus on one or two of the dancers, as you can’t see all 4 at one time, and they are almost acting out an homage to a rave, or a club scene, and on the way, sophomoric and light moments are punctuated by powerful vibrant moments. The motions are sexy. Powerful break dance themed moves yield to slower more tense movements, and the performers are owning the space. On the faces of the performers that are just a few feet away are expressions that is method acting at its height. The dancers aren’t trying to dance to the music, they are so focused it feels as if their focus and movement creates the accompanying bass beats and snares. And then, the last passage of the opening performance, culminates when the faux rave devolves into a dance circle, and Margolick does a routine that is completely campy and silly, and is laughing at herself, and the effect is to illuminate the divide between the hobby of dancing and the art form.

I can’t really do justice to describing the dance numbers, and frankly, they don’t need to be described, they need to be witnessed. What I would say though, unequivocally, is that the leadership is clearly pushing the envelope, the dancers are more than talented performers, they are iconic, and that the organization is in a strong place.

The last takeaway I had as the evening went on and I met many friends of the company, was the bonds and energy and work ethic that so clearly laid the foundation for this work. All of us have jobs or responsibilities, and the power of the commitment these people had, their mutual acceptance, complex self-conscious creations, and ability to be in synch inspired me not only as a spectator, but also as a businessman as it was really a great illustration of what corporations everywhere are striving to achieve.

 

The Jetsons Would Be Proud – Home Automation Today

These days, home automation can be almost anything you want it to be. For the right budget, your home can become an extension of you. The basic function of home automation is to consolidate the points of control for multiple devices to one platform which is accessible from any number of user friendly locations. Typical applications would include keypads/iPads conveniently positioned throughout the home and full smartphone compatibility. With preset scene lighting, integral curtain/shade control, whole house audio/visual and smart climate control, you can chose your desired environment at the touch of a button from your smartphone or wall mounted iPad mini. Other options include access control, intercom, security, surveillance and remote control of all household functions from virtually anywhere in the world with an internet connection.

Blog Pic (2) post

Let’s begin by looking at two of today’s most common applications, lighting and home audio. Here’s a basic breakdown of the types of features you can expect to find:

Lighting-

Depending on whether your project involves new construction (or at least opening up walls and ceilings) or is a retrofit in a finished space, your lighting controllability options will vary in cost and in terms of what’s possible. When doing new construction or any time you have the capability of rewiring all of your light circuits, the preferred method would be to install all the light switches/dimmers for the home in one centralized location (like a tech closet, etc.) and control them with programmable keypads throughout the home. The advantage of this application is that you can designate the multiple buttons (usually 5) on each keypad to activate individual pre-programmed light settings. Some common settings include: scene lighting (using different light zones to create a desired atmosphere), entry, all on, all off, away, low, etc. There are also retrofit options for situations where centralized light switching is not in the scope of work. Various light switches can be removed and replaced with programmable keypads that communicate with one another via RF (radio frequency), creating a very similar functionality throughout the home.

Home Audio-

When it comes to home audio systems, retrofit and wireless speakers and component are readily available for those looking at minimal impact to finished living spaces. With wireless speakers throughout the house you can achieve a fairly balanced sounding system. Functionality and sound quality will depend on how strong your Wi-Fi is and how spread out the system is. Although wireless speakers come in a variety of shapes and sizes, you will compromise on a certain degree of overall sound quality. If the highest sound quality is what you’re looking for, nothing compares to wired speakers properly installed and specifically chosen for the space. With multiple apps to choose from when setting up your home audio, you should talk to your General Contractor and/or Home Automation/Audio professional about your specific intended usage of the system.

Check back in a couple of weeks when we dive into climate control, remote entry control and surveillance.

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.

mortgage-insurance-tax-deduction

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”https://www.youtube.com/watch?v=_RWEZ8ddexo#t=48

Material Selection 101 – Determining Factors

Carrera or quartz? Engineered or solid plank? Programmable keypads or local light switching? Spray foam, rigid, or fiberglass insulation? These are a small sampling of the various options available in today’s construction industry. As you get ready to plan your next (or first) construction project, identifying priorities such as form vs function, maintenance considerations, resale value and budget will help you narrow the search field considerably.

Form vs function:
There are those who’s aesthetic preferences are design driven and others who prefer to focus on comfort and ease of use. A space saving bifold closet door can be a great option in a smaller bedroom, unless you hate bifold doors. A custom fabricated trough sink may look fantastic, unless your kids don’t rinse the toothpaste out of its flat bottom basin every morning. You get the point. Nailing down your specific values in this regard is the first crucial step in ensuring that the project you’re planning will yield a finished product that truly reflects your vision and lifestyle.

Maintenance considerations:
What is the key function and purpose of the space you are creating? Is it a primary residence, a vacation home, a business, etc.? Do you have pets? Are children in the picture or might they be in the future? An equally important question is how much energy/money are you willing to spend on routine and spot maintenance? Certain materials can be highly durable as long as they are properly protected and maintained but will become susceptible to damage if the maintenance is not kept up. For instance, many types of stone are quite porous and will stain easily without being properly sealed (depending on the level of wear and the specific type of stone, sealing is something that will need to be done periodically). When choosing stone, be sure to ask your stone yard or contractor for professional feedback in this regard. By the same token, wood floors tend to be quite vulnerable without a sufficient clear coat. In high traffic areas, this clear coat will wear thin quicker exposing the wood grain to potential stains and scratches. Typically, prefinished flooring will have a more durable (factory applied) clear coat but is only available with micro-beveled edges, producing a look which is slightly different from that of a floor which has been sanded and finished in place. You should confer with your industry professional as to whether engineered or solid plank material is best for your specific application. If engineered flooring is the right decision, be sure to choose a product with a thick ware layer. The thickness of this top layer will determine how many times the floor can be sanded and refinished (a necessary part of routine wood floor maintenance over the years). Exterior finishes (wood, vinyl, stucco, brick, etc.) are another prime example of the degree to which maintenance requirements vary from one finish to another. Whatever finish materials you choose to go with, staying on top of routine maintenance will ensure the continued value of the investment you’re making.

material selection

Resale value:
As you enter the process of designing your project, you might hold more or less importance in the impact your choices will have on resale value. Generally speaking, it is best to avoid highly individualized/stylized design features if resale appeal is a priority. Consulting a design professional and/or your trusted real estate agent will help you to be more cognizant of the most popular building options as well as what kinds of choices to avoid in your specific area. A balance should be found incorporating a neutral style pallet while incorporating features which maximize the potential and individuality of the space.

Budget:
When identifying what your budget will be, first establish what’s driving the project as well as what’s controlling the budget number. Is this project in preparation for sale or refinancing? Is this a renovation based on necessity? Is the budget based on what you think you should spend to increase the property value or is it simply based on the amount of available funds? Either way, knowing what you want to spend on your finish materials early in the game is a big part of moving through the overall job estimation process with the least amount of distraction along with the least number of rewrites.

Without establishing these four basic parameters beforehand, selecting the materials for your renovation or new build can be a complex and overwhelming process. Taking the time to clearly define what your priorities are at the beginning is a good way to avoid being swept off course during the design phase.

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.

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.

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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 Renovate.nyc. 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.

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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.

Conclusion:

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.

The Rent Freeze That Wasn’t

The other day a critic of mine said, “Why don’t you write about affordable housing?” I said, “I don’t want to offend anyone.” Oh well… Here goes:

We don’t deal with anyone who lives in a rent stabilized apartment as part of our daily business, with some notable exceptions. Oftentimes people who own rent stabilized apartments want to sell them, and in doing so we interact, or sometimes a neighbor in a coop will be rent controlled, or an adjacent building with existing air rights. This is the rule of thumb: people with rent stabilized and rent controlled apartments don’t leave. They survive death as their heirs can inherit their apartments. Sometimes some of my very lovely friends who may have been raised in Manhattan are even lucky enough to negotiate buy outs, which can act as seed money to stake a family to buy their first home.

So on NY 1 News they had people calling in after the City Council adopted a plan that raised rent stabilized rents 1% over the next year and 2.75% for 2 year leases. The crowd wanted a rent freeze. The modest increase was in fact the slightest increase, as in the smallest, of the last 50 years. However, despite it being the best deal tenants have gotten from the City in most of their living memories, few were pleased.

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Tenants were DISGUSTED, disappointed, irate, aghast. They wanted to know, “how do they expect us to pay more rent without an increase in real wages?”

Landlords were pissed! How can we only get a 1% increase when property taxes have tripled in the last 5 years?! Utility prices have gone up?! Maintenance for my building is subject to inflation and I can’t afford it!

However, ironically, no one was more upset than the bystander. The bystander is the market rate tenant. One caller said “Rent stabilization only exists in 2 cities in the country and the free market tenants are subsidizing the rent controlled tenants. It should be eliminated. It’s an entitlement.”

Now what does the Sauce have to say?

Dear tenants, you are a lucky mofo. Stop bitching. Say Thank You. It’s not everyone else trying to rob you. I would be sorry that the world is a mean cruel place, but luckily for you, you have a safety net. If I had a Mayor who promised a rent freeze and reneged, I might wonder why the Mayor keeps writing checks with his mouth his ass can’t cash, but I wouldn’t blame just him. I think the Mayor understands holistically that the cost of living is astronomical and that the City is organized chaos. 1% is equivalent to the US Soccer team getting to the World Cup finals. It’s a pleasant surprise.

Dear landlords, you are likely not all that sharp. And if society was left in your hands this island would resemble Lord of the Flies. Let’s look at this. If you inherited your buildings, well, sorry Mommy bought you a Toyota not a Lexus. If you bought your building – look, see the first paragraph. Rent controlled tenants don’t leave. You bought the building subject to their leases. The reason a landlord would want a rent controlled tenant is because the City (read the taxpayers) discount their property taxes in exchange. Landlords complain the rent controlled tenants are all sorts of bad things. Know what they really are though? Less fortunate than you! Count your blessings. Stop being such a pig. Learn how to share.

Dear bystander, you have no idea what you are talking about. Let’s look at the stats. NYC has mass transit so the public can efficiently get from point A to point B without owning a car. NYC has the best food in the world, great artists, some of the best schools in the country, and is the most in demand tourist location in the USA. Better than Los Angeles. Better than Miami, Chicago, and the town you grew up in. NYC has the most valuable real estate in the country. NYC saw the lowest decline during the crash. NYC has the least leveraged real estate. Why? It’s called infrastructure.

However, none of the parties are thinking of the big picture. All of this becomes like sports. No matter what your personal interests are, as a professional negotiator, you can’t hate a negotiated settlement. All of life is a negotiation. Your very DNA is a negotiation between your father and your mother. A successful negotiation is an enduring love. Without challenges we can’t have victories. A world without disagreements isn’t ideal, in fact it’s not our world at all.

Rent control is social infrastructure, and while staring at the details might distort your perspective, the bigger picture is that informed and wise urban planning have made this world city resemble other great global cities, places like Paris and Berlin, where government subsidy similar to rent control are the nutrients that keep an honest, active, and healthy labor force proximate to the goods and services they help deliver to the more affluent classes. In fact the wealth and affluence of the City society is a result of the infrastructure, not a vestige. Informed analysis shows that without social support you have bankrupt cities like Detroit, filled with crime. A city that doesn’t maintain all of its infrastructure actually can die. The clinical analyst who sees things in a vacuum would be wise to take a deep breath. For that matter, we all should.

Carmelo Vs. Carmela

So I caught the Colbert Report the other night and Edie Falco is being interviewed by Stephen Colbert, and not having the best time. Clearly not a match made in heaven. Stephen’s dry and ironic sarcasm is not penetrating Edie’s mind. She is a serious gal.

I flick over to Sports Center and amongst soccer players biting each other and LeBron James, the story us New Yorkers want to know about – where will leading scorer Carmelo Anthony go next year, is discussed. The consensus is the Chicago Bulls, who have great defense and coaching and check the ‘Big City’ box that’s apparently vital to the Knicks All-Star.

Wow, wow, wow. Carmelo and Carmela. Actually, they have a lot in common, though they handle their situations very differently. And while some of you might say Carmela is a fictitious person and Carmelo is real, eh, details.

On Commitment:

Carmela was the materfamilias of the leading syndicate family. Blood in, blood out. The closest thing she got to being disloyal was a sleepover with her Priest, Father Phil, and that was amongst a cacophony of cheating that Tony had put her through, and it was a rainy night, and nothing happened. Tony was cheating on his mistresses, let alone his wife. Carmela and Tony did have a trial separation, and she went out to dinner with one of her son Anthony’s teachers, but even then, she never lost her identity as Tony’s wife and Anthony and Meadow’s Mom.

When Uncle Junior shot Tony and he was lying in the netherworld between here and Kevin Finnerty (the pearly gates or something,) Carmela even stepped it up and made sure the family made its collections. She didn’t deviate or try to align herself with another star.

When Tony’s people killed her daughter’s boyfriend and best friend’s son for robbing a poker game, she never told. When the FBI came she never blinked. When Furio flirted with her, she sent his ass back to Italy.

Carmelo went to Syracuse University. I know a girl who went there too. She told me a story. She said she had a friend who had consensual relations with Carmelo. At the conclusion, he jumped up fist pumped and yelled “100! You’re the hundredth bitch!” Just gossip. I don’t know if he had a girlfriend at the time and am not accusing him of, ahem, infidelity. At Syracuse, with one other marginal NBA player, he chucked his way to the NCAA championship. This was no small feat, as his draft class was the second best of the last 25 years, his competition was also elite.

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Carmelo was drafted by the Nuggets, and paired with Allen Iverson, they were competitive in the uber-competitive Western Conference. Allen Iverson has since retired and is a known cocaine addict (fact check me.) One of those teams they were on won one playoff series. AI got a lot of the blame, not for the blow, just for being a chucking scrub, and so they got other guys in to replace him. Unfortunately the other guys, guys like Chris Birdman Anderson (suspended for drug use,) JR Smith (suspended for drug use) and Chauncey Billups, weren’t enough to take the Nuggets to the next level. At least not on the court.

Carmelo wanted out of Denver. He wanted out ASAP. He did not want to wait for Denver, or his contract to “finish.” So instead of playing out the last year of his contract, he forced a trade to the Knicks. He would only go to the Knicks. The reason he wanted to force a trade, instead of signing as a free agent, is so he could have a guaranteed 5th year on his contract. It was not to win a ring. It was not to help the Knicks advance in the playoffs. It was not to help the Knicks. It was 3 years ago when he signed his 5 year guaranteed max deal. Now he has opted out again. All it cost the Knicks was a decade of development.

Commitment Advantage: Carmela

On Leadership:

When Carmela knew that Adrianna was missing, and the story didn’t really add up, what did she do? She didn’t rat. When Tony left the house and AJ was being a brat, underperforming in school, etc, and Tony, super guilty as an absentee father (and taking the easy way out at every possible fork when it came to his family, except the time he took Meadow to see colleges) bought AJ a yellow Nissan Xterra, Carmela made Tony take the car away until AJ improved his grades. This made her unpopular with everyone (except AJ’s teacher who liked her and she rebuffed after one date) but she had principles and she stuck to them.

When Carmela’s Mom was nervous that their elitist friends would be embarrassed by Tony and his family, Carmela stood up to her Mother. When Meadow was embarrassed when she saw Tony out at a club, she confronted her husband, and made him reflect on the example he was leading by with his children.

When Carmelo played the Celtics in the playoffs, he got into an altercation with Kevin Garnett, who informed him his wife Lala, tastes like Honey Nut Cheerios. That was a surprise to Carmelo, who apparently hasn’t tasted Lala in years, as it came out that despite their public marriage, they are estranged. So while Carmelo is looking for a new team, Lala had previously said that Melo would stay in NYC. Melo responded that he loves and respects his wife, and those weren’t his words.

When Melo came to New York, he did his best to get along with the team and forge a winning attitude. In doing so he took a team that won 50 wins (a stellar benchmark) the year he arrived, with 2 co-stars, Amare Stoudemire and Jeremy Lin, and led them to being swept in the first round of the playoffs by Garnett’s Celtics. The next year, he led them to firing their coach, Mike D’Antoni, shipping Lin to Houston, and marginalizing Amare, with the hopes he would retire. Amare’s injuries aside, neither he nor Melo play D, and their redundancy didn’t directly translate into wins. Over 3 seasons in blue and orange, he leaves New York with a completely depleted roster, on the 3rd coach since he “came home,” and failed to make the playoffs for the first time in his career. While he may have done the opposite of elevating everyone around him, he did find a way to abdicate any responsibility for his folly and blame the Knicks for not supporting him.

Leadership Advantage: Carmela

On Charisma:

Carmela really has a disadvantage here. She was always so focused on the chaos of her family, she really only had eyes for one man, and did NOT go out of her way to charm anyone (even her husband.) While she apparently made a delicious Manicotta, her biggest charm points seem to have been gained on movie nights with Rosalie Aprile and Silvio’s wife Gab.

Carmelo has a sneaker. Have you seen anyone wearing it? No. Because Carmelo is an asshole. His closest friend on the team when he arrived – Chauncey Billups, was immediately cut with his championship career unceremoniously caught up in the collateral damage of Carmelo’s whims. His next bestie, JR Smith, forced the Knicks to sign his kid brother Chris Smith, which caused a huge locker room divide. So basically Carmelo isn’t big on things like, “friends,” “teammates,” though now we are supposed to believe he is really big on winning? I don’t think so. Because I don’t really like him.