Most of us know that the real estate market in New York City is both expensive and competitive. Elliot has become a specialist in his market, and he can typically find deals for himself and/or his clients. He even wrote a book on the subject that he has been working 12 years on! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“Commercial real estate is supported by the economy and the economy is strong” – Elliot Bogod
Elliot Bogod Real Estate Background:
- Real estate author, educator and blogger
- founder and managing director of Broadway Realty, a New York brokerage
- Has personally sold over $2 Billion worth of Manhattan residential and commercial real estate
- Based in NYC, NY
- Say hi to him at https://broadwayrealty.com/
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. First off, how are you doing, Elliot Bogod?
Elliot Bogod: I’m good, Joe. How are you? I wanna say hi to all your listeners from New York City, Manhattan, and happy to be here.
Joe Fairless: We’re happy that you are joining us, and we are going to be talking about today — this is a special segment, Skillset Sunday, and we’re gonna be talking about today step-by-step guide for acquiring properties in New York City.
A little bit about Elliot – he’s a real estate author, educator and blogger. He’s a founder and managing partner of Broadway Realty, a New York brokerage. He’s personally sold over two billion dollars (with a B) worth of Manhattan residential and commercial real estate. Based in, of course, New York City.
First, Elliot, do you wanna give the Best Ever listeners just a little bit more about your background? Then we’ll get right into the step-by-step process for acquiring properties in New York.
Elliot Bogod: Sure, Joe. I’m not a New Yorker, I wasn’t born in New York, but I consider myself a New Yorker for 30 years now. I came to New York in 1999, and finished college here in New York, and then started working for a company called Cushman, which is a big brokerage firm. Soon after, I started working for myself, and for my investors and clients.
Broadway Realty is the company I own, and I’ve been a president of Broadway Realty for many years, for over 20 years now. I’m specializing in commercial and residential real estate, and mostly in Manhattan, even though we do some business in other borders of New York.
Joe Fairless: What are some commercial projects that you’ve brokered?
Elliot Bogod: This year a garage building. It’s in the Midtown West, in Hell’s Kitchen, and that deal will be a development deal, which is secured by a storage company, which will develop it into a self-storage facility.
Joe Fairless: Okay, got it.
Elliot Bogod: They got advantage of the zoning, which is a very good zoning for them, for M2 zoning, manufacturing zoning, so they will change the use of it; they will develop it into — instead of a garage, it will be a self-storage facility.
Joe Fairless: What were other potential buyers wanting to do with that piece of property?
Elliot Bogod: You know, this use is a broad use for many commercial users. You cannot do residential, and you cannot do a hotel, but you can do all other uses applicable on the M zoning, which is manufacturing.
Joe Fairless: Got it. So let’s talk about the step-by-step guide… You wrote a new book called “Get Rich in Real Estate: Your Step-by-Step Guide to Acquiring Properties in New York City.” Can you walk us through the outline of your book? Let’s just talk through that a little bit, the step-by-step process.
Elliot Bogod: Sure. The book is about six weeks out, it’s a new book that took me a long time to write; about 12 years, since before the Great Recession we had in the real estate business in New York… Now we are fully recovered, and I believe this recession has changed to a much more stable market. We saw a lot of purchases, a lot of refinancings and a lot of transactions that happened in the New York real estate, and it’s happening this year as well.
We have a strong market, even though the residential part of it I think got softer… But commercial real estate is supported by the economy, and the economy is strong. We see the real estate, which is following the stock market, and the stock market has never been stronger. The job numbers are rising, the actual employment is great, so I think it’s a good time to be in the New York real estate markets.
Joe Fairless: Okay.
Elliot Bogod: My book talks a lot about New York [unintelligible [00:06:32].16] a lot of New York transactions, but this is a model for other real estate markets, and I think that people who do business in other parts of the country – they watch closely and if they see a good deal, they invest in New York real estate, so it helps them.
This book talks a lot about the next happening things, about the New York cycles, about market cycles, and it shows you models and things that will be hot in the next cycles in the markets in New York.
Joe Fairless: Okay. What’s an example of something that will be hot next in New York City?
Elliot Bogod: New York is moved by technology. First we saw dotcoms in the ’90s. Now New York is a big technology hub. We have a lot of companies, such as Google. Google just bought another building in Chelsea, and it all starts with a billion dollars big office building.
So for them, such big multi-million dollar transactions – they move markets, and people look at those transactions and sometimes they secure it for themselves, sometimes they become anchor tenants. We spoke a lot this year about Amazon. Unfortunately for the real estate markets it didn’t happen, but many other companies are looking to get into the New York if they’re not here already.
Amazon, by the way, has a big presence in New York, and we have a lot of people who work for Amazon; it’s a well-paid workforce, and they rent expensive apartments, they also buy expensive apartments… So Amazon workers are very good for the economy, and all the technology sector I think is a very promising sector… So as long as they do well, the real estate market around the industry does really well, for office building as well as residential, and so on.
Joe Fairless: Knowing that that’s the case, that technology is driving the New York City expansion or evolution, how can we as real estate investor capitalize on that?
Elliot Bogod: In New York you can be a small investor who buys just an apartment, a condominium apartment, or you can be a developer who develops big buildings, multifamily buildings and rents them. For those who work in the industry, it’s a great time and a great opportunity to build new housing. It will attract a lot of new buyers, first-time buyers, people who started working in the technology sector.
I think for first-time buyers it’s a big opportunity for both – for developers and investors, people who buy new apartments, who build new condos… They’ll do well in this market.
Joe Fairless: The challenge that a lot of people might be thinking of is “Well, it’s not gonna cashflow, or if it does cashflow, it’s not gonna cashflow very much. I’m gonna have to hope that the market continues to appreciate.” What’s your response to that?
Elliot Bogod: I think that you look at the cap rates in the rental markets today – four, up to five-cap, in the areas that are [unintelligible [00:10:20].24] Brooklyn, Queens… You get debt services for 4%, low fours for developers, and I think that’s what the big moving factor is – they’re getting [unintelligible [00:10:37].08] money at low rates, and that makes it so the banks are still attracted to new developments, and they’re building.
Joe Fairless: You talked about earlier that your book has New York City cycles and market cycles… Let’s talk about New York City cycles – what should we know about the cycles that New York City has gone through, and in particular how that can be applied to the future, as we move forward?
Elliot Bogod: A big downturn in Lehman Brothers in 2008-2009 times – we had few transactions in the years 2009 to 2011. It changed dramatically after 2012. 2015 I think was the highest market in New York… So it gave us a big lesson that the market can change; it can go high or it can go really low, so we saw discounts in the market of 30%-40% from the tops of 2008. That was the top market. The next top market was in 2015, and now we are in a softer market, which is three years after. The prices are still top prices, but it’s a buyers’ market now. Buyers will get good deals if they are careful; they have secured financing, so… Old sellers are listening to buyers now. That’s the situation with the market now, and that’s how it changed.
I talk a lot in my book about the market cycles. The New York cycle is anywhere between 3 to 5 years. The next cycle I think will happen in 2021. That’s when the next [unintelligible [00:12:27].05] market is coming.
Joe Fairless: And what causes it? Because even if it does happen every 3-5 years, it won’t happen just because it’s supposed to. Something triggers it, so what do you think will trigger it in the next three years?
Elliot Bogod: The population growth in New York – New York now is 8,5 million people city, and we have a lot of people looking for upgrading residences, they’re looking for larger apartments, family-size homes… So the residential market has always affected the trends, and that buyers or sellers market. Of course, interest rates is a big factor. This year we had good news about interest rates. They are still low, and it doesn’t look like it’s gonna be increased, even though at the end of the year we can have surprises… But so far, the interest rates are back to the lows.
In the last 3-4 months we had interest rates for mortgages decrease, so I think it’s a good thing for the market. We sold a lot this year, and something that didn’t move last year because of the interest rates, we saw this inventory started selling again. Law interest rates is good for the liquidity.
Joe Fairless: How can the Best Ever listeners learn more about your company?
Elliot Bogod: Broadway Realty has a website, broadwayrealty.com. My book is on Amazon – Get Rich in Real Estate, by Elliot Bogod. We’ve got a lot of good coverage already for our book, and people like it; we got a lot of good reviews, and we’ve also got a lot of books sold, so we have a lot of interest in our book.
Joe Fairless: Outstanding. Well, Elliot, thank you for being on the show, having a conversation with us about New York City real estate, the market cycles, where you think the market cycle will end – the current one – and when it will begin, in New York City in particular, and then the technology companies really driving the ongoing evolution of the city and its real estate.
Thanks for being on the show. I hope you have a best ever day, and talk to you again soon.
Elliot Bogod: Thank you, Joe. Thanks for having me, and good luck to all your listeners, and best of luck in the real estate business. Have great deals and success in real estate.