Advice for Those Thinking of Jumping Into the Market

Roberta Benzilio, the chief operating officer of Century 21 William B. May, got her start in the real estate business 24 years ago as an investor. As an agent, she handles a variety of properties, including townhouses, condos, co-op conversions, and industrial space. She spoke recently with The New York Sun’s Maura Yates about smart property investments.Q. Some people are concerned that the market may soon start running out of steam. Is it wise to rush into an investment to take advantage of the current values, or is it better to wait a while to see what happens?A. There is no indication in anything we see or hear or read that it is running out of steam. Instead, real estate has become the fourth asset class, as more and more people disenchanted with the stock market are turning to real estate. People are starting to say, okay, let’s diversify and include real estate in our portfolios. There are ups and downs in the market, but every time the market dips or adjusts, it comes back stronger. I tell people to look at the long term – five to 10 years. It ultimately holds its value.Investors have made a lot of money buying properties that increase in value overnight, and then selling them right away. What is the best kind of investment? Should you buy to sell, or look for something for the long haul?What’s been happening is that people are buying new construction properties, and by the time the building opens, they turn around and flip it and make a million dollars on it. You really have to have your pulse on the market to know what areas are going to be hot. When you buy an investment property that throws off monthly income, you tend to keep it. If you buy below market value, you can flip it and get an immediate return. You can buy a distressed property, fix it up, and flip it. That’s called sweat equity. The other side-benefits to keeping properties are depreciation and other tax benefits. There is also the potential cash flow and capital appreciation. At the end of the day, real estate has been throwing off a return as good as stocks, if not better. In the long term, it has definitely been better than stocks.What types of properties, and what neighborhoods, make the best investments?A lot of new investors like to buy condos that they can manage with one tenant in one unit. Multiuse or multifamily brownstones are popular, as are commercial properties. If you get a Class A tenant, those are good investments. Right now, good investment areas are the Lower East Side, Alphabet City, Clinton and the West Side, Harlem, and Brooklyn – Williamsburg, Greenpoint, and Red Hook. There is no bad investment in Manhattan. Every neighborhood is desirable at this point.Once you’ve picked out a great investment property, how do you finance it?Through a bank or any financial institution. Some people will finance it through private investors, or investment funds, but moneylenders tend to charge a little more. Most people go through banks. If the numbers make sense, it’s much easier to get financing today because the banks understand the values. I don’t know of any stocks throwing off that kind of money. Even if the market goes down, you still have the property. You still have the bricks and mortar, which is better than paper.The most lucrative investment property in the world can quickly become a headache with a bad tenant. How do you find a great tenant?You have to do your due diligence, and do credit and background checks. It’s important to check referrals from previous landlords. Finding a tenant is the painful part, but no pain, no gain. You just never really know. In my experience, if you treat people right, usually they behave. If you really want a good, solid tenant, use a broker, because they have the advantages to qualify people.

Advice for Those Thinking of Jumping Into the Market

Advice for Those Thinking of Jumping Into the Market

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