"The real estate market in New York, perhaps with the exception of the office sector that is only now coming back to life, is the busiest it has been in the last 30 years," says Kobi Lahav, real estate broker and sales department manager at the NYC based brokerage Living NY. He adds that "This is the busiest year for sales for investors and rentals. There's an insane run on properties in New York. In many ways, COVID-19 has saved the real estate market."
Lahav went through a somewhat unconventional path. He served in an elite unit in the IDF, studied law at the Hebrew University and worked at a leading law firm in Israel. But the world of real estate has always intrigued him. When he considered getting into the field, he decided to do so in the best market in the world. He considered Hong Kong, London and New York. After choosing the latter, he boarded a plane with two goals: to get into real estate and to study business administration.
New York in late 2007 and in particular its real estate market was on the verge of collapse. “It is a market that is very sophisticated in many respects, but also very outdated in many others. The barriers to entering the field really surprised me. I had in mind an image of a real estate agent who is a brilliant businessman and I found that there are a lot of crooks who offer dubious deals, don’t really understand what they are doing and concentrate only on the bottom line. What I liked was that all of the public information is unrestricted, not like in Israel, where you don’t know what is happening, who bought what and you have to go to the Tabu (land registry bureau) to find out. The available information gives you a control group for people you work with."
In the first company he worked for, he concentrated on rentals because of the crisis in the mortgage market. Slowly he began to understand and learn the complexity of the New York real estate market, an amazing market, he said, where you can develop a career in the areas of offices, investments, rentals, sales – where each sector is a world unto itself. "This is a relatively small geographical area and a lot is reflected in it. Another advantage is the wide variety of buyers."
After four years, he moved to a larger company, where he was also considered the leading broker in terms of sales. From there he was recruited to run a new real estate company, and at its peak he was responsible for about 120 agents. During that time he enrolled in NYU’s Executive Program in Business Administration studies (specializing in finance, banking and management). "I was very active in working with investors, buyers and business consulting," he says. After completing his studies, just before the outbreak of the coronavirus, he moved to a larger company – Living NY – where he took over management of the sales field. “It suited me to work with investors, buyers and property owners," he says, "I also like to work in the field. It gives me an opportunity to focus on what I like." At the same time, he established two companies: one leases office space for professionals in the fields of psychotherapy and psychology, and the other for investments in Student housing in Providence, Rhode Island, where Brown University, one of the leading universities in the United States, is located.
What makes New York a preferred location for investment?
"New York is not an investment location because of returns, especially not in the short term. The transaction costs are quite high, so if you’re looking for short-term deals, New York is not your destination. In more speculative areas, it is impossible to know what the future value of the property will be. New York is like a bond, it's stable. Over time, the property value will usually always rise. As a real estate investment that is part of a large portfolio, New York is very attractive. Regarding the increase in value – if you bought correctly, the value of real estate will increase at least at the rate of inflation. Part of our job is to advise which property is right for you and your investment strategy."
The first thing, in his opinion, that investors should do before coming to New York is to manage expectations regarding the cost of maintaining the property, what the real return is and how much maintenance will cost in the future. A good investment, he says, requires not only luck, but also proper timing. According to him, an investor should be surrounded by the best professionals who are familiar with the market. "New York is a place of 'buyer beware'. If you made a mistake in buying, you have no one to blame but yourself. You have to do the inspection in advance, not skimp on lawyers and be tempted to hire unprofessional people."
Kobi adds that if investors are interested in an apartment, the realtor can do the inspection and later manage the property for them and even rent it out; for experienced investors who are interested in purchasing a building, it is mandatory to conduct an inspection, compare prices and contact a management company. He will be happy to oversee the due diligence process for his clients as part of the complete service package he offers. Lahav reiterates that investors must study the market. "Studying the market means you need a consultant, and the consultant is me – is this the right asset for me and for my investment strategy?"
In his work he concentrates on all parts of New York City – Manhattan, Brooklyn, Harlem, Queens (mostly in Long Island City) and less so on the peripheral areas of New York.
What purchase costs should an investor take into account?
“The negligible costs are the attorney’s fee, payment to the board, checking who the owner is and a lump sum paid to the building. More substantial costs include a progressive purchase tax that is up to 3% of the value of the property and taxation, which depends on whether the buyer is an individual or a company."
Aside from managing expectations, what else is important to know?
"The first thing is the purpose of the purchase – are you looking to make a capital gain? Do you need cash flow? If you want a property in Manhattan, that's nice, but keep in mind that maybe that's not a good enough reason. An investor must know what amount is available to him and whether he will use financing. In addition it is very important to know the city, its real estate market and whether there is someone whom the investor trusts to lead him through the process. Does the broker just care about making money and moving on, or does he want to develop a relationship with you that will last for years? New York is a brutal place to do business. You pay for your mistakes. You want to make an informed decision before you go in.
"Let me stress this – first compare Manhattan or buying real estate there to investing in Israel or on the stock exchange. Look at the returns you can get and how easy it will be to manage the investment, and then decide what is better and whether there is an easier alternative before deciding on Manhattan."
New York has tens of thousands of realtors. Why contact you?
"You need someone who has the education and understanding because you're going to enter a very complex market. I'm an investor myself and that gives me another perspective. My education is different from most agents in the city and I could work at a hedge fund for that matter. There are agents who just open the door and show you a property, and there are agents who really plan the investment with you. Sometimes a non-Israeli investor puts his financial advisor on the line. When you come with a background like mine, the investor's advisor and lawyer will respect you and listen to what you have to say."