At the Juncture of Real Estate and Technology

I often got questions from families, friends and investors on how NYC property tax is calculated. The reason is that the subject is pretty convoluted and it is quite difficult to find any straightforward writings covering the topic. Here is some basic information I collected over the years along with a real example. NYC Department of Finance calculates property taxes through a 5-step process: 1) determining property’s market value, 2) determining billable assessed value, 3) applying any exemptions, 4) applying applicable tax rate, 5) applying any abatement and savings program.   It shall be noted that any tax bills (quarterly for assessed value under $250,000 or semi-annual for assessed value over $250,000) sent to the property owners are based on market value from the year before.  Step 1: Determining property’s market value NYC Department of Finance (DOF) assigns market value to all properties in the City based on the methodology enacted in the early 80’s.  The met...

I try to write on topics that I am interested in but cannot find good books or reads on the internet.  Evaluating real estate development deals is definitely one of those subjects.  Here is how I evaluate residential deals for value-add or ground-up development in a 5-step process: Market Analysis, Development Concept, Preliminary Due Diligence, Financial Modeling and Returns.   Step 1 - Market Analysis Market analysis is usually the first step of any deal evaluation. It will provide a lot of useful information, such as area insights, demographics, product type/design, comps, etc. The most important information to a developer is probably the supply/demand and comps data of the specific product that you choose to develop. As legendary real estate entrepreneur and investor Sam Zell highlighted in his book Am I Being Too Subtle that real estate business follows the simple law of supply and demand! Here is the thought process on how I develop the supply/demand and ...

  There are roughly 3.5 M housing units in New York City. Two thirds of them are rental housing. Clearly a majority of people rent. Multifamily rental is a big part of real estate business in NYC. Significant capital (domestic and foreign) continues to flow into this sector. But there are investors who are hesitant to enter the market. A lot of it has to do with cumbersome rules and regulations around rental housing and many of them are unique to the city. Here are some basics about the business addressing many of the common questions. I hope the information will help clear some concerns due to unfamiliarity about the sector. Type of Housing There are regulated and unregulated housing in New York State. Rent control and rent stabilization are two types of regulated housing. An unregulated apartment is considered “free market” or “market rate” unit. Rent control (RC) limits the rent a landlord can charge for an apartment and significantly restricts the right of the landl...