At the Juncture of Real Estate and Technology

  Development in NYC is tough! There are always multiple developers chasing the same deals with you. There are existing tenants and neighbors that you need to handle. There are community and activist groups that could rally against your project. And there are a number of city agencies (DOF, LPC, HPD, DOB, DOT, DEP, FDNY, etc.) that you have to deal with. On top of all that, there are so many codes that the development must comply with, such as NYS Multiple Dwelling Law, NYC Zoning Resolution, NYC Construction Codes (Building/Energy/Fuel Gas/Mechanical/Plumbing), NYC Fire Code, NYC Housing Maintenance Code, etc. Development in small lots, particularly old brownstones, also faces many unique challenges. So I want to share some of these challenges based on lessons (some were costly!) that I learned from my own experience. Air rights Small lots are usually located in R6, R6A, R7-2, and R7A zoning districts, which come with 2.2, 3.0, 3.44, and 4.0 FAR, respectively. Using a 18-ft ...

  Small lots in NYC are usually measured at 16-20 ft wide facing the street and 75-100 ft deep in a rectangle shape. There are narrower and shallower lots but not as common. Small lots are spreaded across Upper Manhattan, Greenwich Village, East Village, and parts of Brooklyn and Queens. There are approximately 250,000 of these small lots throughout the city. Most of these lots already have structure built on the land but you can typically find available air rights. This is where you as the developer can add “value” by enlarging the existing structure vertically or horizontally to create more floor areas. It’s a classic value-add strategy in the real estate world. Some lots are still vacant and you can search and find them easily by accessing the NYC lot data here . A vacant lot is prime for ground-up development, although it takes much more time and capital to develop and is considered more risky. With an existing structure and available air rights or a piece of vacant land...

Brokers and investors sometimes ask me why I am interested in small lot development.  Being small, it has a lot of inefficiencies and challenges.  And it is just not the sexiest project to work on.  So I want to share some of my thought process on why l like it, what it looks like, how it’s done, and some cool projects in a 5-part series. Part 1 - Why I like it Part 2 - What it looks like Part 3 - How it's done Part 4 - How much it costs Part 5 - Case studies Here is Part 1 - Why I like it?  Real estate development is a capital-heavy business.  Raising money is probably one of your biggest challenges.  I know a few seasoned private developers in NYC who still consider raising capital as a major hurdle in their projects.  Tesla co-founders Martin Eberhard and Marc Tarpenning chose to start with sports car roadster (a very small segment of the market) before sedans and SUVs because of limited funding they have. If you are starting, you have limited cap...

Throughout the year, property owners will receive various documents from the Department of Finance (DOF) regarding your property taxes. This can be overwhelming if you just become a property owner or investor in NYC. Here is a summary of the timeline which helps you navigate the process, and understand various deadlines and due dates. This post is meant to supplement my other post on How property tax is calculated in NYC. You can access that post  here . January 15 DOF sends the annual Notice of Property Value (NOPV) with estimated tax to each building on 1/15 of every year. The NOPV lists the Market Value (AV), Assessed Value (AV) and estimated property taxes for the next fiscal year starting on July 1. It shall be noted that DOF multiplies the AV by the tax rate to calculate the annual property tax. The tax rate for each fiscal year is established by the City Council in November, 4 months after the fiscal year has already begun. So the property tax listed in the NOPV for the next...

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 ...