Overseas Property Investing

What I Look At In An Overseas Property Investment: Reviewing 3 One Bedroom Properties In New York

Published 15 Jun 2022 | 0 comments | 0 shares | 14 min read

BY Cheryl Published 15 Jun 2022 0 comments | 14 min read

BY Cheryl

Cheryl has been writing about international property investments for the past two years since she has graduated from NUS with a bachelors in Real Estate. As an avid investor herself, she mainly invests in cryptocurrency and stocks, with goals to include real estate, virtual and physical, into her portfolio in the future. Her aim as a writer at Stacked is to guide readers when it comes to real estate investments through her insights.

Investing in overseas property can be a tricky thing. But one thing to err on the safer side is to look out for gateway cities. Or rather, places that are on their way to becoming gateway cities – to capitalise on the upside in the future.

The other safe way is to invest in global cities. These are places that are internationally recognised, where hordes of foreign investors pour money in as they are the most well-known, and well-connected (Singapore happens to be one of them as well).

And so in this piece, I’ll be looking at a city overseas and picking 3 properties there to review. Think of it as an introductory series to whet your appetite for overseas investment. It’s not going to be too heavy like some of our Singapore reviews, but instead, give you a better idea of what to look out for, and how to approach doing your due diligence.

Let’s start with New York City.

It is well known for its iconic skyline, colossal skyscrapers and crazy real estate prices. It has something special for everyone – Broadway for theatre, Wall Street for finance, Chelsea for Arts, Fifth Avenue (aka Millionaire’s Row) for shopping and Madison Square for sports.

Reviewing 3 Properties across NYC 27 — Broadway, Times Square. Credits: WIRED

Save for the sometimes peculiar people you might meet there, I have to admit that its architecture, lifestyle, food and the number of billionaires (107 of them, you never know when you’re gonna bump into one on your next trip to the supermarket) makes it a really cool place to call home.

Reviewing 3 Properties across NYC 28 — NGL, there are really some peculiar people there 😳 Credits: NBC New York

The city is divided into five boroughs – Manhattan, The Bronx, Staten Island, Brooklyn and of course Spider-Man’s home – Queens. Each of them has its own characteristics and flavour.

Reviewing 3 Properties across NYC 19 — Credits: New York Today

I might also add that it is one of the densest cities in the country, with about 38,000 people per square kilometre. In comparison Singapore’s density is 8,358 people per square kilometre, so you can just imagine how much busier it can get. I guess that explains why the skyscrapers have to go up so high and why it’s so noisy there. If you have been complaining about how dense Singapore is, New York would clearly not be for you.

Due to the pandemic, some people have termed the city to be ‘dead’ but honestly, I think that claim is far from the truth. As far as real estate goes, Manhattan posted its best year to date, rebounding from the pandemic with $30B in real estate sales. Does that sound like a dead city to you?

You should know though, that this wasn’t always the case for this city. Global money pouring from all around the world over the past decades played its fair share in transforming and building up to the demand in its real estate that it has today.

Here’s a fun fact: New York City has always been a favourite of the rich to buy real estate as they were able to use shell companies and trusts to buy big bulks of anonymous purchases, hiding their identity and assets from the government. This has been quickly clamped down with new regulations recently, but it definitely played its part in contributing to the city’s incredulous property prices that we know of today.

Demographics & Context

Not only are real estate prices expensive, the costs of living in the Big Apple is known as the most expensive as compared to other cities in the USA. With a median individual income of $32,320, NYC’s residents earn slightly higher than the national average.

The majority of the folks living there are aged between 25 to 34 and are mainly White. Out of all the residents, nearly 40% are foreign born (that’s as international as it gets!). Renting is vastly much more popular in NYC, with ⅔ of 3,191,691 occupied housing units being rentals.

Reviewing 3 Properties across NYC 9 — Credits: ValuePenguin

On top of that, rented homes in NYC have fewer people living in them as compared to occupied homes – this translates to people there preferring to live by themselves or with lesser roommates. Or that the family nucleus there is smaller.

Why is this important you ask? That’s because it gives you an idea of what unit type you should acquire for it to have consistently good rental demand.

On the matter of costs when it comes to renting vs owning, it seems that typical homeowners spend more than US$3,000 per month, whereas the average cost of renting a unit ranges from US$1K to $1,499. Though, renters typically spend a higher proportion of their overall income on renting homes as compared to homeowners.

Reviewing 3 Properties across NYC 21 — Credits: ValuePenguin

Another point I thought would be important to know is the majority unit type there since it sheds a really great insight as to how New Yorkers live. I wasn’t surprised to find out that 69.9% of all units in NYC are either 2 bedrooms or smaller, as it is a trend in most denser cities.

I guess this would really matter for us Singaporeans when it comes to the costs and taxes to acquire property there. Take a look at this table of costs and taxes that I’ve done up for my previous piece on a friend that owns 47 properties around the world.

Now that you have a better introduction to New York, I’ll be reviewing 3 different 1 bedders across NYC and will show you my pick of the bunch at the end.

I’ll be assessing each of them with these 7 variables:

Costs & Price per Sqft
Neighbourhood & Amenities
Unit Layout
Downpayment & Monthly Taxes
Rental Demand & Yield
Potential for Value Appreciation
Pros & Cons of the space

Just want to be fair and cover as many boroughs as possible – I’ve picked out 1 each from Manhattan, Brooklyn and Queens.

Option 1: Manhattan, 398 East 89th Street #15A

Type	Detail
Offered Price	US$1,495,000
Size	855 sqft – 1 Room, 1 Bed, 1 Bath
Price Per Square Foot	US$1,748 psf
Floor	15
Price Point	$$$
Developer	Magnum Real Estate Group
Building Key Facts	156 Units, 33 Stories, Built in 2002
Key Points	Walking distance to Central Park and the Guggenheim Museum

Neighbourhood & Amenities

Right off the bat and just looking at the map, I already love the fact that this property is located in the beautiful Upper East Side near the breathtaking Central Park and has amazing amenities nearby. Taking a walk along the world-class park after work hours would be really nice. I can also imagine it would be really aesthetically pleasing to walk along with your neighbours that are well known for their adored architecture.

Reviewing 3 Properties across NYC 18 — Cobbled Stones Apartments in Uptown Manhattan

Just right around the block within a 7-minute walk away is a Wholefoods Supermarket, and a 4-minute walk brings you to 86th Street Metro Station. To get to NYC’S CBD (which is Midtown Manhattan), it’ll only take you a short 20-minutes train ride on the Q Train. Talk about convenience.

You’d also find yourself spoilt for choice in terms of food & beverages, just take a look at the map. There are cafes, restaurants, gyms, beauty parlours, drug stores and departmental stores within a 10-minutes radius walk. Not to mention, my personal favourite Levain Bakery is just there (I’m sold).

Many schools are also nearby, so the location would be perfect for families. Although this 1-bedder would not be too suitable for that demographic, it is still a useful point to note. Some schools include The Chapin School, Brealey School The Dalton School and Regis High School.

Within the development itself, I would say that the services provided are much more comprehensive as compared to a typical Singaporean condominium. There is a 24-hour private residential lobby, a residents’ lounge, children’s playroom, bike room, package room, fitness centre and (my favourite) a roof deck with 360-degree views of the Manhattan skyline. I’d also say that the finishing of each unit is really great. Wood floors, Italian kitchen Cabinetry and Miele appliances are provided. However, it has been lived in since 2002, so I’d assume a certain extent of renovation would be required.

Layout

Although it is just a 1-bedder, I’d say 814 sq ft is pretty generous in Uptown Manhattan’s context. Also, every space in this unit is squarish and well-divided to give a clear sense of purpose and privacy for each space. The best thing is that there is a convertible alcove which can be used for study or just about anything.

I like how the kitchen has its own corner which you can enclose and that there is ample space for living, cooking and sleeping. It’s a good size for any single or couple living together, so definitely rentability would be great.

I would say the airflow in the apartment wouldn’t be too great as both the kitchen and bathroom here have no windows. And because of how it’s laid out, you aren’t going to get much air coming through.

Downpayment & Monthly Taxes

Coming down to the nitty gritty and the numbers part of this deal, I’d assume that an average investor will make a downpayment of 30%. The calculation below is also a generalisation – please consult a professional agent and solicitor for your final numbers!

Downpayment = 30% x US$1,495,000 = US$448,500
Monthly Costs = Mortgage Payment + Common Charges + Monthly Taxes = $8,068
- Mortgage Payment = 5.37%, 30 Years = $5,857 per month
- Common Charge = $977
- Monthly Taxes = $1,234

Average Rent, Rental Demand & Yield

Manhattan is notorious for its high rents, with the recent average monthly rent recorded in February 2022 to be around $4.3K (national US’ is recorded at $1.6K). Rents have bounced up back in NYC and vacancy rates have dropped from 12% a year ago to 1.32% in February 2022. All signalling a good return for the city that never sleeps.

Considering the local resale prices (which is at a median of $1,864,075), taxes and utilities, landlords can receive an approximate range of 5.22% to 5.57% in annual gross yield. That’s pretty solid, in my opinion. But you do have to consider the higher maintenance costs and higher purchase prices.

Potential for Value Appreciation

People have returned and are returning to NYC, and Manhattan’s real estate has peaked higher than it has been in more than three decades. It has swung an average appreciation rate of 26% since 2021 and predictions expect it to go higher.

Reviewing 3 Properties across NYC 22 — Credits: Castle Avenue

Summary: Pros & Cons of the Property

Pros	Cons
Great Amenities nearby	Noise on Busy Streets
Great North & South Skyline of Manhattan	Older building
Accessible and Convenient Location	High monthly charges
Lifestyle Offerings 10/10	Requires A&A
Nearby to many pockets of green spaces	Low level in NYC’s context
Squarish layout of apartment & Generous with Space
Great fittings
Great rental market