8 Real Estate Lessons From NYC’s Biggest Deal-Makers

New York real estate deal makers are trading hundreds of millions of dollars in property every month. What can these kingpins of the industry teach us about strategy, and the current market?

Both September and October saw an array of multi-million dollar real estate deals take place in Manhattan and Brooklyn. So what do the details of these latest transactions reveal for all real estate investors?

1. Real Estate is Hot

Even though some might consider Manhattan real estate to be far beyond their price range, billions have been poured into NY property acquisitions this year. Individual investors, foreign pension funds, and U.S. based investment firms have all been clamoring for bigger stakes. The fact that prices are way up doesn’t appear to be discouraging them at all. New forecasts from Goldman Sachs predicting a flattening year for stocks and equities is only likely to fuel major acquisitions even further. Investors of all sizes need yield and security, and they keep finding real estate is where it is at. That is, provided they can keep beating the pending Fed interest rate hike spree.

2. Massive Money

In the last 2 months alone, the top ten commercial property deals in NYC made up hundreds of millions of dollars, according to Propertyshark. This represents just a fraction of the capital out there, as investors aim to put billions into the hands of smaller real estate investors and startups to drive business.

3. Property Management is Everything

Some of the biggest and most unbelievable deals of 2015 have been breathtaking coups resulting from the poor management of owners. In one case, an investor scooped up around nine prime NYC buildings, and rapidly put some of them back on the market with solid leases and top brand name businesses. This just goes to show that it doesn’t matter how great the location and property is; without expert property management, it could be a bust.

4. Equity is Soaring

Numerous NYC deals completed over the last 90 days have revealed massive gains. It appears to be nothing to both buyers and sellers to see a $15M or $50M property to sell for double the price within two to three years. Often times, interim buyers will invest a few million in making improvements, or invest in great marketing to position the property. But whatever is being done, or not, it is clear the returns are far higher than some mediocre data suggests.

5. Restructure and Optimize Portfolios

It’s common to see New York’s biggest real estate deal makers both buying and selling multiple building in the same year. They aren’t constrained by ‘the market’. They recognize the benefit of evaluating each property on its own potential, and choosing the right time to trade.

6. Multiple Deal Strategies

2015 was a big year for multiple, simultaneous deals. Big NY real estate pros often took down multiple parcels at the same time. This can be a great advantage, and bulk buyers can negotiate superior discounts. Others can scoop up great discounts by compiling adjoining parcels at the same time, and either re-marketing them for developments or redeveloping them themselves.

7. Use LLCs

Take a look at the public transaction records, and you’ll see virtually every deal was done in an LLC. Normally, this is under a unique, property specific LLC. This should once and for all put to bed any debates over whether or not individual investors should be using LLCs, and how they should be using them. Get an LLC, make acquisitions in your LLC names, and stay protected.

8. Off Market Real Estate Deals

The details of this year’s biggest real estate deals show consistent use of real estate brokers. Some deals are done off market. Some NYC real estate agents, like Sotheby’s Dave Ratner, specialize in helping clients with off market deals. Yet, despite their size, expertise, and finances, even the biggest deal makers and savvy investors leverage Realtors to do their deals. So don’t underestimate the power of working in tandem with agents.