Is buying a house as an investment an opportunity

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Huang Qiyuan, a New York real estate lawyer and investor, said that many Chinese Americans invest in real estate. Among the investors are professional real estate investors, as well as high-income earners such as physicians, lawyers, restaurant owners, and supermarket shareholders. Some of them invest in buildings in Manhattan, and some invest in Flushing, Queens. He believes that due to falling housing prices and relatively low loan interest rates, it is now a good opportunity to invest in real estate. However, he suggested that the calculation must be done well, and only when the income and expenditure can be evened, can the move be made. Guo Yafu, president of New York Tianjiao Fund Management Company, said that if the funds are not strong enough, and when renting a house, the first problem people solve is to save money.

You have to live 365 days a year and you can guarantee investment income.” Commercial real estate is also suffering in the cold winter Huang Qiyuan said that housing prices are determined by supply and demand and are local. Therefore, real estate investment depends on local conditions. Due to the impact of the new crown epidemic, restaurants in New York City only allow takeout or limit the number of people in the hall, which has a great impact on the restaurant’s business.

He said he has three commercial properties, two in Manhattan and one in Flushing, Queens. “The three tenants did not pay the rent for six consecutive months.” The Manhattan house was rented to a restaurant, but the tenant said that the restaurant had no business, and they were all takeaways and did not make money. And Flushing rented a small bar, but the bar was closed for a few months, and a note was posted at the door saying: See you on October 1st. He said that the landlord is also buying a house with a loan, hoping to use the rent to offset the mortgage, and at the same time pay monthly taxes. The monthly rent for each tenant is more than 10,000 U.S. dollars, and the six-month rent is nearly 200,000 U.S. dollars. “The landlord has not received the rent for six months, and the landlord’s difficulties are greater than the tenant’s.” Some landlords are older and do not want to worry about rent collection, so they decide to sell the house. However, most houses sold in Manhattan are spread by word of mouth. Due to falling housing prices, houses are difficult to sell. He said that some landlords own more than a dozen real estates, not because they have no money, but because they have no working capital and cannot pay mortgages and taxes.

He said that one of the disadvantages of real estate investment is that it is not easy to sell a house. It usually takes three to six months to sell a house. If it is a special house, it will take several years. Another disadvantage of investing in real estate is that it is prone to lawsuits. For example, one of his clients bought a house for $650,000, and as a result, “a tenant was burned to death in the basement.” The tenant’s family sued the landlord, demanding $16.8 million in damages. He said that even if the landlord sold the house, he would not be able to raise so much money. Some Chinese rented buildings and opened family hotels, but the government discovered that “the Housing Bureau issued six fines, each costing US$12,000.” He said that mainstream society has two ways to invest in real estate. One is to invest in a building and hire a property company to manage it. Everything is done in accordance with the regulations. The second is to buy real estate funds without specific contact with real estate.Before opening, he used to work in an American law firm, specializing in real estate funds. He said that real estate funds are managed by the U.S. Securities Commission (SEC). The SEC has regulations that real estate funds must comply with fund management regulations, fill out forms on time, and submit them to the SEC.

6 types of Chinese investment real estate Huang Qiyuan said that Chinese Americans invest in real estate in many forms.

1. Some large real estate companies from mainland China come to the United States. He said that the amount of capital invested by these mainland real estate groups, such as Shanghai Greenland, Shenzhen Vanke, Anbang Group, etc., is to buy land and build buildings and then sell them. Some are buying ready-made rental apartments and transforming them into co-ops or condos. Some hold 75% of the shares of real estate developers, but let the US companies that hold 25% of the shares develop, and they only manage the share. He said that successful cases are quite profitable. For example, some companies invested 40 million U.S. dollars. After real estate development is completed, the apartment is worth 125 million U.S. dollars. On the day of opening, someone will bid 250 million U.S. dollars to buy it.

2. The local Chinese in New York put forward a development plan, and then asked familiar folks to raise funds. Someone spent US$2 million to buy land and then invested US$12 million to build a high-rise condominium. After the building is built, half of the condo is sold at cost to the paid folks, and half of the condo is sold at the market price. The initiator made money and the participants bought the house. Most of these developments are Fuzhou immigrants. There are also Wenzhou immigrants who raise funds to build houses through meetings. For example, 89 Wenzhou immigrants raised 20 million U.S. dollars and borrowed 20 million U.S. dollars to buy two apartments, which were converted into condominiums and sold to villagers. Many of the participants are small business people, some are restaurants, and some sell phone cards. He said that New York State had a rule in the past that if an apartment was to be converted into a condominium, 15% of the residents had to agree. “They sold a Condo worth 450,000 U.S. dollars for 350,000 U.S. dollars, and no one disagreed.” However, on July 1, 2019, New York State passed a new law requiring half of the residents in the apartment to agree to be able to do so. Transformation. As a result, some Chinese have just bought it, and they encounter the new law. Their past assumptions are in vain, and they just want to get the cost back.

3. The Chinese establish a limited liability company (LLC) for investment in real estate. He said that the scale of these medium-sized companies is about several million dollars in principal, and they specialize in real estate investment, building houses, and selling houses. He said that the advantage of a limited liability company is that the loss is limited, that is, the house. Moreover, they only report to individuals and do not report corporate tax and will not be double taxed. He said someone contributed US$2 million, accounting for one-sixth of the US$12 million in real estate. The invested US$2 million has now risen to US$6 million, earning US$4 million. Now, when he is old and wants to sell it, when he asks the accountant, he will have to pay one-third of the tax for 4 million US dollars, and it will cost more than 1 million US dollars. “He is a little bit reluctant.”

4. Some Chinese go it alone. For example, they raise hundreds of thousands of dollars on their own, buy old houses and foreclosures, redecorate them, and then sell them to make the difference.

5. Some Chinese specialize in auctioning houses. He said that he sometimes went to the house auction market to check, “always see some familiar faces.” He said that these people have done research in advance. For example, the floor area of ​​a single house is 60 feet by 100 feet, and three single houses can be built by removing the old house. So they bid on the auction floor, and sometimes a house asking for $450,000 is bid for $700,000. “The other bidders didn’t look at the house beforehand and thought they were crazy.” In fact, these Chinese considered “one building into three buildings”, while others considered “only one building.” He said that these people formed a gang, “In order to prevent newcomers from entering the industry, no matter how high the price is, it is to block the entry of others.”

6. Raise funds to build a shopping mall. An insider revealed that there is another model for Wenzhou immigrants to invest in real estate, that is, “funding to build a mall.” The specific method is to rent a large building internally by raising funds, and then dividing it into small spaces and renting them out to various merchants to earn rent from it. There are many examples of such malls, such as the New World Mall in downtown Flushing, the food court, and the “Xiao Yiwu” in Max Pace.

He pointed out that there are several reasons why Chinese invest in real estate. 1. The house is something that is visible and tangible, which is more reliable. 2. With limited land and unlimited population, housing prices will always rise. 3. The housing price is stable with little fluctuation, which is liked by the Chinese. 4. The house has use value. If you can’t sell it, you can live on your own. Research real estate before investing Huang Qiyuan said that if you want to invest in real estate, you must really understand the real estate and know the problems and challenges it faces. At the same time, there is another task of investing in real estate, which is to find tenants. He said that finding tenants is not easy. Nowadays, there are many professional tenants looking for free housing. “If they like your house, at least they have to live in the first half of the year for free.” Investing in real estate must have goals, grasp relevant information, and know the trend of real estate. Therefore, investors should carefully study relevant information to find out the potential of real estate. For example, he said that someone bought a building, but the rental income was low and not profitable. He suggested installing washing machines and dryers in the basement of the building, which can make a lot of money a year. He believes that real estate investment should also be diversified. If you invest in real estate, you can invest in different types of residential and commercial real estate. At the same time, don’t just buy real estate in one place, you can look around. For example, he said that the real estate yield in New York City is 4%, the real estate yield in Las Vegas for my friend is 8%, and his real estate yield in Upstate New York is 14%. “Different places have different yields.” If you want to invest in real estate alone, there is no problem, but it is not a big deal.He suggested that they start with the basics first, and then put out the results to raise funds. When raising funds, oneself put out more money, others put out less money.That would be a fraud. As a real estate lawyer, he believes that the main problems of Chinese real estate investment are the lack of large enterprises, the lack of systems, and the lack of planning, which are prone to problems. Some use secondary materials imported from China in order to save money, but the construction quality is not high. They always want to make money before talking.” And American builders pay attention to the quality of construction, and it can still be used after hundreds of years. He said that short-sighted behavior has a great impact on Chinese real estate developers. Housing prices in suburbs will rise as population shifts Yao Rui, an associate professor in the Department of Finance at Baruch College, City University of New York, was once a professor of real estate. He said that after the new coronavirus outbreak first broke out in New York City in early March, it quickly spread to the United States. It stands to reason that many people cannot go out to work, which affects the economy, and the market should go down. However, the US housing market has become a hot spot. He said that the main reason for the active real estate market is that “loan interest rates are very low.” He said that the Federal Reserve (Fed) has met to announce that it will not raise interest rates on loans until 2024. This statement is of great significance. If interest rates remain low for a long time, they will surely stimulate the market. As a result, the volume of transactions in the US housing market in August exceeded previous highs. People find that if they live at home, they can also work online instead of going to the company every day. As a result, Americans began to move out of big cities, to live in the suburbs, or to the south where living was cheap. At present, although there are still cases of the new crown virus, the hospital can bear it, and the death rate is also declining. People are no longer nervous and feel safer. “I went to Costco in New Jersey yesterday and felt overcrowded.” He said that Manhattanites were reluctant to live in the city and moved to large houses in the suburbs, which led to a decline in the Manhattan housing market. In the past, life in big cities was rich and colorful, but now food and entertainment venues are gone. so commercial real estate is facing great pressure. In the past, the company set aside a position for each employee, but in the future, it may be implemented for several employees to share a workplace.

Investors see opportunities in the market downturn New York real estate magazine “Real Deal” (Real Deal) published an article on April 7, 2020, claiming that the Coronavirus has become a “century opportunity” for real estate investors. With the coronavirus crisis causing real estate values ​​to plummet, real estate investors feel that there are greater buying opportunities now than during the 2008 subprime mortgage crisis. According to the report, hotels, retail properties and mortgage-backed securities are especially targets for investors. According to data from Preqin, as of December last year, private real estate funds focused on opportunities and non-performing asset investments totaled US$142 billion. BH3 Investment Corporation launched a $100 million non-performing debt fund at the end of 2018. Companies such as Blackstone Group, Brookfield Asset Management, and Starwood Capital Group have raised billions of dollars from pension funds and sovereign wealth funds, and are preparing to fall in price Shot at the time. Real Capital Analytics data shows that so far, few non-performing assets have entered the market, but many investors hope that this time there will be more opportunities than during the last financial crisis. During the last financial crisis, house prices fell 35% between August 2008 and June 2010.

 

 

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