Luxury real estate in NYC is.... insane

The below is transcribed from The Accidental Landlord podcast. 

Peter: All right, welcome to another episode of the Accidental Landlord podcast. Today we have Mickey Lalchandani, and Mickey is the owner broker of a brokerage in New York City called Undivided. He also has a YouTube channel, the New Build Club with looks like over 15,000 subscribers, so Mickey, we're excited to have you on the show. Welcome.

Mukul: Thank you. Thanks, Peter. Thanks for having me.

Peter: Yeah, I'm excited to get into your perspective. So a lot of times, people we have on the show, come from real estate markets that are less expensive than ours. It's not very often that we have someone come on the show from a real estate market that makes ours look cheap, right? So you're obviously coming from New York City. Why don't you take a minute or two to just kind of introduce yourself to our listeners and tell them a little bit about what you got going on out there.

Mukul: Sure, so New York City is a beast of its own. We get people from all over the world that wants to make New York City their home or that they want a piece of New York City. And that also includes a lot of buyers and investors that wanna just have a piece of property that they can own and say that they have a place in the city. That also, the type of landlords that you get are not necessarily are run-of-the-mill, mom-and-pop kind of investors, they are a certain type of niche and we'll go over that in a little bit and I'll explain a little bit more about that.

Peter: Yeah, awesome. Yeah. So I think I'm excited about what we can learn from you because we do have some luxury properties that we rent out. But in my mind, they probably don't compare to what you consider a luxury property there. But they definitely we definitely have to market them a little differently. The negotiations surrounding them renting them are usually a little different. So I'm excited. Why don't we start there? Why don't we get into that? Like what?

I guess the question is the question would surround somewhere around what is your typical how do you come across rental properties in your business? Like obviously you buy and sell real estate as well but tell us a little bit about the rental side of it.

Mukul: Sure, yes. So New York City is made up of many types of homes. The majority of them are condominiums and co-ops. These are apartment buildings with multiple unit owners that own individual units in a building. 70% of all residential homes are rentals in New York. The majority of homes that people can go on the street and choose to buy a rent will be rentals. So when you look at the streets in New York City and you look up in the buildings, most of them are rental buildings. There aren't a lot of homes for sale comparatively. So the type of unit mix is very particular and each type of home has very specific nuances on what can be rented and what can be rented.

So even a thing which you may not know in your market is we have co-ops. Co-ops have very strict rental policies. And in fact, many of them don't even allow renting. So you, as a local professional, you have to know, you can't just walk up to a building and be like, I want that unit and I want to rent it. No, it doesn't work that way. You have to know all the rules of each particular building and each particular unit.

Peter: Gotcha, let's talk about the people who own the rental property. So just as a point of reference, in our area, we don't have your traditional kind of Midwest real estate investor who's looking to cashflow $100 per door, you know, and build, you know, passive income and eventually retire and not have to work. That doesn't really happen in our area because the prices are so high. So what has happened is the people who own the majority of the rental properties in our area bought them 70s, 80s, maybe early 90s. They're not really purchasing multiple rental properties today. They're usually inheriting them or it's their primary residence and now they have to do a job transfer so now they're gonna be a landlord. But I'm curious if 70% of the units in New York City are rentals, who is buying them? When did the majority of them purchase them? Or what does the investor look like in your area?

Mukul: So I'll preface this with the fact that I work in a specific niche of the market, which is the luxury market. So I don't do the bulk of your rent stabilized or rent controlled units. I typically work on the free market units, which would also be something that would appeal to your viewers who are looking to just come, like let's say they want to come into a new market, they want to buy a property, they would not qualify or they probably will not find cash flowing properties.