“They’re Broke!” - Luxury Real Estate Agent On Who ACTUALLY Buys in NYC

0:00 So, how are people able to afford living in New York City?

0:02 Cuz I love New York.

0:03 I go there as often as I can.

0:06 Well, you but they're living there.

0:07 They are

0:08 They're not just sitting vacant.

0:10 You have plenty of people.

0:11 You walk around Manhattan.

0:12 You see plenty of people walking in, going to their apartment complex.

0:15 A lot of it sacrifice.

0:16 You know, I don't know what the debt to income ratio is in, let's say,

0:19 like greater Las Vegas,

0:22 but most people live paycheck to paycheck in New York City.

0:27 Even at the luxury level,

0:28 like they save very very little because the quality of living is is

0:32 so so so high and the cost of living is so so so high.

0:34 At the luxury level, why would they not just go down a notch to be at like

0:37 the subluxury level to be able to save a little bit of money?

0:41 It's just like a character.

0:43 We're talking like three 4 million condos.

0:46 Yeah.

0:46 People who live like we have clients who

0:48 when you know they have a budget, right?

0:50 So, they have $700,000 that they saved already for renting

0:53 that they want to put down in a down payment.

0:55 And then we have to sit there and talk to them like, "Okay,

0:57 so after the 700 goes into the down payment

0:59 because you're going to put 20 25% down, let's say,

1:02 what do you have left?" Because we have to have reserves to get your loan.

1:05 You're going to have your monthly payment over and over,

1:07 what if there's what if something happens,

1:08 anything, and you're like, "Oh, well, it's fine.

1:10 I'll just make more money." Like, there's there's this idea that it's fine.

1:15 I'll make more money.

1:16 or you can have alternative streams of income

1:19 that that is that I think is new, right?

1:21 That's like a that's a new feeling that people have,

1:23 not just at the $500 to $800,000 level,

1:26 but at like you said, the three, four, and $5 million level.

1:29 It's okay.

1:29 I'll figure it out.

1:30 I can always just make more money.

1:31 And people don't want to live below their means.

1:35 No, not everybody is this guy, right?

1:37 People below your means.

1:40 I don't know if I live I mean I could I could definitely spend a lot

1:44 more but I I spend a lot of money to survive and to live in your wrist.

1:51 I've had this for a long time.

1:53 But I don't look at this as an expense.

1:54 I look at this as an investment.

1:55 Every watch I've ever bought, which is not that many,

1:58 is worth way more now than what I what I paid for it, right?

2:01 So I do look at certain things like invest, you know, as investments that way.

2:05 Um but I'm not insane uh with expenses.

2:08 I grew up in, you know, the the the great recession of '08 and 09.

2:12 Like I know what it was like back then to to not have money

2:14 and to watch people be totally totally totally

2:17 hurt and I will never go back to that.

2:19 Yeah.

2:19 I listened to your podcast that you did a while ago with Erica Coberg.

2:23 Back then you said that you stretched yourself to buy a $3.5 million condo

2:27 and you really couldn't afford it that your budget was like one and a half.

2:31 You saw this and it pushed you to work harder and make even more money.

2:34 Yes.

2:34 You still follow that trajectory?

2:36 Yeah.

2:36 Unfortunately, I have a problem.

2:38 But it's working.

2:39 So, how are you applying that today?

2:41 Uh, I started my own company 5 years ago, you know,

2:44 like I I I I try not to I don't

2:47 push myself into situations where I could file for bankruptcy tomorrow.

2:52 But I think you have to push yourself into situations

2:55 where you put your back up against the wall

2:56 a little bit that if you're in a career

2:58 where you could be incentivized to make more money.

3:00 And I don't give this advice to like my little brother.

3:02 My little brother has a W2 job.

3:04 He works 9 to5.

3:06 I guess he could do some nighttime investing.

3:08 He could do what some of my other friends do.

3:10 He could be crypto trading.

3:11 Like he could have a weekend job, sure, always make more money,

3:13 but then his quality of life

3:15 and his focus would be incredibly fractionalized both

3:18 from like a mental health point of view

3:20 and actually like a physical labor um standpoint.

3:23 So, so I don't do that.

3:25 I think when you're in sales, you your your fate is what you make of it, right?

3:31 You just have to make 10 extra phone calls.

3:34 You can make 10 extra appointments.

3:35 I could work seven days a week.

3:37 And so I pushed myself to buy that apartment.

3:39 It was 3.7.

3:40 And then a year later I was like,

3:42 I could have gone bigger because I just made more.

3:44 Then I bought my first, you know, big house and that was 7.6.

3:48 Um, and that was terrifying.

3:50 And then I gut renovated it.

3:51 And then when I was done, I was like maybe could have gone bigger.

3:54 And then started my own company in 2020.

3:57 Just completely bootstrapped for the first four years

4:00 and then raised money for the first time in December

4:03 to have strategic partnerships.

4:04 I wasn't doing this 100% by myself.

4:06 And I look at like what our expenses are now and it's

4:09 just mindboggling to where I was stressed about just a couple years ago,

4:13 but we just keep pushing the envelope and keep pushing us ourselves

4:16 to the point where we look back a year before and we say, "Oh, okay.

4:20 That wasn't so bad." You know, and it's worked so well for me anyway.

4:23 So, how has the market changed for you since 2020?

4:26 There's a far bigger, I'd say,

4:30 emphasis on thinking globally than thinking hyperlocally.

4:34 Like pre2020 when I was just in New York,

4:38 like I would have no need to sell anywhere else, right?

4:41 Like you have billions of dollars of real

4:43 estate to trade in a threeb block radius.

4:46 You don't have to you don't have to go anywhere else.

4:48 You never have to get in a car.

4:50 You never have to travel.

4:51 But since 2020, the market has become globally influenced.

4:55 And if you match that with hyper local excellence,

5:00 you can actually do so much more in so many places.

5:02 Like I'm in Vegas today because we're we're opening our first Vegas location.

5:07 Like literally today, it's my 14th state.

5:10 I don't in 2020 if you had told me one day

5:13 you'd be coming to Vegas not just to do your awesome podcast,

5:16 but to open and market, I would have said really like what does that even mean?

5:20 Why would we do that?

5:21 And so that's one way the market has changed.

5:23 And then also, what is money anymore?

5:26 Like the amount of trades we've done now

5:27 on the residential side for over $und00 million is crazy town.

5:32 Like the amount of people now that are buying at the 75,

5:35 80, $95 million mark for a secondary home,

5:40 it's just it's hard to hard to fathom.

5:42 The amount of wealth creation that's happened over the past 5 years since 2020

5:47 is completely insane.

5:48 and people put a lot of it back into real estate.

5:50 So, life has also changed that way.

5:52 A lot of people speculate that the cost of housing

5:54 is going up in places like New York City because

5:57 foreign buyers are buying up like luxury condos or even

6:01 buildings and just letting them sit vacant in New York.

6:04 A lot of people think that.

6:05 Would you say that that is fact or it's that's just like a madeup story?

6:09 Categorically false.

6:10 So, that is not true.

6:12 Um during the Obama years, completely true.

6:15 Like why why was that happening then and not now?

6:17 uh a much cheaper dollar for sure, right?

6:21 She had a much cheaper dollar.

6:22 So it made a lot of sense for Canadians, French, Japanese, the Chinese,

6:28 South Africans, South Americans to come

6:30 into the United States and buy cheap real estate.

6:34 Um uh uh for for a lot of reasons, okay?

6:37 And so once Obama left office, the dollar started getting stronger.

6:41 And so if you follow currency exchange, it stopped making as much sense.

6:44 So then you had a lot of foreigners

6:46 who bought during the Obama administration, right,

6:48 for eight years, who then started to sell

6:50 because then they were making, you know,

6:52 even if they were selling at, let's say, a break even in the United States,

6:55 depending on the currency, you were making anywhere from 20 to 30 to 40, 50%.

7:00 Depending on how you you play the tax game here, foreigners in New York City,

7:03 for example, New York City residential real estate

7:06 is about 70% of the of the asset class.

7:09 The majority of New York City is rent.

7:11 Most of those buildings you see are rental buildings owned by major landlords.

7:15 Okay.

7:16 30% of that is then for sale.

7:18 So people can, you know, buy, sell, uh, condos, co-ops, and town houses.

7:24 Most of that is all primary residence for New Yorkers.

7:27 Most of New York City is bought and sold by people who actually live there.

7:30 A lot of the big trades that we've done recently,

7:33 like on the second season of of Owning Manhattan, which comes out December 5th,

7:36 are all just wealthy, wealthy, wealthy New Yorkers.

7:39 their kids go to school there and they want to have a great home.

7:42 There's very little foreign investment.

7:44 Even though there's a lot of it, it just gets talked about a lot.

7:47 And then it's the domestic US purchasers and the New Yorkers who also just

7:51 have other homes who leave them vacant or who keep the lights off at night.

7:56 But there was a period of time where there was a lot of foreign investment.

7:58 Like I remember a 30 Rock episode back with Tina Fay back in the day, you know,

8:02 in like 2006 or something where like one

8:04 of the cold opens is her and I don't even know,

8:06 you know, her boyfriend on the show

8:08 or something looking at an apartment and they're like,

8:10 "Yeah, we're thinking I don't know." And then

8:11 like a Saudi guy walks in, he's like,

8:13 "I would also take this for my motorcycles." And slams the door and like,

8:16 "Damn it, we lost another one." Those days are are are long gone.

8:21 So then what would you say is are the top like

8:23 two or three things causing the rents to be so expensive?

8:27 inventory l lack of inventory and the lack of incentive to build.

8:31 So you talk about New York City today

8:33 and what happened yesterday with the election, right?

8:36 It is very very easy to make promises on on the ideology of taking, right?

8:44 Like you're hurting, I'm going to take from him,

8:46 I'm going to give to you versus you're hurting,

8:50 I'm going to incentivize him to make more and create more for you.

8:55 That just doesn't sound as great because when you're angry,

8:58 you want people to be punished.

9:00 It's so much easier to talk about

9:02 punishing success than it is to incentivize it.

9:05 And that's one of the biggest problems you have in predominantly blue states,

9:08 which is why you've seen so much movement to Nevada and Florida,

9:12 Arizona, where we opened a couple months ago.

9:15 Um,

9:16 and so, you know, you you you you just need people to be incentivized to create.

9:21 It is so burdensome to build new homes even if they're affordable

9:26 in most markets now uh uh that people just don't do it.

9:30 Like there's other places to make money.

9:32 You don't need to do it.

9:33 So there is a real lack of inventory and then rates are high.

9:36 Rates are high.

9:37 So the cost of ownership is incredibly expensive.

9:39 So what does it do to available inventory?

9:41 It makes it more expensive.

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