Wei Min Tan, a luxury real estate broker based out of New York City, has created the one chart that explains why billionaires are investing so heavily in Manhattan real estate.
The chart compares investment performance in Dow Jones, Nasdaq, Gold, and FTSE 100 indices against New York condominium apartment prices from the beginning of 2014 to the end of 2014.
According to Tan, the average price per square foot for a Manhattan condo appreciated by 9.9%, and as much as 19.8% if the home was bought with a mortgage loan.
“The assumption here is that rental income covers the expenses of mortgage, common charges, and property taxes,” Tan explained. “This break-even is commonly achieved with a 50% equity, 50% loan purchase.”
The bottom line is that buying and flipping real estate in Manhattan leads to stable returns for the millionaires and billionaires snapping up these properties, whether they’re living in them or not.
Suddenly, the huge increase in new condo developments makes a lot more sense.
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