NY INVESTORS: Maintain Your Profit in 2024

Do you know about the recent changes to commercial real estate regulations?

Everest experts have the info you need to keep growing in 2024!

With recent regulation changes triggering market downturn, investors might be feeling apprehensive about commercial investment. But here at Everest, we cut through all that fearmongering with the cold, hard facts. Most importantly, we want to highlight a recent regulation update that may mean big business for New York Commercial investors – as long as they know how to play their cards right. 

In April, New York Governor Kathy Hochul outlined her financial plan for 2025, which included tax incentives for new housing. This change would authorize an increase in improvement allowances for rent stabilized apartments. It also introduces new regulations governing free market units. 

So, how can you as an investor, use this updated legislation to your advantage? Hold your horses (and aspiring cash cows); we’re getting to that!

In this article, we’re going to break down the latest trends in the multifamily market, potential pitfalls to avoid, and expert tips to help you keep your portfolio going strong in a changing commercial economy. By the time we’re done, you’ll be all set for success in your ‘24 portfolio. 

Let’s start with a little more detail about the aforementioned housing policy and what that means for investors:

Governor Hochul’s housing policy could mean a big boom for investors. 

This policy aims to stimulate development of multifamily housing options for New York residents. It includes:

• Tax incentives to encourage new housing and office-to-residential conversions – a savvy strategy for all that recently empty office space!

• Regulations to allow for “good cause” eviction in free market rentals – giving a much-needed out for struggling landlords.

• Rent stabilization policies that allow a raise on renovation caps for rent-stabilized apartments – allowing building owners to increase the value of their assets.

• Construction incentives to replace the 421a program. The 485x tax abatement program aims to boost development, especially in projects with fewer than 100 units. 

This policy is seen as a positive step for developers, but may pose a challenge for existing building owners due to increased regulation and insufficient support for renovating vacant units. Everest CEO and Chief Loan Originator, Brooke Jacob, is here to shed some light on the current state of the market and what investors can do about it:

“Housing regulations change all the time – especially in a presidential election year. With a little research, and hopefully feedback from experts, investors can plan out their investments based on current events. This helps them make the most of their portfolio even in a more volatile market.”

This particular round of changes comes with specific adjustments that investors should be aware of. Here are some of the ways that rates will change:

Data provided by: Forbes

The New York governor hopes that these changes will help improve housing availability and unit mix for the city as a whole, which, in its current state is less than desirable:

Data provided by: Forbes

Regardless, with the good and the bad that this new legislation brings, investors would be wise to heed the words of this month’s Everest expert:

“The most important thing to remember is that nothing is permanent. It’s smart to be flexible when it comes to your investment plan. It’s also a good idea to learn more about what events and factors influence the market – so you can plan ahead.”

And that’s exactly what we’ll be talking about in the next section…

As markets change, experienced investors roll with the punches. 

The commercial real estate market is always evolving, influenced by various factors such as economic conditions, regulatory changes, and shifts in consumer behavior. These adjustments are often a cause for concern with investors, especially those with less experience in the market.

“Whether you’re a novice or seasoned investor, anyone can fall victim to the common pitfalls of real estate investment,” Brooke explains. “Especially in times of economic changes, it’s crucial not to lose sight of your priorities.”

The most common pitfalls of real estate investment include:

1. Taking On Too Much Debt At Once – Ensure that your financial strategy is conservative. You should have sufficient reserves to cover any unexpected vacancies or maintenance expenses. 

2. Failing To Conduct Market Research – Stay informed about local market conditions and economic indicators (like those included in the Everest newsletter). This will help you make data-driven investment decisions. 

3. Falling Behind on Property Maintenance – Keep yourself organized on building repairs, financial management, and tenant relation efforts to maintain your property values and reduce vacancies. 

Given the current state of events, and the anticipated market changes, the tips we have discussed so far are especially important for multifamily investors. Brooke elaborates here:

“Multifamily investors have some of the greatest potential to capitalize on positive market adjustments – and also greater potential for loss.. For these individuals, it’s critical that they keep themselves informed on these adjustments.”

There’s one more thing that multifamily portfolios can truly benefit from. Beyond the almighty dollar, it’s about the people spending them. 

Let’s elaborate:

Multifamily trends show increased demand for specific spaces.

Another thing that investors can do is keep an eye on the current trends in commercial real estate. By doing this, they can balance out any potential loss from market changes. Some themes we’ve noticed lately include:

• Flexible Living Spaces – With remote work becoming more common, there is a growing quest for living spaces that offer both flexibility and convenience. Multifamily properties that provide amenities like co-working spaces, high-speed internet, and close proximity to professional services are becoming increasingly attractive to renters. 

• Sustainable Buildings – Let’s face it: the environment isn’t going to get any healthier unless we do something about it. Tenants know that too and they’re already looking for energy-efficient buildings and other sustainable features. Adopting more sustainable building practices can also save owners on operating costs in the long run. 

• Smart Homes – Advanced home management technology and integrated building management systems are no longer optional luxuries. Properties equipped with advanced security systems, smart thermostats, and other amenities tend to be more appealing to modern tenants, particularly in competitive urban markets. 

“Concern about environmental damage is only rising – as are costs of living,” Brooke says. “More and more tenants and buyers are on the lookout for features that make things more efficient to maximize their funds and do their part for the planet.”

Now, as you know, Everest is all about balance. After all, that’s what makes a portfolio more profitable. So we’d like to finish off this month’s commercial article with a quick conversation about the multifamily market and how – impending changes aside – it’s still a smart way to invest… if you’re smart with your investments.

Tips for Investing in the NY Multifamily Market in 2024

Tip #1: Diversify Your Investments

No matter what state the market is in, it’s always best to spread your investments across different types of properties and locations. Diversification can help you weather market downturns and capitalize on growth opportunities. 

Tip #2: Focus on Long-Term Value

Instead of chasing short-term gains, prioritize investments that offer greater long-term value. Properties in prime locations with strong growth potential are more likely to provide stable returns over time. 

Tip #3: Stay Informed With Everest.

The commercial real estate market is dynamic, and staying informed about industry trends and economic developments is crucial. Everest experts can help you adapt your investment strategy as needed to stay ahead of the curve.

“If there’s anything I’ve learned in my years in the professional world, it’s that people cannot succeed alone. We all need each other in one way or another. Aligning ourselves with seasoned professionals in different industries can make a world of difference in our overall success.”

Everest says: Our team has the insight to help you grow.

Everest Equity

Closing Deals Across New York &

 New Jersey Since 2004

Join the ranks of Everest’s top-performing commercial investors today!

Connect with a loan officer to make the most of your portfolio.