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ZONING 101 - COMMERCIAL OVERLAY

In residential zones along major streets and retail arteries commercial use is permitted through commercial zoning overlays. In mixed buildings, commercial uses are limited to one or two floors and must always be located below the residential use. Typical retail uses include grocery stores, dry cleaners, drug stores, restaurants and local clothing stores that cater to the daily needs of the neighborhood.

The Floor Area Ratio (FAR) for all commercial applications is 1.0 under R1-R5 an 2.0 under R6-R10. In most residential neighborhoods in NYC, excluding high traffic areas, C1 & C2 would be the most common. There are only minor differences between C1 and C2 districts, with a slightly wider range of uses permitted in C2 districts, such as funeral homes and local repair services.

For example, an R6 / C1-2, 25 x 100 lot would allow for commercial use on the ground floor up to 2,500 (in commercial uses no rear yard is required) and residential above. R6 allows a 2.20 FAR which in our example equals to 2,500 x 2.20 = 5,500 SF. Since 2,500 SF was allocated to commercial, 3,000 SF are left for residential use. It is a common misconception to think that the 2.20 FAR is added to the 1.0 Commercial FAR. The residential FAR dictates the total square footage allowed.

Stay tuned for future posts

Happy living
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WWW.NYCHOMES4U.COM
You have a commercial tenant looking for space ? Vacant land for sale ? Commercial property you're not sure how to market. Please call us. We can help.
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DETERMINING VALUES AND COST PER SQUARE FOOT - THE MOST IMPORTANT FUNDAMENTAL [PART 3/3]

(Continued from last week)

We evaluate and analyze dozens of deals every month and we would like to share with you two recent investment opportunities that were presented to us.

The first opportunity was a NNN lease property in Fresh Meadows Queens. Prime location, credit tenant with 5 years left on the lease. The CAP rate was very attractive. 6.75%. Sounds attractive right ? No property management. Guaranteed payments. So whats the catch? The rent was 30% above market which is not unheard of for NNN leases.

In today's rental rates the CAP rate would drop significantly making the deal financially non-feasible. The risk in the deal is that the tenant does not renew the lease. The seller increased the asking price based on higher than market rents presenting artificially high returns. This could easily be verified by looking at the asking price per foot. It's considerably higher than market. We told the seller this one was not for us.

The other opportunity was a mid-size apartment building in the Bronx. The building has a 421A tax abatement for 20 more years. Hence, the NOI is high given the highest operating expense is very low. The tax abatement is being phased in every five years. Again, the price per foot was significantly higher than market due to tax abatement. We buy buildings for the long run so we underwrote the deal as if the tax abatement expired. The result wasn't surprising.

The CAP rate would drop significantly with the taxes being fully restored. Price per foot is significantly higher than market. Not for us.
How about an 11 room SRO in Harlem ? SROs are typically apartment buildings that were converted to single room occupancy given the need for rooms by the city. They have common bathroom and kitchen facilities some of the rooms might have a kitchenette and a private bathroom. Asking price was $1.3M and the building was only 3,200 SF in size. So over $400 PSF for a building that needs work and would require 3 years to legalize into an apartment building.

We don't think so.
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DETERMINING VALUES AND COST PER SQUARE FOOT - THE MOST IMPORTANT FUNDAMENTAL [PART 2/3]

(Continued from last week)

In commercial real estate, per square foot pricing is more common since properties are more diverse and the differences more noticeable. So, in order to compare apples and oranges the price per square foot is often used. Commercial real estate agents and brokers often use price per key or price per door when marketing apartment buildings. My first question is usually what the square footage is.

For example, how would you compare two 10 unit buildings. One building has 10 Studio units and the other has large 3 br apartments, all others factors being equal. The building with the larger units is probably more than double the size. So the price per door doesn't quite tell the whole story.

Many other ratios are used in commercial real estate to determine values. CAP rates, GRM, yields, DSCR and many more professional terms that we would address in future posts. However, real estate evaluation should be kept simple. And it doesn't get any simpler than price per square foot. It's what you pay for the brick and mortar. The price per pound as some industry pros like to say. Everything boils down to the price you pay per foot. If you paid too much then your GRM would be high and your CAP rate would be low and vice versa. A reasonable price per foot would allow you to execute your business plan and achieve returns that are standard or better in your local market.

Vacant land is priced based on the maximum buildable square footage. There are other variables that affect pricing such as depth, width, topography etc'. So, one should not make a decision based on square footage alone. The same caution should be exercised when evaluating commercial buildings. Ground floor commercial space in retail corridors is more valuable than residential space. So when comparing buildings with and without a retail component adjustments should be made. Retail spaces with or without a cellar are valued differently.

In the next post we would look at a few examples.
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Commercial Real Estate Case Study
COMMERCIAL REAL ESTATE FOR THE REST OF US

This post was originally published late at night for some reason. For those of you who have missed it. Our apologies.

NYC is a hot market right now and it is always astounding to me to see that commercial real estate deals are, for the most part, being brokered and put together by commercial real estate firms based in Midtown Manhattan. While, local residential real estate brokers sit on the sidelines and focus on single family home sales.

We have trained and converted numerous residential real estate pros into the world of commercial real estate. I'll be the first one to admit it is not for everyone. If you are a top producing agent or if you believe you can make it far in this business and want to do bigger and better deals we will be be happy to help.

See a segment of a presentation by Moshik Regev at the Bronx Mastermind event a couple of weeks ago hosted by the amazing Ceasar Rosas and Cecilly Bumatay. A big thank you to Anthony N. Lolli who was the main speaker. Great talk Anthony.

Thank you for having us.

Happy prospecting.
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DETERMINING VALUES AND COST PER SQUARE FOOT - THE MOST IMPORTANT FUNDAMENTAL [PART 1/3]

How much would you pay for a 2 family house in Bayside? What about an 8 unit walk-up apartment building in Park Slope? How about a mixed-use 4 family and a store in the South Bronx?

The short answer. It depends. Real estate prices are determined by many variables such as location, construction type, year built, zoning laws, mortgage rates, economic climate, property size, quality of craftsmanship and amenities, just to name a few.

On a macroeconomic level, the forces of supply and demand are constantly at play. Positive migration, low mortgage interest rates, low inventory of homes for sale, under-performing stock exchange, high inflation, are all likely to put upward pressure on housing prices. On the other hand, high inventory of homes, high mortgage rates, alternative investment opportunities, will push home prices down.
Some of the variable we mentioned earlier are macroeconomic in nature, such as performance of financial markets and mortgage rates. Others are local such as zoning laws and housing stock. We should always remember that real estate should be evaluated as part of a global market and at the same time be looked at with a 'local' magnifying glass.

Britain's exit from the European Union might attract foreign real estate buyers anticipating home prices in London to come down. This would alleviate some of the demand for luxury Condominiums in New York City. A more local example, would be expanding the boundaries of a top level school district therefore increasing home values almost overnight for those who are now part of the highly-desirable school district.

In your neck of the woods, especially in residential real estate, appraised values are determined by comparable sales. A single family home in Bayside would be compared to similar homes that were recently sold (usually within the last six months) in the area (typically same neighborhood within a 1 mile radius). Not all single family homes were created equal. Many factors are taken into consideration when determining a value of a home: location, lot size, home square footage, detached/attached, number of bed rooms, number of bathrooms, house type, basement/cellar, size of back yard, house condition, year built, driveway, car garage, real estate taxes and many more.

In residential real estate, you would often hear a real estate agent say 'I have a newly-renovated, two family house, 2 story colonial, 3/3, 1.5/1.5 baths, 2,400 SF plus a finished basement, 40 x 100 lot, private driveway and a detached 2 car garage in a nice quiet block in Springfield Gardens, Queens'. Most Queens real estate agents would be able to determine the maximum price such a house can be sold for simply by looking at recent comparable sales and making necessary adjustments to account for any differences between the subject property and comparable homes. Residential real estate agents hardly ever use per square foot prices to compare between residential properties. When did you last hear your agent say that he just found the perfect house for you for under $300 PSF? Exactly!

However, you would often find that the price per square foot is a very efficient tool in evaluating different residential properties.

To be continued.
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UNDERSTANDING REAL ESTATE TAXES CAN MAKE OR BREAK YOUR NEXT DEAL

Real estate taxes don't always get the attention they deserve and often are completely ignored and overlooked. We regularly come across properties that are incorrectly assessed by the Department of Finance or worse yet are in the wrong tax class!

Here's a quick intro for residential real estate professionals; There are four tax classes in NYC. We will focus on Tax Class 1 which relates to the following property types:

- 1-3 family homes
- Condominiums of three stories or less (Originally built as Condos)
- Condominiums of three units or less (converted from 1-3 family homes)
- Single-family homes on cooperatively owned land and certain vacant land zoned for residential use

Class 1 properties are assessed at 6% are taxed at a rate of 19.554% for the 15/16 tax year.

Here's how it works for your property:

Department of finance (DOF) determines the Market Value of your property. The market value can be found on the quarterly tax bills and on the annual notice of property value.
Multiplying the Market Value be the 6% assessment ratio would produce the Billable Assessed Value.
Multiplying the Billable Assessed Value by the 19.554% Tax Rate would result in your annual tax bill.

For example, if your three fam home is valued at $500,000 by DOF your annual tax bill will be as follows:

$500,000 X 6.00% X 19.544% = $5,863.2

This is a simplified version of what your property tax statement might look like. Tax benefits, abatements, and exemptions might apply to your property. You may have the benefit of a lower Effective Market Value due to State laws that requires the City of New York to phase in tax increases.

We will explore these topics in more details in future posts.

If you believe your property type is 3 units or less and you are being assessed at a different tax class you can dispute the assessment as long as you can prove legal occupancy.

If you believe Department of Finance incorrectly evaluated your property value you can dispute the tax assessment.

Please feel free to contact us for free, unbiased good old-fashioned advise. Since we are not tax attorneys we will recommend a tax professional for you to contact.

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I want to welcome The Center for Autism and Related Disorders (CARD) as a tenant into our most recent newly-constructed building in Morris Park, Bronx. CARD is one of the world's largest organizations using applied behavior analysis (ABA) in the treatment of autism spectrum disorder.

A big thank you to Anthony Mameli of Charles Rutenberg Realty and his team for brokering the deal.

We wish CARD continued success and we hope to be able to help and assist in establishing future locations in the Metro New York area.
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Brokers Step Up Your Business
Brokers and agents ! Why limit yourselves to selling single family homes and Sunday afternoon open houses. If you want to invest in real estate and be involved in bigger, more creative deal making. You've come to the right place.

Future posts will showcase success stories of residential agents and brokers stepping up their game into the world of commercial real estate.

For any questions, good advise, and guidance please feel free to contact us.

Happy living

Moshik Regev
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I want to extend a warm welcome to my dear friend and business colleague Rudis Rodriguez on starting his new brokerage firm, Global Vision Realty Corp.

Rudis Rodriguez made it to the top of the residential real estate rankings in the Bronx in less than a year and I am sure the future has never been brighter for him and his team.

Looking forward to working on new projects with you

All the best my friend
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Elected Officials to Amazon: The Bronx is a Prime Location for HQ2

Elected officials from every corner of The Bronx have signed a letter to Jeff Bezos, Amazon’s Founder & CEO, urging the company to consider The Bronx as the site of its next headquarters.

“The Bronx offers many unique advantages when compared to other municipalities. We have seen a record investment in our infrastructure, and we are leading the way in job creation. Companies from all over the world are taking a fresh look at The Bronx, and our existing companies are expanding their presence in our borough. With smart planning and collaboration, Amazon could become a key piece of our ongoing renaissance,” states the letter.

Earlier this month, Amazon announced that it would seek a site for its second American headquarters, HQ2, and issued a nationwide request for proposals. Since then, Bronx elected officials and business leaders have been working to identify potential locations that could host Amazon’s second headquarters and are developing a package of materials discussing the significant benefits of doing business in The Bronx for the company’s review.

“Our borough already has a working relationship with Amazon, and we would welcome them to The Bronx with open arms. We have numerous locations that could meet their needs and a skilled workforce to go with them,” said Bronx Borough President Ruben Diaz Jr. “The Bronx has seen incredible progress on job creation and economic development in recent years. Amazon would be a tremendous new addition to our borough, and we look forward to discussing their proposal for a new headquarters, and how The Bronx could host them, in the near future. The Bronx is a prime location for Amazon’s next home.”

The complete letter to Amazon can be read at on.nyc.gov/2xNtASO
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COMMERCIAL REAL ESTATE FOR THE REST OF US

NYC is a hot market right now and it is always astounding to me to see that commercial real estate deals are, for the most part, being brokered and put together by commercial real estate firms based in Midtown Manhattan. While, local residential real estate brokers sit on the sidelines and focus on single family home sales.

We have trained and assisted numerous residential real estate pros in making the leap into the world of commercial real estate. I'll be the first one to admit it is not for everyone. If you are a top producing agent and you believe you have the skill and the will to orchestrate complex and creative deals you are welcome to contact us. No prior knowledge is required.

See a segment of a presentation by Moshik Regev​ at the Bronx Mastermind event a couple of weeks ago hosted by the amazing Ceasar Rosas​ and Cecilly Bumatay. A big thank you to Anthony Lolli who was the main speaker. Great talk Anthony.

Thank you for having us.

Happy prospecting.
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RESIDENTIAL BROKERS TAKE NOTICE - COMMERCIAL PROPERTIES WANTED !!

Farm Development is looking to purchase commercial properties in the New York Metro area.

If you are a local real estate agent specializing in 1-4 family homes and you are not involved in commercial real estate you are leaving all that business to Manhattan-based commercial firms.

Feel free to contact us if you have any leads on commercial properties or if you need help and guidance venturing into the exciting world of commercial real estate.

We would encourage you to take the first step and talk to us about working together and buying and selling commercial properties.

We buy almost any type of commercial real estate including apartment buildings, mixed-use properties, retail, industrial/warehouse, development sites and many more.

DON’T LET COMMERCIAL REAL ESTATE FIRMS TAKE YOUR LOCAL BUSINESS. CALL US TODAY !!!
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VACANT LAND WANTED

Calling on all agents, brokers, and land owners. We are actively buying vacant land and development sites in the outer boroughs of NYC.

If you have a development site for sale or if you want to find out what the development potential is please contact us at any time.

We do residential, commercial and manufacturing development so don’t rule out any potential deals. Run it by us first.

Thanks
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SEE FARM DEVELOPMENT NOTIFICATIONS ON YOUR NEWS-FEED

I am often asked by our Facebook friends why they don't see our posts although they 'liked' our company page.

Facebook changed their policy a couple of years ago and company page posts have to be financially 'promoted' for greater exposure. We do support Facebook advertising but we also believe our Facebook friends deserve to see our posts in real-time on their newsfeed.

You need to do the following as the attached screen shot shows:

1. Visit our page on Facebook from a PC or Mac @ facebook.com/nychomes4u
2. Like our page
3. Follow our page
4. Click the Follow button and select 'See First' under IN YOUR NEWSFEED
5. Check 'All On' in NOTIFICATIONS

Enjoy
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LAW OF AVERAGES

According to Wikipedia, The law of averages is the law that a particular outcome or event is inevitable or certain simply because it is statistically possible.

When applied to sales or more specifically to real estate lead generation, understanding the law of averages will facilitate real estate agents, brokers, mortgage bankers, investors, developers and other real estate professionals who generate leads for a living.

Real Estate is a business of rejection. More often than not you would hear the word NO. In fact, seasoned real estate professionals, know that when a prospect says no to them the sales process just began.

The law of averages states that 80% of all potential customers are not interested in making a purchase or not ready yet to sign a listing agreement or sell their home. Mind you, if the homeowner is not ready to sell, no matter how skilled the agent is, there will be no listing.

The other 20% are more inclined to make a purchase with the bottom 10% being highly motivated. Our real estate agent has a much better chance to land a listing when meeting with a home owner in the 20% group who are highly motivated. A homeowner at the bottom 10% is the easiest sale. Get the paperwork tight, smile, and you just got a new listing.

It's a numbers game. The more rejection you receive the closer you get to a prospect who belongs to the 20% group.

Be consistent. Never let go. Knock on as many doors as you can. Generate as many leads as you can. More often that you think a friendly prospect will invite you to his home.

Last point. Sales skills and deep understanding of real estate would allow real estate professionals to land prospects who are still on the fence. So bring an agent friend if you think you might need help persuading your seller. Just remember it's all about who opens the door and less about who's knocking.

For marketing tips and advise about lead generation feel free to contact us.
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ZONING 101

Why R8 Zoning is SO Overrated . . . . . .

R8 is a high residential density zoning which is frequently found in Brooklyn, Manhattan and the Bronx. The zoning allows for mid to high-rise apartment buildings of typically 8 stories and up. At a maximum, a floor area ratio (known as FAR) of 6.02 is allowed. This means that a 20 x 100 lot can have a total floor area of slightly over 12,000 SF. In the Bronx, especially along the Grand Concourse corridor, there are vacant lots and small residential properties that are situated within R8 zoned areas.

Here lays the problem; a broker would call and ask us how much we usually pay for a buildable square foot in the Bronx. This question always puts a smile on my face. It’s like asking how much would you pay for a white car. But I say around $50 PSF. So the broker replies with excitement. “I have the perfect deal for you at $55 PSF “. Turns out the deal offered is a single family home on a 20’ X 100’ R8 lot and the price is only $660,000. Well, the Bronx is not Brooklyn yet and I haven’t seen any tall buildings on a 20 X 100 being built. Rents in most areas in the Bronx are affordable, there is no Condo market yet and construction costs going over four stories are extremely high to justify development.

We usually buy development sites if we can cost-effectively develop walkup buildings up to four floors. So there is no real difference, to us, buying a 20 X 100 or a 25 X 100 lot, between R6, R7-1 or R8. In fact, we have a much higher chance of landing the deal if it’s zoned R6 since the owner or broker would not price the site at a certain number per square foot not realizing that going past four stories is not financially feasible.

Please feel free to contact us with any zoning questions you may have

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APARTMENTS FOR RENT IN THE BRONX

We have a selection of fully-renovated 1,2 and 3 bedroom apartments for rent in the Bronx.

Please inbox us for a list of available locations.

Brokers welcome.

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ZONING 101

What can you do with a 25' x 100' lot zoned R4 / R5

We are offered small lots, 25 x 100 in size, zoned R4 or R5 quite often.
In R4 and R5 zoning, unlike R6 for example, you can build on the lot line ONLY if the building next door is built on the lot line (to be technically exact not more than six inches from the line). If the adjacent lot is not improved or if an existing building is not built on the line you will be required to set back your building 8 feet from the lot line.

If, for example, the building on the right side is 2 feet from the lot line then you will have to leave an 8 foot side yard which only leave 17 feet of frontage for the new building. If both adjacent lots are not improved with lot line buildings then two side yards will be required with a minimum combined setback of 13 feet leaving only 12 feet for building width. This renders the lot not fit for development.

When only one 8 foot side yard is needed the building will be 17 foot wide which does not allow for two rooms side by side. Therefore in order to accommodate 3 bedroom apartments a 4 story building with two duplex apartments is required. This results in high construction costs compared to a 2 story house.

To sum up, if no side yards are required an attached building can be developed. This would work best for a 2 or a 3 fam house. If one side yard is required then a duplex over duplex would work best and the price offered for the lot should be lowered given the high construction costs. If two yards are required you should start looking for another deal to buy.

Feel free to contact us with any zoning questions you may have.

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ALERT: RENTAL SCAM

We raised the issue in the past however the problem of dishonest tenants and fraudulent​ rental application forms and supporting documents is intensifying.

This claim is based on our personal experience. We interview tenants on a regular basis and lying on rental applications seems to be the norm these days.

Needless to say that we have many wonderful and honest tenants and we would like to believe they still make up the majority of applicants.

We have also noticed that some rental brokers are in on the scam and that they would guide their clients to make false representations in order to get approved.

Here's a taste of what we go through at the office. A broker submitted an application informing us how great the tenant is. Well, we prefer to verify for ourselves. A quick phone call to the current landlord dialing a 917 number the tenant provided and a sweet lady picks up. She tells us she is the owner's assistant and that she would love to answer any questions we might have. She, of course, knew the applicant and said she was a model tenant with a solid payment history who had absolutely no issues whatsoever. Wow. That's great we thought. But why would an owner of a three unit building have an assistant. Strange​ !

Ok, if she has such a great payment history she must have cancelled checks to show for it. Right ? Wrong. Bank statements didn't show any such rent payments. Our office contacted the tenant and sure enough she provided last six months of cancelled checks.

The bank account number on these checks matched the account number ob the bank statements however these rental payment check didn't show up on any of the statements.

Our conclusion. Tenant is pretty savvy with Photoshop but we would rather another landlord enjoy her creative skills.

Stay tuned and be alert.

Feel free to contact us if you need any help with screening out applicants.

Happy living
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LAND WANTED

FARM Development is seeking land for development in Queens, Brooklyn and the Bronx. Parcels can be as small as 25 X 100 zoned R6 and up. Smaller sites might qualify. We believe we can outbid our competition on most development sites since we have developed a unique affordable housing solution. Give us a try.

Thank you and happy prospecting
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The Farm Triple Commission Commitment

Only four days ago we wrote about the importance of strategic alliances in the real estate industry. We have key accounts and very strong allies which allow us to continue and grow our business in such a competitive landscape.

One of the key ingredients in forming such relationships with agents and brokers is our Triple Commission Program. Yes, I know what you're thinking. Investors never keep their promises. It sounds so corny. Everyone promises that. Oh boy you are wrong !

Actions speak louder than words. This program has worked equally well with novice agents and top producing brokers. Come experience the difference yourselves.
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As America celebrates Memorial Day, we pay tribute to those who have given their lives in our nation’s wars. The willingness of America’s veterans to sacrifice for our country has earned them our lasting gratitude.

At Farm Development we are proud to rent apartments to U.S. Vets. God bless
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The new 421A tax abatement program is making a comeback

When the 421A tax abatement program expired in January of 2016, new development hit a record high and buyers where flocking for new Condos throughout the city. Sure, there were complaints about land prices getting out of control however low rate financing and the availability of tax abatement kept buyers coming for more.

Then, like blowing out a candle, new development came to (almost) a complete stop. Our company, having land available to build, decided to sit 2016 out, and see when and if the 421A program will be renewed. Well, it’s finally here. Projects of 4 units or more likely to qualify.

More details to follow
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Farm Development Is Who We Are

I attached a copy of the marketing brochure we used for the 2014 Triple Play convention in Atlantic City. It still works today as it did in 2014. We stand behind every word . . . .

2017 . . . . Still going strong . . . . .
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The things we do for our friends ........

We strongly believe that in order to make it in the cut throat real estate market, real estate professionals must develop strong, strategic and friendly relationships.

We have always surrendered ourselves with the top real estate people.

Here’s what we do ......

- We share exclusive market insight and trends
- We find people using credit bureau software
- We provide lists of exclusive properties for sale not on MLS
- Joint marketing campaigns
- Offer our hassle-free, no bs triple commission program
Do the back office tedious work so you won’t
- Provide help and guidance on all matters real estate
- Love, respect and happiness
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Seeing is believing. Retail will never be the same.

I took a long walk last week along Madison and 5th Ave, recently considered as ‘untouchable’ retail territory. Well, this is no longer the case.

There are many vacant stores in prime retail areas throughout the city. Retail brokers I speak to have said they had never seen such a market decline in retail.

Internet sales, overbuilding of retail chain stores, online banking and other factors have all contributed to what I saw. The (retail) world will never be the same. Embrace yourselves.

This is a great article from the WSJ.

ow.ly/O6DB30bNEY6
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TRUST

Trust is a 3-tier concept; #Honesty #WorkEthics #Competence

A quick story about a short sale opportunity from this past Wednesday. An agent friend of mine calls me about a homeowner who is thinking about short selling her house. He gives me the address so I can do a little research before the showing. The agent has not secured the listing yet. We work as partners. Needless to say, circumvention is not a concern. #Honesty

We have done a few short sale deals together. One deal took over two and half years to complete. It required 4 BPO inspections and numerous value disputes. We came through and we never let go. My agent friend knows this deal will be no different. #WorkEthics

We went to see the house on Friday. We sat down in the living room and the agent asked me to address the homeowner's concerns. First, I made sure that she had no equity in the house and that she had no desire to keep the property. She had two major concerns. She wanted to stay at the house until September. I told her this was not a problem since we can move along at our own pace. I also informed her that we would hire an attorney since the foreclosure action was uncontested. The second concern was a tax lien and a judgement against her father who owned the house prior to his passing. Again, we assured her these issues should not concern her and that we would be responsible to dismiss the judgement and make sure the tax lien foreclosure would be dealt with. We order a full title report as well as a foreclosure search on EVERY short sale that we do. This is done on day one.
#Competence

For more info about short sales please visit www.nychomes4u.com/short-sale/
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IT'S THE RELATIONSHIPS STUPID !

We all remember the famous campaign slogan of Bill Clinton in the 1992 presidential election, "It's the economy Stupid".

We do not look for deals. We look for relationships. We do not do real estate. We do people. We do not simply develop properties. We develop and maintain friendships.

Real estate investing is a repeat business. Buy. Build. Fix. Sell. Rent. Repeat. Most of our business comes from key accounts whom we have been doing business with for many years. The basis for these long-lasting relationships is trust. People trust us to close deals. People trust us to be open and transparent. People trust us to treat sellers and buyers with respect and dignity. People trust us to find creative solutions to complicated problems. People trust us to do what we say.

We also realize we can't be friends with everyone. We realize that a small portion of the people who practice real estate full-time can earn our trust and be life-long partners and friends. These amazing individuals are the best at what they do. they never blame market conditions. Never blame the economy. Never complain about competition. Never complain about the weather. On the contrary. They embrace toughness. They don't just work hard. They work smart. They developed systems. Relationships. Key accounts. Pipelines. They are business people. Their production outweighs industry's average many times over. They are top producers.

We want to take this opportunity and thank all these amazing people we do business with; to all the wonderful agents, brokers, wholesalers, partners, deal finders, bankers, and everyone who makes our business possible. We cherish your friendship and we are very thankful for your business.

Wishing you as always happy living
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STOP COMPLAINING. MOVE ON OR MOVE AWAY

As you're climbing up on your way to financial success the voices of those who blame others for their every day misfortunes fade away. When you no longer hear these voices you should pet yourself on the shoulder. You've climbed quite a bit. Don't let the negative and toxic people rent space in your head.

We try really hard to conduct business aggressively, creatively an with no compromise but with full transparency, honesty and humanity. Our moral compass points true north.

It is sad and bewildering to see people around us who would get jealous, defame our character, blame us for all the misfortunes in this world, and instead of getting on the right path they prefer to sit at the side of the road and badmouth those who pass them by.

The world is full of losers who spend their lives feeling bitter and instead of climbing up they try to pull you down.

Ignore these people. Cut them out of your lives. Disregard the negative comments, the gossip and the voices around you. Surround yourselves with awesome people and press on.

Just a quick thought. Take a good look at those who criticize you. Those who say behind your back that you took what's theirs. Those who say you couldn't be trusted. Take a good look. This is what mediocrity looks like.

Happy living
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3D REAL ESTATE INVESTING

Real estate investors and developers are always on the lookout for a ‘good’ deal. I’ll be the first one to admit it. Unfortunately (for some sellers), ‘good’ deals are often the result of unforeseen circumstances, bad luck, and pretty much anything and everything that life may throw at you.

The 3Ds ....... namely Death, Divorce and Defaults, as unfortunate as they may sound, are an integral part of day-to-day life. We, as real estate people with a conscience, must remember that we did not create these situations nor are we responsible in any way. What we CAN do is come up with the best possible solution to the property owner.

Be honest. Work hard. Stay humble.
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FLIPPING CONTRACTS . . . . THE RIGHT, LEGAL WAY . . .

This post refers specifically to flipping or assigning an executed contract of sale to a third party. This is done pre-closing so that the original buyer (or the "Assignor") does not take title to the property nor does he or she incur any closing costs.

There are two ways in which such assignment can be done legally. If the contract of sale contains an assignment provision the buyer can legally and knowingly assign his or her rights to the contract to a new, third party for an agreed assignment fee.

We have had transactions in which a deal turned a lot more complicated than expected and we notified the seller that the two options are either we pull out (subject to due diligence or other contingency clauses) of the deal or get his or her consent to assign the contract. This requires a one page assignment agreement by which all legal rights to the transactions are being transferred to the new buyer (or the "Assignee").

When an assignment clause in the contract is not allowed, the only other legal way would be to assign the membership rights in the LLC (the "Buying Entity"). This would require a newly-formed company where tax returns have not been filed and there is no risk of liability.

The dirty little secret, and I suspect some attorneys might disagree, is that the seller does not have to know hence consent to the change in ownership. The buyer is the same buyer under the contract of sale say ABC Real Estate, LLC. The new members, Johnny and Bob, are taking over from Ben and Jane. It's that simple. Of course it would be nice for the seller to know and consent but in such a case a simple assignment clause would suffice.

If timing and privacy are a concern i.e. you don't want the seller to find out we would recommend keeping the original buyer's attorney and title company on the case otherwise seller's attorney might object to clearing title a second time and seller might start asking questions.

And please you never heard it from us ;)
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SPREAD THE KNOWLEDGE

In the following weeks we will begin posting articles and real-life stories from our most-trusted real estate advisers. Our accountant, litigation attorney, transactional attorney, housing attorney, commercial leasing attorney, DHCR attorney, zoning attorney (Oh my god, do we really pay all these guys), title expert, lenders, mortgage bankers, architects, expediters, brokers and many more.

Their advise and experience is second to none.

Stay tuned . . . . . .
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Short Sales 101
SHORT SALES 101 FROM FARM DEVELOPMENT (4/4)

This is the last video in a four video series. Please scroll down for previous videos.

Please don't hesitate to contact us for all your short sale needs.

Happy living
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Joseph Todisco likes this

Mark Hunshik ChoiThis video says the seller needs a real estate agent to do the short sale. Does the seller seek out an agent first or seek out Farm Development first?

7 months ago
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Enter to Win a Free Property Shark Account
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A Free Property Shark Annual Elite Account Is Up For Grabs Please visit thesharktank.hscampaigns.com/ to enter or visit our Facebook page and click on TheSharkTank link on the side menu on the left. ...

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A Free Property Shark Annual Elite Account Is Up For Grabs

Please visit thesharktank.hscampaigns.com/ to enter or visit our Facebook page and click on TheSharkTank link on the side menu on the left. See highlighted menu item on image below.

Please feel free to share

Have fun and happy living
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Short Sales 101
SHORT SALES 101 FROM FARM DEVELOPMENT (3/4)

We will publish the last video in the series next Monday.

Please don't hesitate to contact us for all your short sale needs.

Happy living
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Mark Hunshik ChoiThis video says sometimes the mortgage lender may give the seller an incentive ($) to sell their home as a short sale. The mortgage lender will pay even after they didn't get paid? Really?

7 months ago
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FARM Development, LLCOh yes. Its not as bad as giving your house to your ex just so she could go away ;)

7 months ago
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NO SHOP PROVISION IN LOIs

We often insert a No Shop clause into our letters of intent when submitting offers on commercial properties. In the residential world of real estate this is rarely done. Typically, an agent would submit a binder on behalf of their client with basic info such as purchase price, down payment, mortgage amount, and home inspection contingency. Sometimes a good faith deposit is provided to make the offer stand out.
If the offer is accepted then a deal memo is circulated and a contract of sale is negotiated.

In commercial real estate a letter of intent is submitted with terms and conditions proposed by buyer. LOIs are more detailed than residential binders and may include various due diligence items such as Phase I environmental, topographical survey, DHCR reports, leases, Engineering inspection etc'.

Typically, a due diligence period on a $1M-$5M commercial property is 10 - 14 business days. Sellers are sometimes hesitant to enter into a contract of sale following lengthy negotiations where the deal is contingent on a successful due diligence by the buyer.

Here comes the No Shop Provision; we advise sellers that although we require due diligence we have no intention of wasting attorneys' time negotiating a full contract of sale knowing that we might back out of the deal during due diligence. Instead, we ask the sellers to sign an LOI where guaranteeing a limited time period in which seller is not allowed to market (or 'Shop' hence the term) the property. The clock starts ticking once ALL due diligence items are provided by seller and NOT from the date the LOI is signed. Once buyer successfully completed due diligence and wishes to proceed both parties are obligated to negotiate a contract of sale in good faith.

Advantages to seller:

1. No lengthy contract negotiations prior to due diligence
2. No legal fees paid prior to due diligence
3. No risk of being held 'hostage' by buyer
4. A way out if contract negotiations are not successful

Advantages to buyer:

1. No lengthy contract negotiations prior to due diligence
2. No legal fees paid prior to due diligence
3. No soft deposit required
4. A way out if contract negotiations are not successful

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Short Sales 101
SHORT SALES 101 FROM FARM DEVELOPMENT (2/4)

We will publish the 3rd video in the series next Monday.

Please don't hesitate to contact us for all your short sale needs.

Happy living
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Short Sales 101
SHORT SALES 101 FROM FARM DEVELOPMENT (1/4)

We will publish additional videos in the series every Monday starting today.

Please don't hesitate to contact us for all your short sale needs.

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Success & Failure

Want to climb all the way to the top of the real estate ladder ? Do you have passion and perseverance in the face of adversity ? How well do you perform in an environment of constant rejection ?

Life is stronger than all of us. However, those who have what it takes to make it in this world can take a punch. They will be knocked down but will never get knocked out.

Watch this TED presentation by Barbara Corcoran and get a copy of this wonderful book by Angela Duckworth about Grit: The Power of Passion and Perseverance. Highly recommended !

ow.ly/PLHf309FdTt

ow.ly/WaTY309FdXM
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Real Estate Brokers Welcome
Your investor didn't give you the listing back ? You were promised a buyer's fee but your buyer doesn't pick up the phone? Your short sale is approved but your buyer is no where to be found !
Yes, we know. It happens all the time. Stop betting on losers. Look up Farm Development on the web.

Happy prospecting
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PROSPECTING DONE THE RIGHT WAY

Ignoring knock knock jokes and scary homeowner horror stories prospecting for real estate leads is, by far, the main driver to obtaining listings and deals in residential real estate.

The real estate industry has improved greatly with technological advances. Today is easier than ever to research public records, view streets and neighborhoods, compare prices of comparable properties, contact real estate professionals and do much more, all from the comfort of your home or office.

Prospecting, an old-school, ancient, practice remains as strong as ever. Real estate transactions are built on rapport and trust between people. Houses and buildings need to be toured, appraised, inspected and evaluated. The money is big. Buy and sell decisions are not made lightly and houses are not yet sold on Amazon. Human interaction is key to making real estate deals happen.

The New York Metro area is very desirable and highly competitive. We often see real estate agents that prospect once every couple of weeks and every time in a different neighborhood. Our goal in prospecting is to ‘own’ the local markets we canvas. We use our territory system while employing unique, creative, outside-the box methods in prospecting.

Here are the basic steps in our process:

1. Define a geographic territory (should consists of about 10 city blocks)
2. Decide on property types to target (for example, mixed-use buildings S2)
3. Produce a list based on search criteria (for example, properties that are free and clear and are 4,000 SF minimum)

You have to be consistent and work your territory for the next 12 months through direct marketing, door knocking, and many other methods we use at the Farm.
If you have any questions about prospecting feel free to drop us a line . . .

Happy prospecting
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SEE FARM DEVELOPMENT NOTIFICATIONS ON YOUR NEWS-FEED

I am often asked by our Facebook friends why they don't see our posts although they 'liked' our company page.

Facebook changed their policy a couple of years ago and company page posts have to be financially 'promoted' for greater exposure. We do support Facebook advertising but we also believe our Facebook friends deserve to see our posts in real-time on their newsfeed.

You need to do the following as the attached screen shot shows:

1. Visit our page on Facebook from a PC or Mac @ facebook.com/nychomes4u
2. Like our page
3. Follow our page
4. Click the Follow button and select 'See First' under IN YOUR NEWSFEED
5. Check 'All On' in NOTIFICATIONS

Enjoy
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AGENTS, BROKERS, DEAL FINDERS, BUYERS AND TENANTS

We can accommodate all your commercial real estate needs.

Contact us today with anything you might need.

Happy living
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Bronx Stroll With Farm Development
WE LOVE THE BRONX

Most of our buildings are in the Bronx and we have been actively investing in the Borough for more than five years now. Not easy but very rewarding.

Please enjoy the video as we celebrate five years of real estate success in the Borough we call HOME.
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IF YOU THINK YOU'RE DEAL IS NOT GOOD ENOUGH FOR US - THINK AGAIN .......

Let me make a confession. We, at Farm Development, always look for great deals. The higher the return the better. Here, I said it. Guilty as charged. However, I shouldn't really apologize. The properties we buy require a lot of attention, capital hard work, and experience. Structural issues, IRS tax liens, broken chain of ownership, no surviving heirs are just a few of the challenges we are currently facing.

Many times, however, we are presented with opportunities that don't quite meet our acquisition criteria. Some of these deals don't make any sense hence we say no right away. Other deals, make sense for the right type of buyer.
We are in the business of making deals. We don't need to retain full ownership in order to put a deal together.

Many people we do business with know that even if they believe the opportunity is not 'sexy' ENOUGH for us we will still do our best to do the deal through syndication, partnerships or by assignment of contract. The process is completely transparent and seamless to whoever refers the opportunity to us.

So we ask you to present any opportunity you may have to us. We will be very happy to walk you through our underwriting process and we promise we will try to be as aggressive as we can. If we do not think there is anything we can do we will say so in no time.

Mind you, we won't do stupid deals. By stupid I mean deals that leave no money on the table for the new owner. Let me explain.

In income producing properties we look at three major parameters. 1. GRM 2. NOI 3. $PSF
Please refer to previous posts that expand on these fundamentals. A deal will be considered if, for example, the average price per foot is at fair market value but the average rent is low. This means the seller will receive a fair offer and the buyer can improve his or her bottom line by increasing rents. Or if the building is trading at a 10+ GRM but the NOI is relatively high indicating lower than average operating expenses, there will be an opportunity to make a deal.

We will not do a deal where rents are at market levels, expenses cannot be lowered and asking price reflects high GRM and $PSF. Basically, top market price with no upside potential. No.

We will publish a follow up post illustrating these concepts with some real market scenarios we are currently exploring.

Please feel free to run any deal you have by us. You will not regret it.

Wishing you happy prospecting
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FARM DEVELOPMENT . . . . . . TRY US OUT FOR ALL YOUR REAL ESTATE NEEDS
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EXCLUSIVE HOMES FOR SALE IN THE BRONX

We have complied a list of fully-renovated homes in the Bronx that is offered exclusively to agents and brokers we have close working relationships with.

This is our way of saying thank you to all our great broker and agent friends who have been supporting us all these years.

If you are a top producing agent and you believe you should be on our short list please contact Yaniv Avrahami at 718-419 7779.

We will soon release a list of homes available in Queens.

Thanks again and as always wishing you happy prospecting.
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We’ve taken a few weeks off from Facebook and LinkedIn as 2016 came to an end. We’ve received quite a few requests to get started posting original content as we’ve always done.

We promise that this coming week we will start posting again. We will also have our real estate team members write original content which will be posted exclusively on Farm Development’s social media channels.

Be well and happy living
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To all our friends and partners, thank you so much for making 2016 such a great and productive year.

Looking forward to an even greater 2017.

Wishing you all a happy and wonderful new year.
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RESIDENTIAL BROKERS TAKE NOTICE - COMMERCIAL PROPERTIES WANTED !!

Farm Development is looking to purchase commercial properties in the New York Metro area.

If you are a local real estate agent specializing in 1-4 family homes and you are not involved in commercial real estate you are leaving all that business to Manhattan-based commercial firms.

Feel free to contact us if you have any leads on commercial properties or if you need help and guidance venturing into the exciting world of commercial real estate.

We would encourage you to take the first step and talk to us about working together and buying and selling commercial properties.

We buy almost any type of commercial real estate including apartment buildings, mixed-use properties, retail, industrial/warehouse, development sites and many more.

DON’T LET COMMERCIAL REAL ESTATE FIRMS TAKE YOUR LOCAL BUSINESS. CALL US TODAY !!!
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VACANT LAND WANTED

Calling on all agents, brokers, and land owners. We are actively buying vacant land and development sites in the outer boroughs of NYC.

If you have a development site for sale or if you want to find out what the development potential is please contact us at any time.

We do residential, commercial and manufacturing development so don’t rule out any potential deals. Run it by us first.

Thanks
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INFORMATION IS EVERYTHING

Information is everything. Weather it’s your personal life or your business information is required to grow and make progress. To survive and to function. To live.

Real estate is no different. As a matter of fact, in real estate the need for quality, up-to-the minute information is even greater. It’s what you know and who you know. It’s being well-informed 24/7. It’s being knowledgable.

As real estate investors and developers we need to know the best brokers and agents in our markets. We need to know building code and zoning ordinances. We need to know the Multiple Dwelling Law and the Housing Maintenance Code. We need to know the latest developments in the 421A tax abatement program. We need to know HPD and DHCR rules and regulations. We need to know what community boards favor politically. We need to know future plans of MTA. And the list goes on and on. In short we need to own INFORMATION.

Be well. Be happy. Be informed.
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INFORMATION IS EVERYTHING

Information is everything. Weather it’s your personal life or your business information is required to grow and make progress. To survive and to function. To live.

Real estate is no different. As a matter of fact, in real estate the need for quality, up-to-the minute information is even greater. It’s what you know and who you know. It’s being well-informed 24/7. It’s being knowledgable.

As real estate investors and developers we need to know the best brokers and agents in our markets. We need to know building code and zoning ordinances. We need to know the Multiple Deelling Law and the Housing Maintenance Code. We need to know the latest developments in the 421A tax abatement program. We need to know HPD and DHCR rules and regulations. We need to know what community boards favor politically. We need to know future plans of MTA. And the list goes on and on. In short we need to own INFORMATION.

Be well. Be happy. Be informed.
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A BIG Happy Thanksgiving from the Farm to all our friends, partners, colleagues, friends, and to all good Americans out there ... See MoreSee Less

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THE ART OF NEGOTIATIONS ... See MoreSee Less

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THE ART OF NEGOTIATIONS ... See MoreSee Less

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WHAT RETURNS ARE YOU LOOKING FOR ? (Part 3/4)

A few quick facts about Cap rates.

Fact #1 Cap rates allow us to compare apples to oranges. To compare returns of different assets across different markets. In Manhattan commercial Class A office buildings trade at Cap rates below 4%. Elevator apartment buildings in middle-class Queens neighborhoods trade at around 6.50% Cap rates. If the real estate transaction involves asset re-positioning then projected Cap rate should account for risk and uncertainty entailed in the deal.

Fact #2 Cap rates are a measure of an unleveraged return. Please note that in our previous example we did not take financing into account. The net operating income accounts for operating expenses only. Finance costs are not accounted for. This is a true measure of operating efficiency unbiased by financing.

Fact #3 Cap rates can also be thought of as discount rates. In our previous example, we projected an 8.00% Cap rate. Since financing is not accounted for and assuming we paid cash to purchase and improve the property, the Cap rate truly measures return on cash. If we divide 100 by the 8% Cap rate we would get 12.5. This means if all remains equal we would get back our investment in 12.5 years.
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PROSPECTING DONE THE RIGHT WAY

Ignoring knock knock jokes and scary homeowner horror stories prospecting for real estate leads is, by far, the main driver to obtaining listings and deals in residential real estate.

The real estate industry has improved greatly with technological advances. Today is easier than ever to research public records, view streets and neighborhoods, compare prices of comparable properties, contact real estate professionals and do much more, all from the comfort of your home or office.

Prospecting, an old-school, ancient, practice remains as strong as ever. Real estate transactions are built on rapport and trust between people. Houses and buildings need to be toured, appraised, inspected and evaluated. The money is big. Buy and sell decisions are not made lightly and houses are not yet sold on Amazon. Human interaction is key to making real estate deals happen.

The New York Metro area is very desirable and highly competitive. We often see real estate agents that prospect once every couple of weeks and every time in a different neighborhood. Our goal in prospecting is to ‘own’ the local markets we canvas. We use our territory system while employing unique, creative, outside-the box methods in prospecting.

Here are the basic steps in our process:

1. Define a geographic territory (should consists of about 10 city blocks)
2. Decide on property types to target (for example, mixed-use buildings S2)
3. Produce a list based on search criteria (for example, properties that are free and clear and are 4,000 SF minimum)

You have to be consistent and work your territory for the next 12 months through direct marketing, door knocking, and many other methods we use at the Farm.

If you have any questions about prospecting feel free to drop us a line . . .

Happy prospecting
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PROSPECTING DONE THE RIGHT WAY

Ignoring knock knock jokes and scary homeowner horror stories prospecting for real estate leads is, by far, the main driver to obtaining listings and deals in residential real estate.

The real estate industry has improved greatly with technological advances. Today is easier than ever to research public records, view streets and neighborhoods, compare prices of comparable properties, contact real estate professionals and do much more, all from the comfort of your home or office.

Prospecting, an old-school, ancient, practice remains as strong as ever. Real estate transactions are built on rapport and trust between people. Houses and buildings need to be toured, appraised, inspected and evaluated. The money is big. Buy and sell decisions are not made lightly and houses are not yet sold on Amazon. Human interaction is key to making real estate deals happen.

The New York Metro area is very desirable and highly competitive. We often see real estate agents that prospect once every couple of weeks and every time in a different neighborhood. Our goal in prospecting is to ‘own’ the local markets we canvas. We use our territory system while employing unique, creative, outside-the box methods in prospecting.

Here are the basic steps in our process:

1. Define a geographic territory (should consists of about 10 city blocks)
2. Decide on property types to target (for example, mixed-use buildings S2)
3. Produce a list based on search criteria (for example, properties that are free and clear and are 4,000 SF minimum)

You have to be consistent and work your territory for the next 12 months through direct marketing, door knocking, and many other methods we use at the Farm.

If you have any questions about prospecting feel free to drop us a line . . .

Happy prospecting
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GIVING IS WHAT WE DO ....... THE FARM WAY ...

We have a wonderful network of friends, brokers, agents, vendors, wholesalers, deal finders, bankers, and many industry professionals that allow us to to stay in business.

We don’t take these relationships for granted. We often say that we always try to give before we get. We truly believe that facilitating the people around us would eventually lead to mutual gain. We make it our business to educate, help, and support in any which way the people we do business with.

Here are a few examples of some of the questions and issues that we had the pleasure to help our fellow agents with recently :

- How can I expedite restoring gas service with Con Edison. The gas service is shut off and my buyer must surrender his apartment by the end of the month

- How do I dismiss HPD violations before closing

- The seller won’t replace the roof. How much should it cost my buyer

- What can I build on an irregular R5 zoned vacant land

These are just a few of the many questions we are asked regularly. If we need to we would go far and beyond just providing an answer. We would HELP !!!

Feel free to contact us with any real estate rested issue you may be facing.
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GIVING IS WHAT WE DO ....... THE FARM WAY ...

We have a wonderful network of friends, brokers, agents, vendors, wholesalers, deal finders, bankers, and many industry professionals that allow us to to stay in business.

We don’t take these relationships for granted. We often say that we always try to give before we get. We truly believe that facilitating the people around us would eventually lead to mutual gain. We make it our business to educate, help, and support in any which way the people we do business with.

Here are a few examples of some of the questions and issues that we had the pleasure to help our fellow agents with recently :

- How can I expedite restoring gas service with Con Edison. The gas service is shut off and my buyer must surrender his apartment by the end of the month

- How do I dismiss HPD violations before closing

- The seller won’t replace the roof. How much should it cost my buyer

- What can I build on an irregular R5 zoned vacant land

These are just a few of the many questions we are asked regularly. If we need to we would go far and beyond just providing an answer. We would HELP !!!

Feel free to contact us with any real estate rested issue you may be facing.
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WHAT RETURNS ARE YOU LOOKING FOR ? (Part 2/4)

We are currently looking at a 6,000 SF, mixed-use building in the Bronx. We will take you through our underwriting process to derive a projected Cap rate and decide if we would pursue this opportunity.

Property is currently vacant and requires an extensive renovation estimated at $60 psf. Property was offered to us for 800,000. If we add up cost of renovation, purchase price, closing costs, carrying costs, finance costs, soft and architectural costs we would have a total cost basis of about $1,300,000.

Please note that ALL expenses should be accounted for until property is fully cash flowing.

Often we see real estate professionals that use the purchase price as the basis for computing Cap rates. This is wrong! If you purchase a building for a million dollars and your closing costs are 5% your cost basis is $1.05M not $1.0M. Dividing the NOI by $1.05M vs $1.0M would yield the real, although lower, Cap rate.

Commercial brokers often use purchase price as the cost basis putting a positive spin on Cap rates. Don’t be fooled.

Rent for the commercial ground floor retail is projected at $30 psf and $22 for the residential units on top floors. Please note that we use net rentable square footage compared to gross square footage used in computing cost of renovation. We estimate a 10% loss factor in calculating net rentable SF.

Gross SF Net SF
Retail 1,300 1,170
Resi 4,300 3,870

Annual gross rent is therefore :

1,170 rsf x $32 + 3,870 rsf x $24 = $130,320

We project a 6% vacancy and credit loss for this particular transaction so the net annual rent roll is $122,500

Now we need to deduct all operating expenses:

Real estate taxes - $12,875
Sewer & Water - $6,750
Insurance - $5,000
Management (5.00%) - $5,651
Heat & Hot Water - $0
Electric - $1,800
Repairs & Maintenance - $5,000
Misc. - $5,000

Total Operating Expenses - $42,076

NOI = $130,320 - $42,076 = $88,244

Our projected Cap rate equals $88,244 / $1,300,000 = 6.78%.

Cap rates allow us to evaluate and compare different assets across different markets. In our example, 6.78% return in an average Bronx neighborhood for such an asset is not sufficient. Why you might ask ? What’s wrong with 6.78% return ?

First of all, these numbers are projected. We still need to purchase the building, hire an architect, obtain Buildings Department approval, complete the construction, obtain sign offs, occupy the building, collect rent, and refinance out. Not to mention how management intensive buildings in the Bronx are. In our experience such a transaction should yield a minimum Cap rate of 8.00%. So, dividing our NOI by 8.00% would result in $1,103,050. This is the all-in cost basis. Mind you, the only variable is purchase price. The cost of renovation or carrying cost wouldn’t change just because we want a higher Cap rate.

So, in order to accommodate this total cost basis we can only afford to pay the seller $603,050. To sum up, if we buy the property for $603,050, (plus cost of renovation and all related costs), an $88,344 NOI would produce an 8.00% Cap rate.

To be continued in next post
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INTERESTED IN REAL ESTATE INVESTING ??? WE PROVIDE FULL TUTORING & TRAINING IN HOUSE

FARM Development offers a full-service, one-stop shop real estate solutions with in-house capabilities in buying, renovating, developing, managing and selling residential and commercial assets. Our focus is ground-up development, rehabilitation of existing properties, and re-positioning of under-performing assets in the New York Metro area.

Our acquisition specialists go through a rigorous training program both in the field and in the office and are constantly monitoring the real estate market for off-market opportunities. We employ sophisticated direct marketing methods to acquire properties directly from sellers.

Our outstanding relationships with local real estate agents and brokers allow us to get deals under contract before they even hit the market. We use the most advanced computer software and we employ the most creative techniques to locate, negotiate, and close real estate deals throughout our local markets.

We are currently expanding our acquisition team and are looking for a small, select group of individuals who want to develop a career in real estate investing.

No prior experience is required. We offer full training and mentoring in house. Our program is a perfect fit for:

1. Individuals who want to get started in real estate investing but don't know how
2. Real estate agents and brokers who want to keep their brokerage license
3. Wholesalers, deal finders, and real estate pros who want to take their career to the next level and have the comfort of an in-house ready, willing and able buyer

Please google us or visit our facebook page.

We are very selective in choosing the most-qualified individuals to join our team.
Please email us for more information

Thank you and happy investing
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WHAT RETURNS ARE YOU LOOKING FOR ? (Part 2/4)

We are currently looking at a 6,000 SF, mixed-use building in the Bronx. We will take you through our underwriting process to derive a projected Cap rate and decide if we would pursue this opportunity.

Property is currently vacant and requires an extensive renovation estimated at $60 psf. Property was offered to us for 800,000. If we add up cost of renovation, purchase price, closing costs, carrying costs, finance costs, soft and architectural costs we would have a total cost basis of about $1,300,000. Please note that ALL expenses should be accounted for until property is fully cash flowing.

Often we see real estate professionals that use the purchase price as the basis for computing Cap rates. This is wrong! If you purchase a building for a million dollars and your closing costs are 5% your cost basis is $1.05M not $1.0M. Dividing the NOI by $1.05M vs $1.0M would yield the real, although lower, Cap rate. Commercial brokers often use purchase price as the cost basis putting a positive spin on Cap rates. Don’t be fooled.

Rent for the commercial ground floor retail is projected at $30 psf and $22 for the residential units on top floors. Please note that we use net rentable square footage compared to gross square footage used in computing cost of renovation. We estimate a 10% loss factor in calculating net rentable SF.

Gross SF Net SF

Retail 1,300 1,170

Resi 4,300 3,870

Annual gross rent is therefore :

1,170 rsf x $32 + 3,870 rsf x $24 = $130,320

We project a 6% vacancy and credit loss for this particular transaction so the net annual rent roll is $122,500

Now we need to deduct all operating expenses:

Real estate taxes - $12,875
Sewer & Water - $6,750
Insurance - $5,000
Management (5.00%) - $5,651
Heat & Hot Water - $0
Electric - $1,800
Repairs & Maintenance - $5,000
Misc. - $5,000

Total Operating Expenses - $42,076

NOI = $130,320 - $42,076 = $88,244

Our projected Cap rate equals $88,244 / $1,300,000 = 6.78%.

Cap rates allow us to evaluate and compare different assets across different markets. In our example, 6.78% return in an average Bronx neighborhood for such an asset is not sufficient. Why you might ask ? What’s wrong with 6.78% return ? First of all, these numbers are projected. We still need to purchase the building, hire an architect, obtain Buildings Department approval, complete the construction, obtain sign offs, occupy the building, collect rent, and refinance out. Not to mention how management intensive buildings in the Bronx are. In our experience such a transaction should yield a minimum Cap rate of 8.00%. So, dividing our NOI by 8.00% would result in $1,103,050. This is the all-in cost basis. Mind you, the only variable is purchase price. The cost of renovation or carrying cost wouldn’t change just because we want a higher Cap rate. So, in order to accommodate this total cost basis we can only afford to pay the seller $603,050. To sum up, if we buy the property for $603,050, (plus cost of renovation and all related costs), an $88,344 NOI would produce an 8.00% Cap rate.

To be continued in next post
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Joel CustodioWhat are projected SF based on ?

1 year ago

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Joel CustodioJonathan Talmi great a example of deal analysis

1 year ago   ·  1
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WHAT RETURNS ARE YOU LOOKING FOR ? (Part 1/4)

I’ve been asked that question so many times by agents, brokers, investors, friends and family.

Return is a fundamental concept in real estate investing and it’s in the heart of what we do. So without further ado let’s start exploring the meaning of returns.

How do you know if you are getting a good return on your real estate investment? There are different types of return in the world of real estate; Cash on Cash Return, Capitalization (CAP) Rate, Internal Rate of Return (IRR), Return on Equity, Return on Investment (ROI), Yield and other financial measures that are less frequently used.

We often buy properties that are either non performing or under performing. We are not concerned with actual returns on date of purchase. We buy real estate based on projected returns when the assets are fully renovated, stable and 100% tenanted. When there is no positive operating cash flow or when a piece of real estate is sold at a loss returns would be either negative or wouldn’t make mathematical sense. For example, when purchasing a vacant apartment building that requires significant renovation it is understood that during renovation the property would generate an operating loss and therefore negative returns. However, once the building is fully renovated and tenanted it is likely to generate positive returns. So, actual returns are measured once we have executed our business plan and the property is completely stable and cash flowing.

Other types of returns, as we will see later, require selling or refinancing the property in order to realize returns that are not cash flow related.

One of the most important financial measures in real estate investing is the CAP rate short for Capitalization rate.

A Cap rate measures the rate of return on a real estate investment property based on the net operating income (NOI) the property generates and is expressed as a percentage. The Cap rate can be calculated by dividing the NOI by the market value (or the total cost basis) of the property.

We use a conservative approach in underwriting investment opportunities and determining an accurate, real-world NOI. Gross annual rent is adjusted for vacancy and credit loss based on location and asset class. All operating expenses are subtracted from the net annual rent (read out post about real world projections). The figure we get is the annual operating income or NOI.

When dividing the NOI by the market value of the property we get the Cap rate. The market value can be the price we are willing to pay for a real estate transaction or the market price of a property we already own. We use the Total Cost Basis to compute Cap rates.

When we underwrite a real estate transaction we would project the gross annual rent roll, the vacancy and income loss, and all operating expenses. We would estimate the acquisition price, closing costs, development (hard) costs, finance and soft costs to derive at the Total Cost of the project. By dividing the projected NOI by the projected total cost we would get the Cap rate.

Please remember a projected Cap rate is only as good as the the underwriting assumptions used to compute your model.

To be continued in the next post
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WHAT RETURNS ARE YOU LOOKING FOR ? (Part 1/4)

I’ve been asked that question so many times by agents, brokers, investors, friends and family.

Return is a fundamental concept in real estate investing and it’s in the heart of what we do. So without further ado let’s start exploring the meaning of returns.

How do you know if you are getting a good return on your real estate investment? There are different types of return in the world of real estate; Cash on Cash Return, Capitalization (CAP) Rate, Internal Rate of Return (IRR), Return on Equity, Return on Investment (ROI), Yield and other financial measures that are less frequently used.

We often buy properties that are either non performing or under performing. We are not concerned with actual returns on date of purchase. We buy real estate based on projected returns when the assets are fully renovated, stable and 100% tenanted. When there is no positive operating cash flow or when a piece of real estate is sold at a loss returns would be either negative or wouldn’t make mathematical sense. For example, when purchasing a vacant apartment building that requires significant renovation it is understood that during renovation the property would generate an operating loss and therefore negative returns. However, once the building is fully renovated and tenanted it is likely to generate positive returns. So, actual returns are measured once we have executed our business plan and the property is completely stable and cash flowing.

Other types of returns, as we will see later, require selling or refinancing the property in order to realize returns that are not cash flow related.

One of the most important financial measures in real estate investing is the CAP rate short for Capitalization rate.

A Cap rate measures the rate of return on a real estate investment property based on the net operating income (NOI) the property generates and is expressed as a percentage. The Cap rate can be calculated by dividing the NOI by the market value (or the total cost basis) of the property.

We use a conservative approach in underwriting investment opportunities and determining an accurate, real-world NOI. Gross annual rent is adjusted for vacancy and credit loss based on location and asset class. All operating expenses are subtracted from the net annual rent (read out post about real world projections). The figure we get is the annual operating income or NOI.

When dividing the NOI by the market value of the property we get the Cap rate. The market value can be the price we are willing to pay for a real estate transaction or the market price of a property we already own. We use the Total Cost Basis to compute Cap rates.

When we underwrite a real estate transaction we would project the gross annual rent roll, the vacancy and income loss, and all operating expenses. We would estimate the acquisition price, closing costs, development (hard) costs, finance and soft costs to derive at the Total Cost of the project. By dividing the projected NOI by the projected total cost we would get the Cap rate.

Please remember a projected Cap rate is only as good as the the underwriting assumptions used to compute your model.

To be continued in the next post
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A BIG THANK YOU FROM FARM DEVELOPMENT FOR THR CONTINUED INTEREST IN JOINING OUR TEAM

We have been looking for a small, select group of top producing, experienced individuals. It’s like American Idol. Not making it doesn’t mean you don’t have a promising future.

Be well and happy prospecting
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A BIG THANK YOU FROM FARM DEVELOPMENT FOR THR CONTINUED INTEREST IN JOINING OUR TEAM

We have been looking for a small, select group of top producing, experienced individuals. It’s like American Idol. Not making it doesn’t mean you don’t have a promising future.

Be well and happy prospecting
... See MoreSee Less

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A BIG THANK YOU FROM FARM DEVELOPMENT FOR THR CONTINUED INTEREST IN JOINING OUR TEAM

We have been looking for a small, select group of top producing, experienced individuals. It’s like American Idol. Not making it doesn’t mean you don’t have a promising future.

Be well and happy prospecting
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Wishing all our friends and partners a healthy, prosperous and happy new year. ... See MoreSee Less

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FARM Development, LLC added 3 new photos.

Farm Development is Hiring .......

We are expanding our acquisition team. We are happy to announce that we have recruited two amazing real estate veterans to assist us in new acquisitions in Queens and the Bronx.

We have a couple of spots still available. We are looking for the best of the best.

Our program is a perfect fit for real estate agents and brokers who want to keep their sales person license and open up new income opportunities.

Please be sure to check out our previous posts.

Be well
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One Stop Shop 4 Real Estate

We get asked often if we still do residential real estate since we have been very active in commercial deals recently. The answer is ABSOLUTELY YES !!

We do development, construction and property management in house. We can purchase, develop and manage almost every asset class in the New York City Metro area.

Thank you all for the continued support.
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GIVING IS WHAT WE DO ....... THE FARM WAY ...

We have a wonderful network of friends, brokers, agents, vendors, wholesalers, deal finders, bankers, and many industry professionals that allow us to to stay in business.

We don’t take these relationships for granted. We often say that we always try to give before we get. We truly believe that facilitating the people around us would eventually lead to mutual gain. We make it our business to educate, help, and support in any which way the people we do business with.

Here are a few examples of some of the questions and issues that we had the pleasure to help our fellow agents with recently :

- How can I expedite restoring gas service with Con Edison. The gas service is shut off and my buyer must surrender his apartment by the end of the month

- How do I dismiss HPD violations before closing

- The seller won’t replace the roof. How much should it cost my buyer

- What can I build on an irregular R5 zoned vacant land

These are just a few of the many questions we are asked regularly. If we need to we would go far and beyond just providing an answer. We would HELP !!!

Feel free to contact us with any real estate rested issue you may be facing.
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Farm Development just put a 10,000 SF commercial building in the Parkchester section of the Bronx under contract.

The building is under-performing, requires work, and has great upside potential.

More commercial deals are in the works.

We hope you would contact us with any commercial real estate opportunities you may have.

Please feel free to call with any questions you may have.

Thank you
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GET RICH QUICK. FLIP HOMES IN YOUR SPARE TIME. NO MONEY DOWN. QUIT YOUR JOB NEXT YEAR

It is absolutely amazing how many people read books, attend seminars, and buy into ‘get rich quick’ systems that do nothing but make the authors and the speakers wealthier.

Don’t be tempted. Real estate is a business of rejection with a very steep learning curve. It requires tenacity, courage, creativity, uncompromising dedication, and second to none killer instincts.

To successfully make it in real estate you need to team up with the best in the industry to get the help and support that you need. Surround yourself with the best and you become the best.

May the force be with you
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IMPORTANT NOTICE FOR AGENTS & BROKERS - MUST READ !!

Find out how you can break through the compensation glass ceiling. According to the BLS, real estate agents earned a median salary of $40,990 in 2014. The best-paid earned about $105,270, while the lowest-paid earned approximately $21,540.

Farm Development is expanding its acquisition team. We are looking for a small, select group of real estate top producers.

Our program is a perfect fit for real estate agents and brokers who want to keep their sales person license. Here’s why.

- Make money selling real estate when owners DO NOT want to list

- Sell commercial real estate in your local market although you’ve been told you could only sell 1-4 family homes

- Negotiate with real estate owners as a principal and get a buyer’s commission from us

- Refer to us deals from other agents and get paid a buyer’s fee so the listing agent does not need to co-broke

- Start investing with us. You cannot possibly be a real estate professional without owning real estate

- Learn new techniques and strategies in prospecting, negotiations, acquisitions, sales and marketing, construction and development and much much more

A career in real estate should be professionally satisfying and financially rewarding. However, it’s not for everyone. It takes a very special breed to make it in real estate.

Feeling stuck ? Already working 60 hour work weeks and not making ends meet. Couldn’t find the right company to work with ?

Contact us today !!!

-
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VACANT BUILDINGS WANTED

We are currently looking for vacant residential or mixed-use buildings in the five boroughs.

Building size 4,000 - 15,000 SF. Any condition.

For inquiries please email moshik@nychomes4u.com

Thank you
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IF YOU WANT TO HAVE A SUCCESSFUL REAL ESTATE CAREER THE ONE THING YOU ABSOLUTELY MUST HAVE IS ......... GRIT

Miriam-Webster defines grit as firmness of mind or spirit : unyielding courage in the face of hardship or danger.

A more detailed explanation is found in Wikipedia. Grit in psychology is a positive, non-cognitive trait based on an individual’s passion for a particular long-term goal or end state, coupled with a powerful motivation to achieve their respective objective. This perseverance of effort promotes the overcoming of obstacles or challenges that lie within a gritty individual’s path to accomplishment, and serves as a driving force in achievement realization.

Real estate is not for the faint of heart. You need to get with the ‘You eat what you kill’ program because you’ll soon find yourself facing financial and emotional adversities. Put your seat belt on. It’s going to be a long and bumpy ride.
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NEVER AGAIN ... See MoreSee Less

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THE SOUTH BRONX FROM A 220 FOOT MAN LIFT

Went on a friend's state-of-the art man lift 220 feet up in the air. Amazing views.

Videos soon to follow . . . . . .
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LOCATING SEWER CONNECTIONS THE FARM WAY

We couldn’t locate the sewer connection on one of our Bronx development sites. DEP maps and records didn’t show sewer connection. We didn’t want to spend $35K on a new sewer line. So ?

We went 45 feet down into the city sewer system to look for the missing connection. Guess what ? We found it.

A big thank you to our awesome sewer guy, Tony.
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HAPPY BIRTHDAY 🎉🎉🎉🎉🎉 THE FARM TURNED 5 TODAY

Farm Development was officially formed on September 06, 2011, although we became fully active about two years later.

According to the Small Business Administration, more than 50% of new businesses fail in the first five years. We can assure you we will be around for many more years bigger and stronger than ever.

I want to take this opportunity and express my love and gratitude to my fellow farmers Sunil, Lori, Emely, Alex, Angie, Tony, Albert, Manny and Wilfred. I wouldn’t last a day without you.

A big thank you to all our wonderful contractors, vendors, lenders, suppliers and service providers. We appreciate all that you’ve done for us.

Last but not least, a special thanks to all the brokers, agents, deal finders and sellers for putting your trust in us.

Thank you
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HAPPY BIRTHDAY --- THE FARM TURNED 5 TODAY

Farm Development was officially formed on September 06, 2011, although we became fully active about two years later.

According to the Small Business Administration, more than 50% of new businesses fail in the first five years. We can assure you we will be around for many more years bigger and stronger than ever.

I want to take this opportunity and express my love and gratitude to my fellow farmers Sunil, Lori, Emely, Alex, Angie, Tony, Albert, Manny and Wilfred. I wouldn’t last a day without you.

A big thank you to all our wonderful contractors, vendors, lenders, suppliers and service providers. We appreciate all that you’ve done for us.

Last but not least, a special thanks to all the brokers, agents, deal finders and sellers for putting your trust in us.

Thank you
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  • iPad Mini Raffle

    Attention:  New York agents and brokers Another great reason to come by and visit us at Triple Play 2014. We will be giving away an iPad Mini to the winning broker or agent on Thursday, December 11, 2014. Download brochure Click to download Raffle brochure 2014 Triple Play We will be at booth #932. Can’t […]

  • Triple Play

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    At FARM Development we pride ourselves on having focus, innovation, and insight. Along with that, we care about reaching out to others and making those connections that are vital for any successful company. This is the exact reason that we are attending the Triple Play Realtor Convention and Trade Expo from December eighth to the […]