This past February, Tamir Shemesh, a managing director at Prudential Douglas Elliman, brokered a deal between a seller at the Milan condominium at 300 East 55th Street and, count ’em, “10 or 12” doctors from California.
“They need to travel for business or pleasure, and instead of staying in a hotel they are going to purchase something that will appreciate over time,” Shemesh said.
In the age of the co-op (read: board-regulated sales), this shared-pied-à-terre-style buying was more or less unheard of.
“Co-ops frown on pied-à-terres in general,” said Chris Poore, vice president at the Corcoran Group. “Especially if two people are sharing the property.”
“It’s a double whammy,” said Jeff Krantz, vice president of sales and marketing at City Connections Realty.
But with the rise of condo living, the shared pied-à-terre is gaining in popularity.
“Most co-ops will prevent [pied-à-terres] because the [other owners] don’t want to feel like they’re living in a hotel,” said Shemesh. “But a condo can’t prevent it.”
“There’s nothing in the offering plans that would prohibit you from [buying jointly],” noted Wilbur Gonzalez, managing director at Brown Harris Stevens’ ID Marketing Group. Gonzalez also pointed out that if the market gets tougher, a sponsor would likely be even more flexible about selling to more than one buyer.
That’s not to say that multiple buyers are banging down the doors of New York City brokers just yet. But there are instances.
Rodrigo Niño, president of Prodigy International, recently sold two units in the Financial District’s William Beaver House to four brothers from Spain.
“They are all paying an equal amount,” said Niño.
Still, brokers point out that with joint ownership comes a lot of responsibility — and risk. “It’s very difficult for people to take the plunge,” said Krantz, who has had more than one pair of buyers approach him about purchasing a shared property, but has never actually had anyone sign a contract.
“Getting into that kind of relationship … if the financial situation changes and one [person] can’t afford to buy the other out, managing the property becomes a logistical problem for a lot of people,” he said.
Add to that the cost of management, scheduling time (no one wants to be fighting over prime dates like July 4 or New Year’s) and potential lack of privacy, and it could break a deal.
“It could result in the end of a friendship or the changing of lives,” said Prudential Douglas Elliman’s Leonard Steinberg. “Though I do think it’s a wonderfully clever idea for offsetting the expense of owning a pied-à-terre in Manhattan, and much less wasteful because it won’t be sitting empty.”
Gonzalez recently sold two separate condos to multiple buyers. The first, he said, was a Downtown luxury unit, which was bought by foreign buyers who wanted a home in Manhattan. The second, he said, was to a pair of friends who purchased the property as an investment.
“One is single, the other is married. The unit they wanted was north of $5 million, so they pooled their money and bought it together,” said Gonzalez, who has personally joined forces with other individuals to buy investment properties. “Their intent is to rent it out, but they may sell it now that the value has appreciated.”
Gonzalez continued, “I think it makes perfect sense as an alternative investment vehicle. Oftentimes the entry costs are high for real estate, so if you can split costs and profits, you can enter that market.”
Gonzalez also predicted a quick recovery for the dollar, and conversely mentioned the pound and the euro dropping in value. “The dollar should recover by the end of the year, so there are a lot of Europeans who are converting to dollars now to maximize.”
For Europeans to share a pied-à-terre “makes complete sense as long as you can get your schedules in order,” added Gonzalez. “It’s certainly cheaper than a hotel.”