Five Things To Learn About Real Estate Investing From Hasidic Jews
It’s no secret that the Hasidic community does very well in real estate. But how do they do it?
It’s no secret that the Hasidic Jewish community runs real estate in Brooklyn. The ultra-orthodox sect has $2.5 billion invested into the borough according to a recent article in The Real Deal. They are transforming huge areas of Bushwick, Greenpoint, Bed-Stuy and Williamsburg. Their no-qualms approach to gentrification has angered many but few can argue with their success. How do they do it when so many others fail? Here are some tips from under the shtreimel.
1. Buy Don’t Brag
If anyone is the anti-Hasid it’s Donald Trump. He brags about everything. Those giant gold letters grace the buildings he owns and even ones he doesn’t. This is not the Hasidic way. They have a code of silence that keep them under the radar, shielded by a labyrinth of LLC’s that keeps people from asking too many questions.
2. Go Your Own Way
Now, because of their success, institutional lenders are happy to throw money their way, but one major Hasid developer has raised $166 million from the Tel Aviv Stock Exchange. What can you learn from this? Don’t look to banks or hard money lenders on the internet to fund your flip. See if you can borrow from friends and family and tie your repayment into the completion of the project. I don’t know specifically that is what Hasids are doing but if there’s a closeness and level of trust with your lender, it will save you a fortune in monthly fees and doc prep/loan/junk fees.
3. Invest Big To Change A Neighborhood
At the Rheingold Brewery development in Bushwick, developer Yoel Goldman is planning a million-square-foot complex containing 900 rental apartments on the six-acre site of the former brewery. He is changing the demographic and sales prices of the entire neighborhood which means properties around it will also increase: A boon for flippers. What can you learn from this?
If there’s a beat up or abandoned cluster of houses in a certain neighborhood, put a low-ball offer on them all, fix and flip and you’ll change the market rate of nearby properties. You can rinse and repeat with some of those, too.
4. Use Government Tax Laws To Maximize Profits
You’ve got to love the 1031 Exchange law. Basically it means that you can sell a property and as long as you identify another property of the same or greater value to buy with the proceeds within 45 days. Then, if you complete the transaction with 180 days, you don’t have to pay taxes. There are many more NYC specific tax laws that Hasidic’s have used (and abused) but the 1031 is great if you are a multiple flipper.
5. Wear Black In The Summer
Well, okay, you don’t exactly have to wear black in 100-degree weather but don’t flaunt your wealth. If you flip a few houses, going out and buying bling and fly rides is only going to draw attention and hangers on which will slow your flow and could turn into a big headache. Stay low key. You could pass a billionaire Hasidic developer in the street and never know. If you have a fragile ego this advice may be hard to stomach—but suck it in. Modesty is the best policy.
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