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German real estate family makes initial purchase in Brooklyn

Much has been said over the past few years with commercial real estate investment by investors from China. However, as multifamily properties continue to increase in value, a purchase by a German real estate company is creating headlines.

A recent globest.com article highlighted the purchase of a multifamily property in the South Williamsburg neighborhood of Brooklyn. The 41-unit building was acquired by BCB Property Management in 2014 for $12.75 million. However, just over two years later, a German real estate family bought the property for $23 million. The deal marked their first purchase in New York City.

While the increase in value is striking, the numbers surrounding the purchase give the impression that the property’s value will continue to rise. The property boasts a purchase multiple of 21.5 times the rent, with a capitalization rate of 3.3 percent. Since it is a more mature building, the investor sees plans to renovate the property to further increase its value.  Also, plans to shut down a competing train line will bring more traffic through the neighborhood. The new ownership group sees this as a great investment opportunity.

The story exemplifies the need for experienced real estate attorneys in terms of foreign investment. Foreign investors may not understand all of the procedural steps necessary to complete a purchase, and precious time (and money) could be wasted by standing pat. A skilled lawyer can guide foreign investors through the process of negotiating and acquiring property.

The preceding is for informational purposes only. It is not legal advice.

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