At the Core: The Jigsaw Puzzle of Real Estate

Being a real estate agent is a lot like solving jigsaw puzzles. Some puzzles have 15 pieces and others have 1,500. The puzzles with the most pieces take longer to complete, but on multiple levels they’re almost always the most rewarding.

It’s easiest for us to draw an analogy between our profession and solving a puzzle after we’ve completed a transaction, when we have the benefit of hindsight. It happens most often when we’re telling “war stories” about the most difficult transactions we’ve encountered. The conversation goes a lot like this:

“Remember that deal with the low appraisal, and the condo was declined by the bank, and our buyer wanted to close in June, but the seller didn’t want to close until September?”

“Oh yeah… wasn’t that the one with the seller’s broker that was almost impossible to deal with?”

“Yes. That one. But somehow, we still got it done!”

Putting the pieces together for our clients on deals like that is especially rewarding because there is a real sense of accomplishment and pride. We also learn the most from those deals and they help us get better at solving the puzzles we’re working on now and the ones we’ll tackle in the future. We’ll be ready for that 50,000 piece-jigsaw puzzle when it lands on our desk!

Starting with a Corner Piece

Before our clients are in contract, and before they even make a bid on a property, in real-time we’re helping them put the first pieces of their puzzle together.

In late June, Marie had one of our clients on speakerphone as they worked through all of his numbers. Would he have enough money in reserve to meet the co-op board’s requirements? Could he bid on the $3.7 Million property that he and his wife loved most, or would their budget dictate that they remain focused on the $3.2 Million property they saw with Jeff a few days before?

The phone call lasted 45 minutes. Back-n-forth, Marie and our client traded numbers until everyone was on exactly the same page. Ultimately, he knew how much money he’d need for both units. He knew what the payments and debt ratios would be in both scenarios, and whether he’d meet reserve requirements for the board. He had the information he needed to make highly informed decisions.

Reactive vs. Proactive

Solving puzzles is good for business but creating them can be even better.

Internally, we mostly measure our success through our clients’ experiences. We’re achieving at the highest levels when all of our clients are happy. But to the outside world, and to our future clients that have not met us yet, our success as real estate agents is measured in units, transactions and dollar volume. So, we always have to think about ways to identify or even create opportunities so that we exceed the standards for success within our industry. In effect, we have to create our own puzzles.

We like to think of New York City as a giant jigsaw puzzle, with invisible pieces scattered everywhere. The pieces can be questions or answers, or they can be people who have the answers to the questions. They can be buildings or banks or new laws or regulations or tax codes. They can be facts or figures or charts and graphs.

Separately, the pieces might not mean a lot. But when we understand how all of these pieces fit together, we’ve almost always identified opportunity. We connect the dots by reading articles and talking with experts and analyzing data. But mostly, we ask questions.

Toward the end of June, our team registered for a panel event where experts in the field told us about new laws governing developers who want to convert their buildings from rental to condo or co-op. As audience members, we asked a lot of questions and we got a lot of answers. And, we met people who undoubtedly would be able to provide us answers to questions we’ll have in the future.

We always want the members of the Espinal Adler Team to be critical thinkers, and that always starts with asking the right questions. Each member of our team should always ask:

  • How can I identify an opportunity to grow my business?
  • How can I create an opportunity for the team?
  • Most of all, how can I identify opportunity for our clients?

Every time we find an answer to these questions, we’re a stop closer to solving a puzzle and creating opportunity.

Ask the Experts: David Halberg Untangles NYC Condo & Co-Op Insurance

This month, we interviewed David Halberg, a Principal of KDB Brokerage Services, LLC, which was established in 2003.  He is a Licensed Insurance Broker for Property and Casualty, as well as Life, Accident, and Health in New York, New Jersey, and Florida.  He has extensive experience working with international clients, as well as individuals relocating to New York.  Prior to founding KDB, he headed the Latin American Crisis Management practice of American International Underwriters for nearly seven years.  Fluent in both Spanish and Portuguese, he lived and worked in Mexico, Brazil, and Chile. We get a lot of questions regarding insurance from our clients, so we figured he’d be the perfect person to interview.

Here’s our Q & A session with David:

Question: What is a Master Insurance Policy?

The Master Insurance Policy of a Cooperative or Condominium is designed to cover the common areas of the Building including hallways, courtyards, and the lobby, as well as the actual Building structure, equipment and apparatus.  In addition, it contains Liability coverage which protects the Building in the event of legal action due to events such as someone injuring themselves in a common area.

It is important to note that in Cooperatives the coverage also extends to the actual structural interior of the apartment i.e. floors, walls, ceilings, but it excludes paint, skim coating, wallpaper, flooring, etc.

Question: Is it Necessary to Review the Master Insurance Policy?

Regardless of whether the unit is in a Cooperative or Condominium, it is crucial that the Proprietary Lease and/or Bylaws, as well as the Offering Plan be examined by a real estate attorney as part of the due diligence process. This review can identify the specific responsibilities of the Building and Shareholder/Owner should damage occur to the unit.  Moreover, many Buildings now require Shareholders/Owners to obtain certain minimum limits of Homeowners Insurance.

Question: What is an H0-6 Policy and what does it cover?

Cooperative and Condominium Homeowners Insurance (HO-6 Coverage) is an essential complement to the Master Policy.  It provides what is often referred to as “walls in” coverage for the interior of the unit.  Under most Proprietary Leases/Bylaws, Shareholders/Owners are responsible for repairing damage sustained to their units including the Improvements and Betterments such as hardwood floors, built-in cabinetry, and tiling.  Moreover, Personal Property such as clothes, electronics, bedding, furniture, artwork, etc. are not covered by the Master Policy, but are protected under an HO-6.

Question: Does an H0-6 Policy cost more for a Condominium or a Cooperative?

Whether the unit is located in a Condominium or Cooperative, the premium for an HO-6 Policy does not vary significantly and the coverage is relatively easy to obtain.  If the unit is located in a prewar Building, it is important to ensure that the policy has Mold coverage due to the frequency of leaks in old plumbing infrastructure.

The cost of an HO-6 policy in New York City depends on a number of factors.  A key one is the Replacement Cost of the unit which is calculated based on labor costs, the square footage of the unit, as well as its interior finishes and appliances.  Other important elements are the construction material and age of the Building, the value of the Personal Property contained within the unit, the existence of Building security such as CCTV, keyed elevator entry, or a 24 hour doorman, loss mitigation components such as sprinklers, and any prior Shareholder/Owner claims history.  Another factor that will affect the cost is the Deductible amount, as well as the selection of Insurer.  Some offer very broad policy coverage and a more client centric approach to claims resolution, while others are not as consumer friendly.

Question: What are the Different Components to a Homeowners Insurance Policy?

Homeowners Insurance principally consists of the following components – Dwelling, Personal Property, Loss of Use, and Liability.

The Dwelling portion indemnifies the Shareholder/Owner for damages that occur to the interior of the unit as the result of a covered loss such as a fire or leak from a pipe.  The Dwelling Limit represents the amount available to the Insured for replacing and/or repairing hardwood floors, skim coated walls, permanent lighting fixtures, countertops, moldings, cabinets, large appliances such as refrigerators, stoves, or dishwashers, tile work, drop ceilings, etc.  Given that NYC real estate is so costly, it normally represents a significant portion of clients’ net worth.  Therefore, it is crucial to accurately calculate the Replacement Cost of the Dwelling.  In other words, should the worst case scenario occur and the unit is completely destroyed, there must be enough funds to reconstruct/repair the apartment to its condition prior to the loss.  Moreover, when financing the purchase of an apartment with a mortgage, the bank will usually require Homeowners Insurance and a Dwelling amount calculated on a Replacement Cost basis, so that it is protected against a catastrophic loss.

The Personal Property section indemnifies the Shareholder/Owner for items such as electronics, furniture, clothing, bedding, portable light fixtures, glassware, silverware, etc.  Essentially, if an apartment could be flipped upside down, it covers everything that would fall on to the floor.  Personal Property is covered on a Replacement Cost basis which means that the Insurer will pay out the necessary funds to purchase a new item that is of like kind and quality, instead of adjusting for depreciation. Separate Limits can be obtained for valuable pieces of jewelry, art, or furs.

Loss of Use protects the Shareholder/Owner in the event of a covered loss that renders the apartment unusable.  For example, a significant leak would necessitate the replacement of floors and possible mold remediation.  Obviously, the Shareholder/Owner could not be present in the apartment while this work is ongoing.  The Loss of Use cover allows rental of a unit of like kind and quality in a similar neighborhood until the apartment is habitable again.

The Liability portion provides protection against Third Party claims should someone get injured in the apartment of the Shareholder/Owner or if there is an incident such as fire that causes damage to an adjacent unit.  The Homeowners Insurance would provide Primary Coverage of anywhere from $300,000 to $1,000,000.  However, a severe incident could result in a claim that pierces through this Limit and that is when an Umbrella Liability Policy would be essential in asset protection.

Question: What Should People know About Insuring an Investment Property?

Investment property units present unique challenges with regards to Homeowners Insurance (HO-6 Coverage).  Normally, a Primary Residence can be insured by a Standard Lines carrier such as Hanover.  However, in the case of an Investment Property, the unit is generally rented out to tenants, so it is not even utilized as a Secondary Residence.  Moreover, Investment Properties are often purchased in the name of a Corporation or LLC.  As a result, the Standard Lines companies have very little appetite for these types of risks.  Consequently, it is necessary to approach Excess and Surplus Lines carriers such as Lexington Insurance Company and Underwriters at Lloyd’s, London, which are generally more expensive.  These Insurers are not subject to the same regulatory framework as Standard Lines companies and, as a result, have greater flexibility in determining the premium charged for a particular risk.  Furthermore, they are required to collect an Excess Line Tax and a Stamping Fee on each policy.  Despite the additional cost, the coverages offered under the Excess and Surplus HO-6 are very similar to the ones described earlier and provided by Standard Lines insurers.

Question: Should Renters Obtain Insurance and should Landlords Insist Upon It?

Investment Property Owners should absolutely insist that any Lessee of a unit obtain Renters Insurance (HO-4 Coverage).  This type of Insurance has three principal components – Personal Property, Loss of Use, and Liability.  Should a loss such as a fire or leak occur, the Lessee would rely on the Renters Policy to replace damaged Personal Property rather than turn to the Owner for compensation.  Moreover, if a guest of the Lessee trips in the unit and is injured, the Renters Policy would respond to any subsequent Liability that might occur thereby mitigating the Owner’s exposure.

Question: Are there Additional Policy Types That People Should Consider?

Umbrella Insurance is simply defined as overlapping Liability Coverage. It protects against claims above and beyond the amounts covered by Primary Insurance policies such as Homeowners or Automobile. Moreover, Umbrella Insurance also provides protection against claims arising from slander or defamation. Coverage is usually offered in $1,000,000 increments and the cost is quite reasonable.


July 2019 Monthly Mortgage Buzz with Matt Jablonski

Did you know?

Mortgage rates are often lower when you borrow more?

Is there a magic number for how much you should borrow to access lower rates?


In the U.S., the vast majority of mortgages are eventually sold by lenders to government agencies Fannie Mae or Freddie Mac. Those agencies set loan size limits, and they will NOT purchase a mortgage if the loan size exceeds the thresholds they’ve set. Loan amounts below their limits are considered “conforming.” Loan amounts above their limits are often referred to as “Jumbo” loans or “Portfolio” loans because banks keep the loans that they can’t sell in their own portfolios.

The standard conforming loan size limit in the U.S. is $484,350. But in high-cost areas, like New York City, Fannie and Freddie will purchase loans from mortgage lenders as long as the loan size does not exceed $726,525.

It is important to note, that the vast majority of banks and mortgage lenders serving New York City are willing to put their clients into jumbo/portfolio products as long as their loan size exceeds the standard conforming size limit of $484,350.

Have Jumbo Rates Always Been Lower than Conforming Rates?

No. And it’s not even close!

In 2009 Jumbo rates were as much as 8% higher compared to conforming interest rates. But, about halfway through 2013, the gap between jumbo and conforming rates completely closed. Now, in many instances, mortgage lenders offer Jumbo rates that are .25% – .5% lower than conforming rates.

Why Did this Happen?

There are several factors. We’ll focus on two of the biggest.

  1. Fannie Mae and Freddie Mac securitize mortgages (pool them together to be sold on the secondary market as mortgage-backed securities – MBS). Guarantee fees or “g-fees” are paid to MBS providers like Fannie Mae and Freddie Mac to guarantee the payment of principal and interest on their MBS. The average g-fee has almost tripled since 2010.
  2. Rate is always about risk. Lenders charge higher fees and rates to borrowers that come with more risk. Risk is measured by several factors including a borrower’s credit score, the amount of their down payment, and property type. The guidelines that banks put in place for their Jumbo/Portfolio products often require higher credit scores and bigger down payments. So, inherently, they are less risky.

Why is this Especially Important in New York City?

Since the average price of a Manhattan condo or co-op hovers around $1 Million, many prospective NYC buyers will obtain mortgages with balances that exceed conforming limits.

Have additional questions? Feel free to reach out to me directly at or 914.714.9102.

At the Core: A Tale of Two Cities

A Tale of Two Cities

Technology is shrinking the world. The other side of the planet is less mysterious than it used to be. Social media has had a figurative Pangea effect on the planet, pulling every nation and every continent closer to one another one YouTube video at a time.

The effect has the same hold over the business world. Our office is in the heart of Manhattan, but our clients are from all over the globe. They come to New York for a day, or a week, or a month, or even for years at a time, or forever. They love the city, but they still want to know that their investment in it was a wise one. Not only compared to the other properties in a building or in the surrounding neighborhood, but also compared to other properties in Europe or Asia.

As the world shrinks, our responsibility as real estate agents grows exponentially. We are number-crunching conveyors of information. And with so much good information ready to be collect and so many tools to help collect it, really there’s no excuse for us not to offer valuable real estate information about any plot on the planet.

One of our clients recently told us he was leaning toward a new investment in London rather than buying in New York. It was safer, he thought, and many others in his family had done so in the past. He asked us to create a comparison of costs and market trends between the two cities.

Here’s what we found:

The Cost of Buying a Condominium (London vs. New York):

Taxes paid at closing to the U.K. government are significantly higher in London compared to the taxes paid at closing to the city and state of New York. New York saw a recent bump to their mansion tax, while the U.K government is pondering an additional Stamp Duty Land Tax paid by non-residents of the U.K.

 (A Comparison) New York Mortgage Tax and Mansion Tax vs. London Stamp Duty Land Tax

New York

New York State Mortgage Tax (in New York City) — Buyers in New York that obtain mortgage financing are required to pay a mortgage tax based on the size of the loan (not the price of the unit). The amount of the tax is dependent upon the county where the subject property is located. In all five New York City boroughs, a mortgage borrower would pay 1.8% of their loan amount on mortgage balances of $500,000 or less, or 1.925% of their loan amount on mortgage balances greater than $500,000.

New York State Mansion TaxPrior to June 2019, there was a flat 1% Mansion Tax levied against all properties sold at a purchase price of $1 Million or more. There was a lot of buzz about creating an onerous Pied-a-Terre Tax. Instead though, lawmakers altered the mansion tax rule and created a tiered structure that charges a higher percentage to people who buy higher-priced properties. The tax is against the full purchase price.

$1 Million – $1,999,999 = 1%

$2 Million – $2,999,999 = 1.25%

$3 Million – $4,999,999 = 1.5%

$5 Million – $9,999,999 = 2.25%

$10 Million – $14,999,999 = 3.25%

$15 Million – $19,999,999 = 3.5%

$20 Million – $24,999,999 = 3.75%

$25 Million + = 3.9%


Stamp Duty Land Tax (SDLT) – -Most homebuyers in England and Northern Ireland pay a Stamp Duty Land Tax. It’s a tiered tax, based on purchase price and whether or not it’s your primary residence. The tax is against the full purchase price.

When Purchasing Your Primary Residence

£125,001 – £250,000 = 2%

£250,001 – £925,000 = 5%

£925,001 – £1,500,000 = 10%

£1,500,001 + = 12%

When Purchasing Additional Property/Non-Primary Residence

£40,001 – £125,000 = 3%

£125,001 – £250,000 = 5%

£250,001 – £925,000 = 8%

£925,001 – £1,500,000 = 13%

£1,500,001 + = 15%

** First-time homebuyers avoid an SDLT on any home with a purchase price under £300,000

*** The U.K. government is considering a new 1% Stamp Duty Land Tax for non-residents of the U.K. who by homes in England and Northern Ireland. This would be in addition to the existing SDLT fees. The surcharge would apply to homeowners that spend fewer than 183 days in the U.K. during the 12 months prior to the date of a property transaction.

Other Closing Costs to Consider

Aside from government taxes, there are other fees to consider when purchasing a property in New York or in the U.K. mostly due to the American practice of obtaining an expensive title insurance policy when purchasing real property, the typical non-tax closing fees in New York are higher than they are in London, but not nearly enough to account for the massive difference between Mortgage/Mansion Tax and SDLT. Ten, twenty, or even $30,000 in title fees isn’t out of the ordinary in New York, whereas in London a buyer might pay a conveyance fee of less than £2000.

Mortgage Rates

Mortgage rates in London were generally about 1% lower than what we see in New York right now.

Lenders in London advertised Adjustable rate mortgages almost exclusively, whereas in New York, we often see 30-year fixed rates advertised just as often.

The State of the Market in London

London had 3,703 annual Transactions in 2018. That number is down in Prime Central London by 15% compared to 2017 and down 45% compared to 2014. For greater London the numbers are down 4% compared to 2017 and 26% lower compared to 2016.

Prices were increasing by about 20% per year from around 2008 – 2014. But in 2018, Prime Central London prices dropped 2.9%. Prices dropped .2% in Great London.

The average price of a home in London was $266,999 in 2008. That average jumped to $473,609 last year. Prices in London were down though by .5% in 2017 and by .8% in 2018.

New construction is typically priced 15-20% above market.

The average home price in London is now 16 times the average salary in the U.K.

High-end transactions are down 25% in London compared to a year ago.

 Brexit Conversation Dominates the News

Uncertainty and hesitation are likely the most common words spoken in any conversation that relates to the London housing market. A lot of buyers and sellers are waiting out a Brexit resolution with a current deadline set for Octobert 31st.

The Bank of England’s Mark Carney said an extreme “no-deal,” hard Brexit scenario could bring spiraling interest rates and a drop in house prices of up to 35% over the course of the next three years. Other forecasts were much less extreme though. Most analysts thought there would be some downward movement no matter what the outcome.

 Taxation of non-resident investors in U.K. real estate (Major Changes made April 2019)

Non-residents had an advantage over U.K. residents when it comes to the taxation of U.K. real estate. But the British government is attempting to level the playing field.

As of April 6, a uniform tax code applies to sales of both residential and commercial real estate and includes non-residents. The tax charges will apply to gains on direct sales of U.K. real estate as well as indirect disposals of U.K. “property rich” interests.

Non-resident companies would be taxed 19%. Non-resident individuals would be taxed up to 20% on gains from commercial properties and up to 28% on gains in the case of residential property.



Our Real Estate Finance Specialist Talks about First Months on the Job

In this space The Apple, Peeled usually features an expert that has made their mark on our industry. We’re constantly looking out for guest experts that our team and our readers can learn from. And in so many instances, our subjects have become our trusted resources and guides in their areas of expertise.

We always choose someone from outside of Douglas Elliman. Certainly, it’s someone from beyond the walls of our own office. But for this month’s edition, we decided we’d try something different. Early this year, our team created a position that seems quite unique to our industry. We added our own “Real Estate Finance Specialist,” a role designed to provide our clients unlimited access to an unbiased, unaffiliated mortgage expert.

How It Happened

Almost 6 months ago, Matthew Jablonski made one of the scariest decisions of his life. He was a mortgage originator for 15 years, entrenched in the industry, consistently placing in the top 1% of loan officer in the country every year.

But then he quit! And he joined our team.

Matt told us that the mortgage industry changed, the people he was surrounded by changed, and just about everything else in his life was changing, so the timing was spot-on to change careers too.

“I decided it would be better to change everything all at once,” he said. “I needed a shot of adrenaline. Something more dynamic with more possibilities. Something that was new on a daily basis.”

During the train ride from his house, Jablonski opened his notebook and double-clicked his mechanical pencil. On his way into the city to see our team at our weekly meeting, he got all of his ideas down on paper, and then he created an outline and a specific job description.

A few times before that morning he thought, “What if I quit my job and got my real estate license and I joined Marie and Jeff’s team?” he said. “I had absolutely ZERO days experience as a real estate agent, but I played a role in over 2,000 real estate transactions during the course of the last 15 years. Surely, I thought, I brought something to the table.”

On a page inside his composition notebook, not lost inside all of his other thoughts, there’s a bullet-point list that says:

  • I’d be completely unaffiliated with a mortgage lender or a bank, so the clients might be more at ease if I gave them mortgage advice.
  • I’d use my experience to help these clients find the mortgage program that best suits them.
  • I’d be able to hold lenders accountable, both in the efficiency of their process and with all the numbers.
  • I could translate things that may not have been made clear by a loan officer.
  • I could help a client understand how to negotiate for the best terms.
  • I could vet pre-approvals for anyone that makes an offer on one of the team’s listings.

Even though he was confident in the idea, and he thought it was a completely unique position that could give our team a leg-up on the competition, Matt later told us that he was really afraid to pitch the job to us.

“What if (Marie and Jeff) weren’t interested,” he said. “Over the years, (the Espinal Adler team) referred a ton of business to me. As soon as I pitched the job, everyone would be completely aware that I wasn’t completely happy with being a loan officer. That could have been bad for business.”

The Beginnings

Nearly a dozen years ago, Matt and Marie sat next to each other at a Manhattan closing. Matt helped the buyer with her mortgage, and Marie listed the property for the seller. Marie and Matt spoke very briefly once or twice during the process. But while their clients were signing the massive pile of documents on the closing table, they discussed strategies for refinancing Marie’s personal home.

Soon after that, Matt closed the refi for Marie and her husband. Then the team started referring a lot of our clients to him because he was such a good hand-holder. We’ve worked on a lot of complex transactions over the years, and all of our buyers that worked with Matt made it to the finish line and he always gave them all the time they needed. And he always kept us in the loop too.

“At every bank or mortgage company I’ve ever worked at, there’s always been a manager around to remind me to go to my closings,” Matt said. “Face-to-face time is always good for business. It’s kind of crazy what can happen if you put everything aside and show up to your closings! Luckily, I showed up that day.”

In an interesting twist, the Espinal Adler team very recently helped a client close on the sale of her property and on the purchase of a new, bigger and better unit. The client was the same one who Matt helped get a mortgage when she was buying Marie’s client’s apartment. The stars were aligned.

Pitching the Job

Despite his fears, Matt pitched his idea because he said getting referrals from us would force him to stay in the mortgage industry longer. Logic dictated that he share his idea.

Marie’s jaw dropped.

“I was kind of in shock because the same idea was sitting and stewing in my brain for at least a year,” Marie said. “I thought it would be great if Matt could run a ‘Mortgage Desk’ for our team. But I always dismissed the idea because I didn’t think he’d want to leave.”

In theory, we were on the same page as Matt, but there was still so much to work out. He still wasn’t licensed. We still had to further define his role and figure out if we could make it work financially. And Matt had to be 100% sure he was ready to take a leap of faith.

“I had to overcome the fear of failure and the fear of leaving behind a job that provided for my family for so many years,” Matt said. “And, the hardest part was leaving behind an amazing colleague that worked alongside me and helped me achieve amazing success over the last couple of years.”

We kept an open line of communication. All of the pieces started to fit. Matt took his real estate courses, passed his tests, and joined the team when he got his license shortly after the new year.

Typical Client Interaction

The very first client that Matt assisted in his new role comes with a success story that will be difficult to duplicate.

Our client Sachin, who is a busy executive at a well-known accounting firm, already called three different lenders before he spoke with Matt for the first time. He chose a loan officer that he was completely comfortable with, whose bank offered a very low interest rate.

Sachin and Matt spoke several times while his mortgage application was ongoing. discussed loan program options and about the city and state taxes that Sachin would ultimately be responsible for at closing. The application process was running smoothly and Sachin received a commitment well in advance of the contingency date written into his contract. But when Matt reviewed the commitment letter, he noticed that the low rate came with a sizable origination fee approaching $30,000.

Sachin let Matt know that he wasn’t aware of the fee. So, Matt called the loan officer to find out if there was an error or miscommunication. There was no error. The only hope to eliminate the fee was to obtain a loan estimate from a competing lender the documented they were offering the same rate without the origination fee. Armed with that information, Sachin’s loan officer could request a pricing exception to reduce or eliminate the fee.

“I called all of my contacts within the industry to see where they would “price-out” the loan,” Matt said. “Sure enough, one of them was able to offer the identical rate without charging the extra fee. Sachin could have switched gears and applied with this new lender. But instead, he passed along the competitive data I helped him to obtain.”

Sachin’s loan officer’s request for a pricing exception was granted. The fee was eliminated and the deal closed right on-time, without the fee.

“Matt’s insight into financing options and their implications, given my unique deal structure and circumstances were invaluable,” Sachin said. “I secured the right product for my needs at an optimal rate and cost and managed the timeline to a timely close.”

Getting Creative

Our client Rick is a self-employed resident of California who was in search of a Manhattan apartment that he could use as a second home when he was in New York on business, or if he was in town to watch a St. John’s basketball game (he’s a huge fan).

We connected him with Matt before he flew in with his wife Anita to look at properties. Apparently, Rick did his homework on the team and he notice that Matt was a St. John’s alum and he covered the basketball team when he was Sports Editor and Editor-in-Chief for the student newspaper. They had an instant connection.

Shortly after they made contact, Rick sent to Matt a very complex set of corporate tax returns and they reviewed them over the phone. Matt told Rick that because he was self-employed, the way his income was calculated would be open to interpretation, and unless they obtained specific clarification from Rick’s accountant, an underwriter might use less qualifying income than what he deserved.

Matt and Rick decided that the best course of action would be to submit an official mortgage application and seek an official approval in lieu of a pre-approval, even before a specific property was identified. That way, we would know exactly how much income the mortgage underwriter would give him credit for. Having a commitment letter would put Rick and Anita in better bargaining position, but just as importantly, the proactive measures would provide our clients with additional peace of mind.

About 10 days after they applied, they were issued a commitment letter. Rick and Anita had no preference between condo or coop, but Matt and Rick spoke at length about how a coop board is even more strict than a lender — A board would insist that his debt-to-income ratio be significantly lower than what a lender called for, and the board might not calculate his income exactly the way the underwriter at the bank did.

During a trip to New York, we helped Rick and his wife find an Upper-West-side co-op that they loved. The monthly maintenance was higher than the estimates the bank used to obtain the mortgage commitment. We were all concerned that a co-op board might balk at Rick and Anita’s application if they didn’t take the time to properly analyze the corporate returns.

Matt walked Rick through all the numbers. He saw that if Rick and Anita refinanced their California property, they could take advantage of better, more flexible terms compared to what was in place. Ultimately, it would result in numbers that even the strictest co-op board would love to see. An action plan was implemented and Rick and Anita applied simultaneously to refinance their California home while they applied for the mortgage for the New York property. During the first week of June, the co-op board approved their application.

“The Espinal Adler team afforded us advantages not available in other real estate offices,” Rick said. “There is little doubt that we would not have been successful in our Manhattan Co-op search and ultimate purchase had we been with another brokerage team.  The Espinal Adler team is truly unique in having Matt Jablonski, a real estate finance specialist, as an integral part of the team. Matt shepherded us through the process, minimizing our time commitment as our particular situation was quite complex.  Moreover, as Matt’s loyalty is to the Espinal Adler client, not to a particular bank or lender, he was able to arrange the best financing options for us. Having Matt as part of our purchase team, we believe, was one reason we were successful in our co-op purchase.”

At the Core: Our Trip to Saudi Arabia

Around five years ago, we were introduced to a Saudi Arabian family that loves visiting New York City. During the course of the next two years we developed a friendship while we helped them find an amazing condo in Manhattan. In business and in life, relationships are the most valuable reward, and in so many instances we’ve been fortunate enough to stay connected with our clients long after they’ve closed on a new home.

Eventually, our friends from Saudi Arabia introduced us to their friends, and we worked hard to help them successfully negotiate on an investment property. After that, our network started to grow. We were working with more than a half dozen families from that region of the world. So many times, we were invited to visit our growing network of friends in their home countries. They’d tell us that Americans don’t visit there enough, and they genuinely wanted for us to experience it ourselves.

We visited Saudi Arabia late last month, first Jeddah and then Riyadh. We met dozens of the most gracious and most interesting people in an unbelievably fascinating part of the world. Our hosts treated us like royalty. They gifted Marie a beautiful traditional Abaya and invited us both into their home for weekly dinner with their extended family.

Saudi Arabia is still a conservative place but being there was enlightening. It was demystifying. Personal freedoms are spreading and becoming the norm. Among the professional class, there’s a palpable level of excitement as they watch the country liberalize faster than anyone might have imagined.

New regulations have brought order to industry, making investments safer and more stable. Enormous resources are flowing into the diversification of the economy and the growing pains are mitigated by the optimism of what the leadership’s vision and steps will eventually lead to.

Not far from our hotel, we saw a McDonald’s and a KFC. Then we saw all of the high-end retail stores you’d find on 5th Avenue. Jeddah is clean and beautiful, but unlike New York City, during the day, you’re not likely to see a parade of pedestrians navigating the sidewalks. Instead, they opt to travel from the confines of their air-conditioned vehicles.

On foot, we didn’t make it more than 5 or 6 blocks before we turned back to get out of the sun. When we got back to our hotel, a musician sat playing on a Grand Piano that was setup in the lobby, something that would have been revolutionary less than 2 years ago.

Our visit to Saudi Arabia was transformative. We learned so much and we had the most amazing time. But officially, we were there on business. Our network expanded exponentially. We met with groups and individuals and were given the opportunity to explain the complexities of investing in New York real estate.

Naturally, almost all with whom we met compared New York to London, the city that Gulf State homebuyers have been most comfortable investing in for years. There were so many questions. “What’s the story with the NYC market?” “Is it soft?” “What does the data show?” “How does it compare to London.”

Thankfully, we spent weeks preparing. We felt like true real estate “diplomats.” On the flight home, we talked about becoming global brokers. It’s almost too exciting to think about all that we could learn from meeting with some of the world’s most interesting people and learning about their cultures while exploring parts of the world that we’ve never visited.

We imagine an annual trip back to the Middle East, but we’ve also set our sights on Europe and Asia. What an amazing job we have!

Ask the Experts: Compliance Experts Open Doors to Mortgage Lending For NYC Developers

Behind-the-scenes, Orest Tomaselli is a key figure in the reshaping of New York City’s skyline. Many of the most prominent luxury residential developers turn to him and his team at National Condo Advisors to help coax lenders into offering financing to homebuyers who are interested in their buildings.

Tomaselli started National Condo Advisors a decade ago after Fannie Mae and Freddie Mac changed their condo and coop guidelines, leaving management company’s and boards confused and often out-of-compliance. The government agencies created a specific process and set of rules that nobody knew how to follow, leaving hundreds of buildings and thousands of unit owners unable to get mortgage financing. After years of handling compliance in the back offices at mortgage banks, Tomaselli saw an opportunity and he took it.

“Nobody knew how to do it,” he explained. “If I work with existing, established developments and new construction developments, I could work them through the process of getting them healthy, getting them compliant, getting their bylaws and budgets in-line. Making mortgage financing available.”

When they first started, the aim of National Condo Advisors was to obtain a blanket approval from Fannie Mae for an entire building – an “Agency Approval.” That would often stoke the fire and help with the first several sales until lenders became comfortable with a building. The focus now is portfolio lender approval, directly from banks and mortgage companies.

An approval from Fannie Mae isn’t as relevant in New York City as it might be elsewhere. The agency will only purchase mortgage loans for amounts less than $726,525, which is impractical for so many of the multi-million-dollar units throughout the boroughs. So, in many instances, they’ve eliminated Fannie Mae project approvals and they’ve gone directly to the lenders.

“The lender piece has become incredibly important,” Tomaselli said. “When a developer is looking at a site, they will call (and they will say) we need mortgage financing on this building as soon as we record a condo declaration, which happens when 15% of the units are in contract.”

What once seemed a tall order, considering Fannie Mae calls for 50% of the units in a building to be in contract, is now a common request that National Condo Advisors is equipped to handle. A developer wants to capture every buyer that likes their building, so the ultimate goal is to be able to close on a unit as soon as there is a temporary certificate of occupancy on the building, which doesn’t always happen in New York City.

“Letting a buyer go because a lender can’t provide mortgage financing is ridiculous,” Tomaselli said.

The most common impediment standing between a building and a blanket lender approval is the same as it was when Tomaselli started his business more than a decade ago. The Fannie guidelines state that a condo should have a line item in its budget that allotted 10% of its revenue from common charges toward a reserve account.

During the early years for National Condo Advisors, they assisted a massive Brooklyn new construction condo project that had an annual budget of more than $5 Million. To become compliant, they would have to add a line item showing $500,000 was earmarked for reserves. Since all of the assets were already allocated, one of the few solutions was to jack-up common charges, which would make it extremely difficult for the marketing team to sell units in the building.

“Nobody wanted that,” Tomaselli said. “It seemed like a really innocuous kind of guideline. We had to figure out a way around it.”

The solution became a reserve study – An engineering study where every single component within the property is inspected and assigned a value and a remaining useful life over a 30-year horizon. The undertaking was designed mostly to determine if the building really needed to dedicate 10% of its budget toward a reserve fund. Fannie Mae allowed for it, so many lenders followed suit.

A reserve study done on the Brooklyn condo project determined that it needed to allot only $112,000 annually toward reserves. Since it was a brand-new building with very few unit owners paying HOA dues, the burden of funding the reserves fell on the project developer/sponsor. Regulations state that once the project’s sponsor contributes toward reserves, that money cannot be taken back. So, having the reserve study done saved the developer almost $400,000 every year until they sold out the building. It also kept the maintenance fees at market levels at a time the marketing team was trying to sell units.

Since then, National Condo Advisors has mimicked that plan Across New York City and elsewhere. They assist new and existing buildings obtain an initial reserve study, help them align their budgets, work with the marketing team to outline how to keep maintenance fees low, and they work to get a building’s bylaws, budget and insurance compliant so it will gain approval from the Attorney General’s office and pass muster with lenders.

Tomaselli started Strategic Inspections just a year after he launched National Condo Advisors because the reserve studies were taking up to 3 or 4 months to complete, which “did not go over well in New York,” he said.

Today, a typical reserve study takes Strategic Inspections 30-45 days to complete. It costs between $8,500 and $15,000 for a 100-200-unit building. The company provides a 70-page report that details the cost to repair and replace every specific component in the building that’s paid for by the board. They outline a cost to contribute to the reserve account over a 30-year horizon, in many instances eliminating the need for special assessments, and ensuring that the building is healthy, and mortgage financing will always be available. Strategic Inspections completes 40-60 reserve studies every month.

Reserve studies have saved the day in more unusual circumstances as well. Mortgage financing was unavailable at a condominium in the Financial District because the board sued the developer for shoddy workmanship. Lenders were too uncomfortable with multi-million-dollar litigation pending. But when a reserve study revealed that repairs would cost $2.5 Million, and the board documented it had more than $6 Million in its account, Tomaselli was able to prove to one of the biggest mortgage lenders in the city that the building did not represent too high a risk to lend in. Property values in the building skyrocketed afterward.

Having a 10% line item in a building’s budget isn’t the only compliance issue that stands in its way of gaining a blanket approval from a lender. They’ll often balk if a building has too much commercial space, insufficient master insurance, a high percentage of single-entity ownership, too many non-owner-occupied units, and/or low pre-sales at new buildings. In all of these instances, National Condo Advisors either can help a building get healthier or it can make a case that it’s already worthy of mortgage financing.

Still, Tomaselli said he sees pushback from some management companies and attorneys that are just fine with the status quo. He said there usually has to be a trigger for people at existing buildings to call on his team for help.

“People don’t often do a reserve study because they should do it,” he said. “They call us because they can’t get mortgage financing, or when people complain to the board about a special assessment.”

A troubled building might spend $10,000 on a reserve study and another $10,000 on compliance, but then it could quickly get approved by three lenders or more, Tomaselli said.

“From our perspective, it’s such a low-cost barrier for these developments.”


At The Core: Knowledge is Power

We’re preparing for an upcoming business trip. It’s been in the works for months or even longer, but its finally almost upon us.

An audience on the other side of the globe waits for us to deliver our expertise. That’s a massive responsibility, one that we embrace and take very seriously. But It doesn’t matter who or where the audience is, being called an expert in any profession is an immense responsibility.

A trip like this one has a way of forcing us to dig a little deeper and work a little bit harder to ensure that we exceed expectations. For weeks now, we’ve been gathering information along with other members of the Espinal Adler team. We’re creating reports to help tell the story of our current marketplace and the opportunities that exist within it.

It’s true that we’re gathering this information for an audience far away. But the effort and energy we invest preparing and further educating ourselves, and the willingness to push beyond an antiquated idea of our own comfort zone is going to make us better at our jobs – and that’s a good thing for all of our clients, even the ones right around the corner. Because of that, no matter how successful we are based on traditional business standards, this trip represents another massive step in our careers.

We believe that knowledge, and the effort put forth to gain it, and the desire to deliver it genuinely to others, is what separates an ordinary real estate agent from an expert.

Since well before the itinerary for our trip was finalized, we’ve been surrounding ourselves with the best, most respected, and most knowledgeable people in our industry. Learning from them is part of our job — part of our responsibility – it’s part of being a true professional. We meet every week with experts from different niches within our industry, doing what we can to pry from them whatever knowledge they’re willing to share so that we can deliver it to our clients.

In the first few months of 2019 alone, we’ve met with:

  • An attorney that specializes in representing foreign nationals.
  • One of the most talented interior designers in New York.
  • The CEO of a company whose expertise in compliance is sought out by virtually every condo developer in the region.
  • Perhaps the most respected appraiser in all 5 boroughs.
  • The president of one of the most widely used NYC property search engines.
  • More than a dozen lenders to find out exactly what each of them might offer our clients.

During the last year, our team has promoted a marketing expert, added a mortgage expert, and we hired another multi-lingual agent. All of those actions fit within the same mantra of bringing to our clients the most knowledge and expertise available.

Knowledge is Power

In our personal lives we interact with professionals who work in fields that we know very little about. We expect those professionals to guide us appropriately, especially when we’re making a purchase. But if we have no history or established relationship with the person offering their guidance, it’s not easy to put our complete and total trust in the advice they are giving.

One of the members of our team told us he went to a “big box” hardware store last week to gather information about a flooring project he was working on.

He expected the sales person would be able to provide the price per square foot – after all, it’s written right on the display. He expected that the salesperson would be able to tell how long it takes to order a product and to have it delivered and installed.

But our team member was caught off-guard and pleasantly surprised when the salesperson provided details about the tax benefits of specific capital improvements made to a primary residence, including the installation of new floors. It was obvious that the salesperson took pride in his profession. His knowledge exceeded expectations and provided instant credibility.

The same principles can and should be applied in real estate. An agent has to be so much more than a scheduler and a door opener – That is the least amount of value we can possibly provide. Every day, we have to work on our craft. We have to surround ourselves with and learn from other experts in our field so that we can live up to the responsibility of being called a professional and an expert.


Ask the Experts: Foreign Buying Challenges and Solutions with Martin Jajan

Martin Jajan, Founder and Managing partner at Jajan and Associates located in the Financial District, has helped hundreds of foreign national buyers purchase property in the United States. Our team asked him to share with us some of the challenges they face and some of the solutions he offers.


The Buying Process

The foreign buyer isn’t always aware of the complexity of a real estate transaction in the United States. Many European and Latin American nations tend to be “civil law countries” in which transactions are done through what their concept of a notary is. In the United States, a notary has the power to authenticate a signature, but in civil law countries the state grants a notary the authority to supervise an entire real estate transaction. So foreign buyers are often surprised that they need a lawyer, and that a separate attorney would represent the seller and a lender in instances when the buyer is financing a property.

The foreign buyer is often unfamiliar with the need for title insurance as well, according to Jajan. “In foreign countries, if there is a mistake with chain of title, it’s on the notary,” he said. “There isn’t a separate title company that is insuring title. There is no title insurance.”


Strategies and Structures

Jajan’s first conversation with a foreign buyer always begins with a description of the American buying process, but before long the dialogue shifts more specifically toward the tax implications of the purchase, and in many instances toward privacy and maintaining anonymity.

“The foreign buyer is not going to be taxed the same way that U.S. people are going to be taxed,” Jajan said. “The IRS code is clear that they will tax foreigners that are investing in property in the United State vastly different than they would U.S. citizens.”

The inheritance tax is most commonly the primary tax consideration when deciding upon how to structure a transaction. The exemption for U.S. citizens is $11.5 Million, and it’s doubled for a married couple. Foreigners are only given a $60,000 exemption. So, if a U.S. citizen passes away, their heirs could inherit up to $11.5 Million in assets free and clear of any tax. But a foreigner would pay tax against an inheritance in excess of $60,000. The amount of that tax tends to fluctuate between 35% and 45%.

Hundreds of documents have been written on how to avoid the estate tax, but Jajan says he can distill the information and deliver it in a conversation that lasts about 20 minutes. From there, based on his clients’ circumstances, he can make a recommendation that will quickly and effectively protect them from the estate tax in a relatively inexpensive manner.

Jajan estimated that 90% of his foreign clients form an entity of some kind and the entity created ultimately is the buyer in the transaction. He identified three common strategies.

  1. Form an LLC.

The Limited Liability Company (LLC) acts as a pass-through entity that will provide his clients with a higher level of anonymity and they would also gain some tax advantages compared to buying as an individual. Forming a simple LLC, however, will not protect the property owner or members of the LLC from the estate tax.

  1. Form an LLC that is taxed as a corporation and is linked to an off-shore corporation.

This multi-faceted structure would protect a foreign buyer from the estate tax. The estate tax is not imposed upon the death of the owner of an offshore corporation because the asset itself is not within the United States, and therefore falls outside the government’s jurisdiction.

With this structure, the owner would be subject to higher capital gains taxes compared to the first structure.

  1. Form a Trust

Forming an Irrevocable trust is a common solution for foreign buyers that are making a purchase in excess of $5 Million, because it can offer a client the best of both worlds according to Jajan.

The trust would own an LLC and the LLC would own the property being purchased. The trust would be taxed at a lower rate compared to an individual, and, because the trust will never die and continue in perpetuity, an estate tax would never be imposed.


** Some of the suggested structures can present an issue for lenders. So, Jajan always asks if his client plans to finance the purchase or pay cash. He’s met with multiple lenders that specialize in situations like these and are often more flexible and more amenable to starting a relationship with a foreign national.


Ideal NYC Property Type for the Foreign Buyer

For many foreigners, privacy is paramount. Structuring in any one of the methods that Jajan suggests would certainly provide a high level of privacy from the public. But buyers purchasing a co-op, or an existing condominium will be asked to disclose significant personal financial information.

Very rarely is the foreign buyer trying to hide anything, Jajan said. “From a cultural perspective, it’s very invasive to have to give financial disclosure information, when the fact is, that’s not what’s done in their home country.”

A foreign buyer purchasing a pied-a-terre, or an investment property is usually someone of means, and in some cultures, they’re used to a very high level of service and they’re used to people wanting to do business with them.

“The idea that they have to provide tons of financial disclosures and go on a co-op interview and beg someone to take their money and let them into their building doesn’t sit well with them,” Jajan said. “It’s offensive.”

Perhaps more importantly, in some instances the disclosure of financial information can bring with it a security threat.

“People hold their cards very close to their vest in terms of what their assets are and how they made their money,” Jajan said. “If this information falls into the wrong hands, that’s when kidnappings occur. That’s when other crimes and security risks might occur.”

The Ideal Property Type for a Foreign National Buyer

A new construction condominium is the ideal property type for a foreign buyer that wants to avoid disclosing personal information. A new project likely hasn’t assembled a board and the developer/sponsor has the right to sell without commanding a board package, so there is no financial disclosure involved (outside of what a lender would ask for in a situation where financing is involved).

Although an existing condominium has no ability to approve or decline someone who wants to buy in a building (like a co-op board does), a board has the ability to waive the right of first refusal or to exercise it.  They often use that ability as leverage to collect a full board package from a potential buyer.

Many condominiums include in their by-laws a right of first refusal, which would force an owner to offer their unit back to the condo before selling to a third party. It’s important to note that a title company won’t issue a title policy unless the condominium waives their right of first refusal, and most lenders won’t issue a mortgage unless that right is waived. Its not unusual for a condo board to have concerns with absentee owners living overseas because it might be more difficult to collect common charges and/or special assessments. They’re also cognizant of their owner occupancy levels in an attempt to remain compliant with lender guidelines.

“They are using their power to get as much information on someone as possible so they can make a decision on how to protect themselves,” Jajan said.


The Impact of Design with Benjamin Noriega Ortiz

Enlisting an interior designer to help with your home search makes sense on multiple levels, according to well-known NYC designer Benjamin Noriega Ortiz.

Ortiz said he’s accompanied longtime repeat clients and their realtors on countless showings over the years, but homebuyers that are thinking of hiring a designer for an upcoming purchase would be wise to utilize the search itself as a way to interview prospective designers.

Literary agent and lifelong New Yorker David Vigliano is in the midst of searching for his next New York City Apartment. He’s hired Ortiz in the past, most notably to decorate his Park Avenue property, so he thinks it made complete sense to have Ortiz’ watchful eye during showings.

“He’s able to point things out that I might not consider,” Vigliano said of Ortiz. “As a buyer you have a real emotional reaction to a space. It’s easy to fall in love with some aspect of it and get carried away by that.”

Anyone can look at a designer’s work in a magazine or through pictures online, but Ortiz said that photos are not necessarily the ultimate test and shouldn’t always be the deciding factor when determining who to hire. He said it’s just as important to have chemistry, a connection, and the ability to communicate and get along with your designer.

“You have to remember that you have to deal with the designer very intimately,” he said. “They are going to ask questions like ‘what’s in your night table drawer?’ If you’re not comfortable with a designer, they’re not for you.”

Ortiz helped Debbie and Mitchell Rechler decorate four rental properties as well as a home on Long Island and most recently, their Manhattan apartment.

Debbie Rechler said when she first met Ortiz, he wanted to know about all of her family’s habits – their eating habits, when and where they watch television, where they hung their coats. But now, after collaborating so many times, she said that Ortiz can easily extract what he needs from her and her husband to create a look and a feel that makes their family feel at home.

“It’s like being with a really close friend that knows how you live,” Rechler said. “He gets in our head. He can take things out of my brain and then he can implement it.”

Consider looking at the same place three times with three different designers, Ortiz said. Without giving away all of their secrets, a lot of designers would likely do that for free, considering it an initial consultation.

A lot of brokers might frown upon investing the extra time showing properties to clients and to their interior designers, but Jeff Adler and Marie Espinal of the Espinal Adler team at Douglas Elliman said they would fully endorse an arrangement like that because ultimately, it could help everyone.

“Design is so crucial in real estate,” according to Espinal. “A designer can really lay the groundwork for a vision. Sometimes they can tell a story in a way that a person can’t do on their own.”

“If the designer has a bad feeling about an apartment, we want to know about it,” Adler said.

Ortiz knows some of his repeat clients so well and has earned their trust enough that they’ll ask him to preview apartments with a realtor so he can narrow their search before they even step foot in an apartment. Sometimes, he can immediately dismiss certain spaces. For example, he can tell the client that a unit faces south, and they’ll need blackout shades; he’ll know if a new building is set to go up across the street and will soon block their amazing views; he’ll know if their custom furniture will fit or make sense in a particular space; and he can rule out apartments that don’t have enough flat walls to hang paintings for his clients that are collectors.

“I’ll tell them, you don’t live like this. This is a mistake.” But, Ortiz said, he can provide specific feedback that could actually make the real estate broker’s job easier. “I’ll go to two or three or four apartments with the realtor, and then I’ll say, ‘okay, you can show this one.’ Then the client comes in and says, okay [the search] is done.”


Selling Your Property (Design vs Staging)

Ortiz’ designs tend to be very personal. A client might show him a painting and ask him to convey the feeling of that painting throughout their living space. Always prioritizing functionality, he uses paint colors, artwork, furniture, shapes, and lighting to create the concept his client is looking for. Ortiz said he almost always includes the color green somewhere and you’ll almost always see a circle of some kind incorporated into the design. No matter the outcome, and no matter what he thinks about the look he’s created, only the client can determine if he was successful.

“If the client says it’s good, it’s good, because it’s their place.”

It’s a designer’s job to appeal to an individual’s or a couple’s very specific set of tastes. They want to love the space they live in. But when someone is selling their property, appealing to a much larger audience is the obvious priority. Even though interior design and staging are two completely different things, Ortiz said that good staging is “really a work of art.” He regularly sees brilliant staging in New York City where a good stager can properly convey scale (so people know that their furniture will fit) and the stager can use a non-threatening pallet to make a space look beautiful.

The good news for property sellers, according to Ortiz, it doesn’t take much to make a very personal space much less personal. “Sometimes all you need to do is change the paint and immediately it becomes less personal.”

The Impact Design Has on the Way We Feel

New York City moves fast. Its residents are always on the run and so many of them have demanding high-stress jobs. Like most interior designers, Ortiz said a person’s living space can have an amazingly positive impact on their personal well-being.  Spending time thinking about the environment you live in is “crucial” and as soon as you walk into your living space, you should be able to catch your breath and it should feel like home.

“You have to be able to wake up and feel happy,” Ortiz said. “And that feeling can guide you through your day… [and] through your life.”

Ortiz said it’s entirely possible to create those feelings through interior design no matter where you live, whether it’s a 5,000 square foot home or a tiny studio apartment, your living space should also be diverse and accommodating. “Sometimes we want to feel active… Feel sleepy… Feel fun,” he said. “In a house or an apartment, you can do all of that.”

Marie Espinal, Benjamin Noriega Ortiz, Jeff Adler