Suze Orman, financial expert and TV personality, recently sold her New York City apartment for 4 million according to New York City land records. The nearly 1,300 square foot condo at the Plaza Hotel had originally been listed at 4.5 million, but then was reduced to under 4 million in September 2015. Suze and her wife Kathy were able to turn what appears to be a decent profit on the sale considering she had originally purchased the condo for 3.6 million back in 2007.
When initially hearing those numbers, it sounds like a nice profit, but for a nine-year investment, one would expect they would be able to secure a better return based on the amount of capital that was invested. Maybe Ms. Orman believes a home is not an investment, but for most New Yorkers, and Americans in general, it is.
Therefore, when making a single investment of 3.6 million on a nine-year term, and only grossing an additional $400,000, many would question what had occurred. $400,000 would be great if that was her actual take-home amount, but it isn’t unfortunately. Once you factor in closing costs, real estate taxes, and realtor commissions, you conservatively can expect to lose 10% off of the top, which cuts into the $400,000 mentioned earlier. So her sale looks like a decent investment on the front end, but once these factors of the associated real estate transaction/closing costs are applied, it seems like she might just have gotten her money back.
The Plaza Hotel
What may have played a factor into the steep price drop was the financial uncertainty surrounding the Plaza Hotel. According to Bloomberg.com, the Plaza Hotel will finally go to a foreclosure auction after nearly two years of uncertainty surrounding the ownership of the hotel. Although this foreclosure action doesn’t have a direct impact on the sale of the Ms. Orman’s condo, the uncertainty around the future of the hotel arguably could have had an impact with potential buyers (pure speculation at this point). Now that the property is finally going to auction, one wonders if she would have been better off to wait to improve her return on investment. Either way, with closure finally coming to the Plaza Hotel, greener pastures may be in the future for all going forward.
