What is a Pied-à-Terre and Why Do People Buy Them in New York?
The term “pied-à-terre” sounds sophisticated for a reason. Affluent individuals who frequently travel to a city for business or pleasure use it as a second home, allowing them to bypass the hassle of hotel living.
Translated from French to English, the term means “foot to the earth”, giving the impression of a foot planted firmly on the ground. This type of home grants its owner a continued connection to another city, facilitating fast transitions and providing easy access to the city’s offerings.
Compared to a vacation home, pied-à-terres are generally smaller, and more urban, and their usage brief. The pied-à-terre provides owners with a constant presence in another city, without the inconvenience of hotels or the commitment of a permanent dwelling.
What Is a Pied-à-Terre?
- A pied-à-terre is essentially a second home in the form of an apartment kept in the city.
- People typically purchase pied-à-terres because they frequently travel to the city and would like to forego staying at hotels so often.
- Virtually any property can function as a pied-à-terre, but buyers need to be aware that certain co-ops may prohibit such usage of their purchased property.
- A great way of earning income from a pied-à-terre is to find short-term renters, especially if you know you will be away for a few months,
Why Purchase a Pied-à-Terre?
There are several reasons to consider a pied-à-terre including but not limited to: business, travel, entertainment and leisure.
One might secure a pied-à-terre for a city one frequents for conferences, or a nearby weekend getaway.
Some have family (such as kids in college) nearby the pied-à-terre location or want to cut down on long commute times to a job in the city, away from suburban residences.
Pied-à-terres are generally smaller and more minimalist than the owner’s primary residence and allow occupants to avoid the time and expense of repeatedly finding new places to stay in a city.
As the ultimate playground for the rich and famous, a good portion of New York City real estate ends up being pied-à-terres which are not so minimalist.
Plenty of Hollywood celebrities, pop idols, and the top tycoons and billionaires have their feet planted in fairly swanky pads.
Pied-à-terres can also be valuable real estate investments, and a convenient asset that may be shared among family members, friends and descendants.
What Should You Look For in a Pied-à-Terre?
Ok, so you’re wondering why you’ve wasted all that time on hotels.com and you’re ready to hop online and browse those Manhattan real estate listings, but first things first—what exactly should you look for?
As any inhabitant of a major city like NYC knows, location is everything.
Choosing a pied-à-terre specific to your needs might require weighing commute, entertainment interests, price range and proximity to transportation.
For example, people coming in from Long Island might be more comfortable on the east side of the island, as transport to this location wouldn’t require crossing Manhattan traffic.
Unlike full-time city inhabitants, pied-à-terre buyers might want to be in the thick of it, perhaps in a high rise in the middle of Times Square, for example, instead of a quiet residential street in Brooklyn.
Location in the center of town allows users to maximize the short amounts of time spent in their second home by, for example, catching as many Broadway shows as possible.
Pied-à-Terre's Usually Include Amenities
Pied-à-terre buyers also often value amenities like doormen or building staff members who can look over the property whilst they are away and receive mail should there be any.
Fitness centers, spas, pet allowances, lounges, impressive city views and rooftop clubs can also be things to consider when browsing.
As always is the case when buying apartments, maintenance fees are something to consider. Ideally maintenance fees for a one-bedroom will hover around $1,000 and around $1,500 for a two-bedroom in New York City, though these choice pads can be a dime a dozen.
Last but certainly not least, buildings (especially co-ops) may not allow purchasing units for pied-à-terre use.
When the building does allow such functionality, it is usually mentioned in the marketing material, so check first!
Should You Buy in a Condo or a Co-op?
When purchasing a pied-à-terre apartment, the type of building it’s housed in is one of many decisions to make.
First of all, what even is a co-op?
A co-op is a building owned and managed by cooperation, i.e. of tenants. Co-ops are often better maintained and cheaper than condos, which are simply independently sellable apartments.
Unfortunately, co-op buildings tend to have stricter rules about subletting, so a pied-à-terre may be out of the question completely.
For this reason, condos tend to be more desirable to pied-à-terre buyers than co-ops.
Condos are easier to buy and often allow for short term rentals, if you’d like to do this while you’re not there.
However, condos are not as abundant as co-ops, particularly in New York City. Co-ops make up around 75% of the properties in Manhattan.
Can You Rent it Out When You're Not There?
Ideally, yes. But not all buildings allow short-term rentals, and this policy may be difficult to circumvent in that classy doorman building you have your eye on.
This is something to look into and ask your real estate agent about before buying.
Condos are generally more amenable to short term rentals, but even condos may crack down on the use of services like Airbnb.
(Rats! Just when you thought you’d make back all of your investment.)
Many buildings, however, are amenable to guests and, of course, there are also properties without staff on the premises.
We won’t tell if you don’t—but of course the safest route would be to okay a plan like this with building management.
In fact, you could purchase your pied-à-terre primarily as an investment property in New York, which you can occasionally use as a pied-à-terre when you have periods of vacancy.
That way, you can make some of your investment money back (and eventually passive income) while enjoying your property at the same time.
It may help you down the line pay for additional real estate.
If this is the first piece of real estate you'll be purchasing, read up on everything you need to know before you buy property.
Important Considerations with Pied-à-Terres
Surprisingly, not everyone is a fan of pied-à-terres.
They’ve drawn criticism for prompting an influx of foreign buyers, and there’s even talk of a special pied-à-terre tax, or the need to tax them at escalating rates, according to property value.
One such extreme case that actually sparked a debate and eventual reform of the mansion tax was billionaire Ken Griffin's penthouse pied-à-terre purchase at 220 Central Park South for an outrageous $238 million earlier in 2019.
Luckily, for pied-à-terre potentials, no such tax exists yet.
However, if you happen to be in the part of the population that can afford a pied-à-terre ranging over a million dollars, you need to consider NY's mansion tax which will cost you extra.
Not to mention, transfer taxes may cost you extra when you buy in a new development.
What If You Can’t Afford to Buy a Pied-à-Terre?
Even if your lifestyle doesn’t justify the substantial investment, there may be other options. NYC is overwhelmingly a renter’s city, and there are many reasons to rent a pied-à-terre instead of buying.
You won’t get stuck with a depreciating asset.
You won’t have to worry about how high maintenance fees and taxes are.
Renting is certainly cheaper in the short term and still provides the convenience and home-away-from-home feel that pied-à-terre seekers are after.
There’s also often a lower barrier to entry in the renting vs buying spectrum. Renting, of course, gives you the opportunity to try before you buy.
If all of this sounds doable, and you’re in the market for a regular weekend place, or a multipurpose second home, a pied-à-terre might be something to think about investing in sooner rather than later.
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