Buying an Investment Property in NYC
Most New Yorkers can’t afford to buy an investment property, but for those who can, and can handle the responsibilities of being a landlord, it’s a great way to make some extra cash each month. There is a lot of uncertainty in today’s market due to the pandemic, uncertainty causes fear, fear can lead to motivation to sell, which creates opportunities for brave buyers. The market has shifted from a seller’s to a buyer’s market.
In general, buying an investment property requires you to completely switch your thinking. You’ve got to analyze the apartments from the potential renter’s perspective and think about where your priorities would lie if you were looking for a place to rent. Right now there is increased demand from renters for properties that are a good fit in times of coronavirus, like units with private outdoor space, convenient locations where you’re not necessarily required to use public transportation and etc…
In terms of size, a studio or 1 bedroom are your best bet to start with. You have to be able to rent what people can afford, so studios and one-bedroom apartments are always a good idea. There is always a high demand for studios across all boroughs.
In general, if you’re looking for a sure thing, you should look for properties in well-known areas such as Upper East Side and Midtown East but it means you’ll pay a higher price. For a first time investor looking in areas in Upper Manhattan, like Inwood and Sugar Hill. In Brooklyn Bed-Stuy, Crown Heights and Bushwick and Queen also have developments popping up in Flushing, Sunnyside, and Woodside.
There are times when your investment property will rent quickly and others when it will take a while based on supply and demand. You need to be in a position to cover the carry costs in the absence of rental income. That means that you shouldn’t work with a tight budget that doesn’t allow for any unforeseen costs or renters who don’t pay on time. Probably if you’re buying just a single apartment, you won’t be able to live off the rental income.
Also, don’t expect to make money with your property straight away. The NYC real estate investment market is more about overall return, with the majority of your return typically coming from appreciation in value over time.
Beatriz Moitinho is a Real Estate Salesperson, specialized in Luxury Real Estate and a Productivity Coach at Keller Williams New York.