Damoun Baruch Yashar
CEO | Licensed NY Real Estate Agent
New York Real Estate Group
1115 Broadway Ave, 11th Fl
New York, NY 10010
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"The Best Compliment I Can Receive Is A Referral To Your Friends And Family."
There are two aspects to consider when looking into the purchase of an investment property; the return on revenue you can reasonable expect based on the purchase price and the location and how it might be affected by future price appreciation. South Florida still has plenty of opportunity but doing your homework is very important and locational factors cannot be overlooked.
When looking at project returns you need to carefully evaluate the purchase price and ongoing expenses like association fees, property taxes, insurance, etc. You also need to thoroughly investigate the current rental climate in the area surrounding the property. What are similar properties renting for, how quickly are the renting, how many similar properties are out there for rent, etc.
You also need to carefully evaluate the condition of the property and determine what expenses may be incurred in getting the property into rental condition. Many of my clients prefer to put hard surface flooring throughout as it stands up to wear and tear better than soft goods. One thing many investors overlook is if you are in an association will they accepts pets. Many pet lovers have a difficult time finding home that will accept their pets and this can be a huge benefit to investors. If you find a pet friendly situation it will make it easier in most locations to find tenants willing to pay a little more.
Future appreciation is hard to put a precise number on but the better the location the higher that appreciation will probably be. You can expect a little lower up front returns (in my area from 6% to 8% cash on cash returns) compared with up to 15% in less desirable areas and product types.
The best thing you can do is locate a qualified Realtor who can properly assist you in locating good opportunities and be ready to act quickly when the right opportunities present themselves. If your search brings you to Palm Beach or Martin Counties I would be very happy to work with you towards meeting your goals. The current market is really a perfect storm and in my opinion Florida real estate in the right location is one of the absolute best investment opportunities we will see in our lifetimes. No doubt investors have been flocking to our shores over the past two years so the easy pickings aren't so easy anymore. You might also want to explore our foreclosure auctions where 3rd party bidders continue to have much success and you might find the following article to be of interest;
Best of luck with your search and if I can offer anything additional please let me know.
Always at Your Service,
Tom Priester e-PRO
"Results Driven Real Estate"
Keller Williams Realty
I agree with the comments below - Manhattan is looking to grow as the market recovers. However, Manhattan is expensive. As a result, its neighboring areas, such as Lower Fairfield County (Greenwich, Stamford, Westport, etc) have seen very strong gains both in rental incomes and property appreciation over the last 12-18 months.
Lower Fairfield County is very affluent, home of several high profile hedge funds, Wall Street executives and celebrities. As such the demand is rising and values increasing, specially on the high end luxury market. While you hold on your investment, rental incomes are very stong as well helping offset some of the holding costs.
Investment properties with 7-9% cap rate are becoming harder to find, but can be found. Cap rate compression is certainly on the rise. They are not expected to hit the prior record of 3.5%, but certainly heading towards the 5% range.
As an example, a small investment property which had previously sold for 275K during the 2007 happy days is now selling for 160K.
I would be happy to discuss your parameters and provide you additional information.
Equity Capital Real Estate
(203) 280 3838
Have you considered Charlottesville, Virginia. We were voted one of the best places to live! Charlottesville is family friendly and centrally located. Only two hours to Washington, DC, the beach and skiing! Look us up and please contact me if you'd like to take a closer look at property values here.
Talking for the Southern New Jersey area, Brigantine seems to have the best buys for investments. The Ocean City Area will not show capital gains immediately, but we manage the rentals also. We do well with summer rentals especially with beach front properties.
Regardless of whether you are considering residential or commercial properties, New York City is one of the best real estate investment markets in the world. Many analysts expect median market prices in Manhattan to rise by five to 15 percent in the next five years.
For investors, it is a classic example of strong demand and limited supply. With rising property values thanks to a growing populace, international and national interest and limited landmass, hundreds of NYC properties provide their owners with high yields and insulation from unexpected market changes.
However, supply and demand is not absolutely consistent across the city. Investment potential varies from neighborhood to neighborhood. Even if you are considering two identical apartments in the same building, one apartment might make a better investment than the other.
If you are looking to buy in New York, you should buy in some up and coming but not yet expensive area. where you can expect increase in prices over time and at the same time get rental income while you own the properties. There are so many options, starting from buying a single apartment unit in to buying a multi-family or mixed use building(s). The approach will really depend on your budget, expected holding time and how you are going to manage them. I used to underwrite commercial properties and would be glad to suggest couple available options. Elena 646 593 7207
Of critical importance regarding your question must be the method of your investment. Some investors have multi-faceted enterprises some singular. Some have investment goals that are exclusive to cash generation, wholesaling, pre-habbing, re-habbing, hold and lease, hold and rent, section 8. The list goes on and on, but knowing your objective is somewhat important to qualify a recommendation. Defining and understanding your exit strategies also allows the latitude to steer away from seemingly great deals with an embedded poison pill.
There are many areas that have flat-lined and show sustained signs of revival. Shortly, the opportunity in the area will be gone. More details result and better guidance.
You may find it beneficial to make a commitment to a professional, and work co-operatively toward building your business plan.
That said, it is possible to buy properties with cap rates of 6% up to even 10%+ in the best case scenario, in rental properties with stable or possibly increasing values. I know, because I've done it. Areas I like right now include suburban Detroit (stable suburbs popular with renters) and Atlanta (city of only), residential only (not office space, which is seriously overbuilt, especially in Atlanta, unless your time horizon is very long indeed!).
"Areas most affected by the crisis" is not necessarily the most profitable formula. There are cities in the USA that were barely touched by the housing bubble that continue to make excellent investments. However, you can get in with less money in areas that were hard hit.
I echo everything Tom says--find yourself a local real estate agent who really knows investment property. In fact, you want an agent just like Tom! If I were you I would call him, especially since you already know how things work in Florida. Geographic diversity is not necessarily effective in reducing risk, as everyone discovered when the real estate bubble burst.
As Tom says, research must be done or you might get burned, as happened to many investors who rushed into excellent markets a few years back, but made foolish property decisions because they were greedy and in too much of a hurry.
For example, consider Tom's note about pet ownership. You personally may not like pets, but whether you know it or not, dog ownership is on the rise in the USA (for a long list of reasons), and landlords/property managers who know how to manage the (minimal but real) risks of pets have a competitive advantage. That's just one example of thinking like an investor.
If you insist on buying a clunker (bad investment), the agent has to sell it to you. We can try to explain things to you but if you won't listen, we will just do what you tell us to do. I've heard a few cautionary stories from agents. The investor-buyers acted foolishly so it's hard for me to feel too sorry for them.
An area can be a good investment, but you're not buying the whole town, you're buying one building at a time. And that building must have strong fundamentals if the investment is going to be successful for you.
Stay loyal to that good agent, because remember the agent only gets paid if you buy something she or he shows you. You can be excited and eager in your search, but try to stay methodical and keep your emotions in check. This is real estate, not a souffle.
Don't try to cut the agent who is helping you buy out of a deal to save some money (in cases where you don't sign a buyer broker agreement, in which case you can't do that). It's not nice, and it's not smart business for you. Because agents who like investing always know where the best deals are now, they will look out for their clients, investors are often repeat customers, and agents have long memories!
Licensed Real Estate Salesperson
Charles Rutenberg LLC
New York, NY 10022