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Bertd, Home Buyer in New York, NY

which area would i buy into for rental and value

Asked by Bertd, New York, NY Tue Feb 8, 2011

I am an australian looking to invest in NY

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9
Many affordable apartments available on http://www.bronxhousing.org/
0 votes Thank Flag Link Mon Jun 27, 2011
I would add to the comment from my colleague below that most condos dont allow short-term rentals and few and far between allow 6 month terms. And keep in mind you have to furnish it with all the bells and whistles each time theres a new tenant if you find a person who wants a year furnished......being an absentee landlord you will have to hire a Management company, which will whittle down your ROI for the Furnished unit as the tenants will call for all sorts of issues and to replenish should you not come across each time you have a turnover. It can be great but it can be tedious and limits your choices to one or 2 Condo buildings in the Mid-town East near the UN area.

Also keep in mind that not all Investor friendly co-op sell to Non-American Citizens.
0 votes Thank Flag Link Tue Feb 8, 2011
Fantastic question and all of my colleagues that have responded below have certainly covered most of the bases. One major point to take into consideration is that right now we're in a fantastic buyer's market and yet the rental market has bounced back with strong, consistent numbers and seem to only be creeping up to pre-crash numbers so a rental investment property is of great value these days.

Downtown is a fantastic rental market but I'm not 100% convinced about return on investment not to mention that the bulk of investment friendly co-ops and newly developed condos are in other areas such as Murray Hill, Midtown East, and Midtown West (Hell's Kitchen. Of course Upper East is a fantastic bang for your buck and has a consistent flow of possible tenants but it also has an extremely high inventory for rentals which keep the cost of rentals down comparatively.

Have you considered investing in an apartment and leasing it out as short term furnished rentals as an option. You can typically charge anywhere from $400 to $1000 above an unfurnished apartment on those.

Hope this was helpful!

Please feel free to contact me with any questions or advice directly at mark@bonatierra.com

Regards,
Mark Cisneros
Bona Tierra Realty
0 votes Thank Flag Link Tue Feb 8, 2011
Hi Bert d,

Depending on your budget New York City is definately going to be your best ROI. Our Real Estate market is cyclical and buying at this down-market is perfect if youre in it for the long haul, you will have made a strong investment for the future.

I have worked with many foreign national buyers all over the City for the past 10 years and know every neighborhood and its returns, whether the apartment is in a walk-up or in a luxury high-rise.For eg I helped a client buy a 1-brm in a brand new development in the Union Square area, which along with the West Village is the most desirable rental and Sale neighborhood in the City. We got him a rent over $5000 on his investment of close to a 1MM. Similiarly a 2brm.2 bath in and around that area will get you $7000 in rent on your purchase price of 1.5MM.

You just have to take your budget and see which areas work best to stretch your $$ investment. You should also know the summer i.e from May thru Sept is when you get the maximum rental income on your apt. If youre looking for a deal you will want those slightly away from transportation blocks to get more bang for you buck and yes, people do want to rent there because its more peaceful, greener and quieter.

To recap your best bang for your buck is going to be the Upper East-side and Hells Kitchen. Simply more condos there, so anytime there is more competiton you can get a better deal especially when its all cash.
Anyways, its all relative. You really have to see it for yourself and decide according to your budget. Condo closing costs are around 5-6% of the Purchase price so you need to keep that in mind.

Please feel free to contact me if you feel I can help answer any of your questions.

Good Luck!!

Veena Prakash
Rutenberg Realty
vprakash@crrnyc.com
0 votes Thank Flag Link Tue Feb 8, 2011
Much will depend on your budget, therefore determine what you are willing to spend and then focus on areas that suit your budget--also consider a visit and explore areas of possible.
0 votes Thank Flag Link Tue Feb 8, 2011
Bertd,

First of all, great decision to invest in New York. If you are looking for great values as well as strong income possibilities in the New York area, the northern part of the Bronx offers tremendous value. Due to it's location close to Yonkers, the area offers many great properties that should really be valued higher than they are. Especially in this market, the opportunities are abundant. Also, as my colleague below has mentioned, proximity to transportation is very important to renters (as well as owners). With a couple of subway lines close by, as well as a plethora of bus transportation, the north Bronx, particularly Wakefield and Pelham bay offer tremendous value and income potential. Let me not forget to mention that the Riverdale section of the Bronx is a big-money neighborhood with strong income potential, although perhaps with not as much great-value properties.

If you have any questions, feel free to contact me at:

O: 347-657-1114
C: 718-451-6859
E: david.rodriguez@pantigagroup.com
0 votes Thank Flag Link Tue Feb 8, 2011
Bertd,
Great question. As a life-long New Yorker (and we're talking 5 decades) I can tell you that there are few neighborhoods in Manhattan that are not great investments. That said, I must refute a remark below stating that "Brooklyn and other boroughs" are "not as glamorous as owning a piece of Manhattan." New York Magazine rated Park Slope, Brooklyn as the #1 top neighborhood in New York City.

As an investor, there are a few things to consider. You need to limit your search to condos rather than co-ops. Although our rental market is very strong now, you will do best renting out if you are very close to subways and services. For example, on the Upper East Side, the further you are from the only subway line (4/5/6) the less expensive to buy, but the harder to rent out. The Upper West side has more subway options, but has mostly co-ops and few condos.

There are many subtleties to our market, and the best thing you could do is to work with a skilled, experienced agent here who can navigate you through the process from start to finish.


Best,
Jenet Levy
Halstead Property, LLC
212 381-4268
jlevy@halstead.com
http://jenetlevy.halstead.com
0 votes Thank Flag Link Tue Feb 8, 2011
That is a very big question and depends first of all on how much money you have to invest, and if you will or will not have debt service (i.e. a mortgage) to determine immediate profitability.

The second thing to consider is your investment goal(s). As Jeff has said, are you investing for glamour (or possible personal use in the future) or for cash flow? I own rental properties, but not in Manhattan, because I don't consider the ROI to be good enough at this time, not to mention the cap rate in Manhattan, which is too low for my taste. Put simply, the properties are too expensive relative to the rents you can get.

If you are investing for cash flow and are willing to consider Brooklyn or Queens, I think you need about $300,000 in capital available for a 1-bedroom condo that would sustain rental demand, and at least $550,000 for a turnkey multi-family townhouse [more in a chic neighborhood] that would sustain rental demand. By "sustain rental demand" I mean a place that is close enough to public transportation and is large/pretty enough, with enough amenities, to attract renters steadily. You especially want to look for close subway access, this is what renters always ask about.

You will also need a property manager, who must hold a real estate license in New York State. This person or firm screens prospective tenants, collects rents, and manages repairs. It is possible to purchase a property with a tenant in place, which can work out very nicely.

If I can help, let me know and we can set up a Skype appointment.

Karla Harby, VP
Rutenberg Realty
kharby@crrnyc.com
0 votes Thank Flag Link Tue Feb 8, 2011
Hi Bertd,

If you wanted to invest in Manhattan, you'll have to remember that cap rates (e.g. rates of return) are very low, mostly due to demand for housing in Manhattan (e.g. it's extremely easy to keep a unit occupied).

If you're OK with a rate of return after expenses of 3 - 4%, while also enjoying the potential appreciation of Manhattan properties, there are any number of neighborhoods that could work for you, and you may want to invest based on preference. For example, a recent client wanted a condo near the Metropolitan Opera, and consequently I helped her find an outstanding current deal in the Upper West Side which will be very easy to rent, but which she may also use herself in the future when she wants to take occupancy.

Neighborhoods that have relatively lower valuations (compared to their immediate surrounding neighborhoods) and higher growth potential include the Clinton area of Manhattan (34th St. to 59th St. from 8th Avenue westward), the Lower East Side (which has already begun to increase dramatically in recent years), and East Harlem, which has seen an influx of higher-income residents driven by the new development and space.

For higher rates of return, you may consider Brooklyn or other boroughs. Not as glamorous as owning a piece of Manhattan, of course, but if you keep the apartment occupied (e.g. through use of a hard-working competent broker), you should enjoy an excellent return on investment. Coming off the housing crash and overdevelopment, there are some particularly good opportunities at the moment, as well as buildings with multi-year tax abatements that can better control your long-term expenses. Specify a budget range, and I'd be happy to send along a list of ideas along with an idea of the going rates for rents in each building.

regards,
Jeff Brenner, MBA
Senior Associate - CitiHabitats | CitiSales
Apartments | Townhouses | Multifamily
Rentals, Sales and Investments
By Referral Only
"Platinum Production Award - 2009" | "Top Rental Production"
"Top Overall Production (Sales + Rentals) Award - 2008"
Mobile 646-496-5333
jbrenner@citi-habitats.com
0 votes Thank Flag Link Tue Feb 8, 2011
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