Is investing in NYC a bad idea
Member since 2024 · 18 posts · 14 votes
Is investing in NYC a bad idea
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
2yThe areas of the country that are the most anti-landlord are also where you make the most money, because they have the highest demand. NYC, Boston, DC, LA, San Fran, Seattle. It takes just owning a few properties in these areas to turn you into a multimillionaire in a pretty quick time.
Some strategies to consider implementing;
1) Buy B class properties and higher
2) Don't be afraid of vacancy
3) Know the laws like the back of your hand
4) Hire good property management
5) Treat your tenants well
District Invest Group545 Reviews
55 Replies
- Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes2y
Quote from @Melanie P.:
The best way to protect yourself investing in NYC is to buy higher quality assets and require exceptional credit credentials from your applicants to obtain approval to rent. Minimum credit score 720. Unfortunately you cannot check New York eviction records and they are the best predictor of future problems. Are you ready to upgrade your primary and turn your current home into a rental?
If you're looking for cheap stuff with high cashflow you need not travel further than the areas around Camden, NJ, Newark, NJ etc. Bridgeport and Hartford CT are also worth looking into.
Evictions in Newark and Camden aren't easy (easier than NYC though). Bridgeport and Hartford are dumps. Easier evictions, but both cities have fallen on major hard times.
- Investor · WNY/CNY/Adirondacks, New York State · Member since 2024 · 151 posts · 133 votes2y
@Jessenia Hartage Most people on here are afraid of NYC and have certainly never been to Queens, so I would take the warnings with a grain of salt. NY State is fine to invest in.
I was only in Brooklyn for 4 years as a tenant, so I can't comment about investing in NYC specifically. I do have property way far outside of NYC, far far beyond Albany. Yes, tenants do have more protections here and you need to understand the law. You'll also want to have plenty of your own capital in reserve to deal with vacancies and repairs.
I imagine a lot of the tenant-landlord problems can be prevented by providing good customer service and having clear standards, both in who you rent to and how you maintain your property. In other words, it's the jerk who doesn't give 24-hour notice to enter the apartment and who is renting out a dump with a broken hot water heater to a tenant with no background check that will have the most problems.
Since you're local, you learn how to work with local tenants, property managers and contractors. Learn the laws that apply to buildings and tenants. Understand your risks and think through your worse-case scenarios before proceeding.If it were me, I'd start with one small condo in a large building in a neighborhood I like. Live there for a little while I paint it and get repairs done and then rent it out.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes2y
The areas of the country that are the most anti-landlord are also where you make the most money, because they have the highest demand. NYC, Boston, DC, LA, San Fran, Seattle. It takes just owning a few properties in these areas to turn you into a multimillionaire in a pretty quick time.
Some strategies to consider implementing;
1) Buy B class properties and higher
2) Don't be afraid of vacancy
3) Know the laws like the back of your hand
4) Hire good property management
5) Treat your tenants well
District Invest Group545 Reviews - Member since 2024 · 18 posts · 14 votes2y
Quote from @Calvin Thomas:
Quote from @Alexander Szikla:
New York City is an excellent market to invest in - but you need to manage your risks accordingly and have a long-term focus.
NYC is not for the faint of heart or the new investor. It is for professional investors who have years under their belts and can weather the storm from the political or legal climate. NYC is as bad, if not worse than DC, Washington State, or California. All crap shoots in terms of landlord abuse.
I hear that! Thanks
- Member since 2024 · 18 posts · 14 votes2y
Quote from @Russell Brazil:
The areas of the country that are the most anti-landlord are also where you make the most money, because they have the highest demand. NYC, Boston, DC, LA, San Fran, Seattle. It takes just owning a few properties in these areas to turn you into a multimillionaire in a pretty quick time.
Some strategies to consider implementing;
1) Buy B class properties and higher
2) Don't be afraid of vacancy
3) Know the laws like the back of your hand
4) Hire good property management
5) Treat your tenants well
Totally agree,
- Member since 2024 · 18 posts · 14 votes2y
Everyone has been extremely helpful in providing their insight and I greatly appreciate it.
- Lender · Austin, TX · Member since 2021 · 448 posts · 441 votes2y
NYC is not a great market to start in since all the deals there will be appreciation plays. If your goal is cash flow, I would look at other MSAs. I've done a few in Rochester, which seems to be a pretty good cash flow area and is still kind of "in your backyard".
- Member since 2021 · 4 posts · 2 votes2yStay far away. There are simply better places in the country to generate a better return. Being close to your real estate means you could potentially property manage and you might know the neighborhoods better. However, NYC has a ton of wealthy people and the result is really poor investment return rates.
Cap rates in NYC are disappointing. Take a look at the cost of the potential purchase. Then compare against potential rent, subtract vacancies (5-10%), subtract property management (8%), subtract maintenance (8%) then subtract insurance and property taxes. The remainder - your net operating income, divided by your purchase price is your return. I'd want to see a 10% return with current mortgage rates being 7%. Otherwise, just make a better return just being a hard money lender.
Appreciation in NYC has been disappointing. I owned a co-op apartment and i bought in 2011 post financial crisis and have since sold. Today, prices are flat to where i bought. Zero appreciation in 13 years, let alone any covering transfer/closing costs. Some of this is local mismanagement in city government with NYC real estate not following the trend of real estate in the rest of the country.
The tenant and eviction issue in NYC is real. My bank did a lot of lending in NYC and stopped lending for a while as their NYC portfolio did really poorly. They have resumed lending outside of NYC.
Many high paying jobs have left NYC. There are still plenty of high paying jobs left, but the economic fundamentals are certainly not great compared to many other opportunities in other markets - Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes2y
Quote from @Russell Brazil:
The areas of the country that are the most anti-landlord are also where you make the most money, because they have the highest demand. NYC, Boston, DC, LA, San Fran, Seattle. It takes just owning a few properties in these areas to turn you into a multimillionaire in a pretty quick time.
Some strategies to consider implementing;
1) Buy B class properties and higher
2) Don't be afraid of vacancy
3) Know the laws like the back of your hand
4) Hire good property management
5) Treat your tenants well
It can also squeeze you financially real fast in NYC.
- New York City, NY · Member since 2015 · 2 posts · 1 vote2y
@Bernard Joseph S.
Hi Do you recommend any turnkey company to start out for a new investor. Im also in the NYC area
- Member since 2020 · 351 posts · 329 votes2y
You’ll get a lot of different answers here, I think most people in these forums shy away from tenant friendly states. I invest in Rochester ny (which is very tenant friendly) and the tenant friendly nature had given me issues yet, mostly it’s helped me reduce liabilities. Mostly what this means to me is you can’t fly by the seat of your pants and need to do things by the book and be very business like about it. You need to buy high quality properties, have stringent screening policies and take care of the property. Your margins also need to be better on the deal upfront because you need to have reserves to deal with a 6 month eviction process and you need to do a good job of documenting the evidence.
With that said I had a mentor who was smarter than me who said real estate in tier 1 cities is the best store of wealth. Despite them all being deep blue tenant friendly cities, they are also the engines of wealth creation in this country and therefore over a long period (20+ years) are likely to outperform everything else.
At the end of the day, you need to come up with an investment thesis you believe in. Maybe that thesis is wealth flows to the biggest and best cities like NYC therefore real estate will outperform else where in the country. One also does significantly better local so between those two things, dealing with the more difficult landlord laws are worth it. Another one might be I want to risk less money on the first deal even if investing out of state is more difficult and I need landlord friendly laws so my mistakes are less expensive.
With NYC, two house hacks are likely to get you enough for retirement. I could never be surrounded by some many people, but it’s househacking there is a great opportunity.
Go read the laws on tenant protections and come up with your own thesis. Best of luck.
- Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes2y
Hey @Jessenia Hartage - I'm a broker, investor, property manager, in NYC.
NYC may not be a landlord "friendly" city relative to other parts of the country - but don't be fooled by the absurd headlines you'll hear.
What I can say is that the headlines about the difficult tenants and rent restrictions cause issues or a small fraction of property owners - but you'll never hear about the 99% of cases where tenants are paying on time and respect their landlords' properties.
if I'm in your shoes, in terms of recommended criteria, I would opt for looking for strongly appreciating areas and not just monthly cashflow. Most landlords actually lose money for the first few years (if you're focused solely on profit AKA income - expenses) but the vision for most owners here is to bank on the strong appreciation of property prices in NYC.
Shoot me a DM or text me if you'd like to chat further, happy to give you my $0.02 as well. - Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes2y
The city seems to be on a downswing and is legendary for disrespecting property rights. It's also incredibly expensive and hard to make anything cash flow. But, it's New York. It's got a huge number of wealthy individuals and businesses there and I don't see that changing. It definitely has some stability in that.
- 2yKerlous TadresBusiness MemberRealtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
Quote from @Jessenia Hartage:
Am totally new to investing, but every training session i read or listen to, says to start in your back yard. Am in queens, NY is not landlord friendly. Since this is new to me should I still consider NY like bklyn and queens or should I just stay away? If yes to invest in NY, what would be the recommendation criteria that I can implement to protect me to some degree.
If I were you, I would consider all options. I myself invest in Columbus, Ohio and can say that there is a lot of appreciation that happens here with all the new business coming such as an Intel, Wells Fargo, and other businesses. Columbus is also generally a pretty safe area and if you build good relationships with a realtor, contractor, property manager, and attorney you should be pretty safe! Happy to discuss more with you if you would like!
Kerlous Tadres | Reafco Real Estate540 Reviews - Rental Property Investor · New York, NY · Member since 2023 · 17 posts · 6 votes2y
Quote from @Jessenia Hartage:
Quote from @Melanie P.:
The best way to protect yourself investing in NYC is to buy higher quality assets and require exceptional credit credentials from your applicants to obtain approval to rent. Minimum credit score 720. Unfortunately you cannot check New York eviction records and they are the best predictor of future problems. Are you ready to upgrade your primary and turn your current home into a rental?
If you're looking for cheap stuff with high cashflow you need not travel further than the areas around Camden, NJ, Newark, NJ etc. Bridgeport and Hartford CT are also worth looking into.
I was actually considering NJ and CT as an alternative to NY. So thank you for that, I might just focus there instead. Thanks,
Highly highly recommend that to you as well. Areas around Newark NJ and along the I95 Corridor in CT are fantastic. In the process of closing on something in New Haven myself and am very happy with the numbers and the quality of the asset
- 2yAbel CurielBusiness MemberReal Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
Quote from @Jessenia Hartage:
Thanks Abel, Thats actually the area that I live in. Since you are a queens agent, honestly speaking what challenges are you finding investors facing when renting their property in those area and what system can they put in place to reduce those challenges?
The main challenges that investors face with their rentals is inherited tenants. To avoid the challenges associated with inherited tenants, investors can:
- aim to purchase properties 100% vacant at closing. This is more challenging for 3-4 family properties than it is for 1-2 family properties.
- request documents from the current landlord to find out more about the tenants i.e. the original rental application, proof of rent payment, copy of current and past leases, etc.Other suggestions for investors:
- set expectations with tenants at the onset regarding annual rent increases. We regularly recommend 1.5 - 3% increases at the end of each lease. This depends on current market conditions.
- use lease riders to insure all of your rules (and penalties) are thoroughly explained. Have tenants initial next to these rules to confirm they've read and understood everything listed.
- Read and utilize the appendix items from Brandon Turner's Book on Managing Rental Properties.
REbuild Team - eXp Realty5234 Reviews - Member since 2021 · 4 posts · 2 votes2y
I'd highly recommend the OP run the numbers. Adjust the tenant friendly states with a high vacancy. If it takes 6months to evict vs 1 with each eviction you lose more rent. Appreciation is harder, but take a data driven approach. What was the appreciation over the last 10 years. What are the demographic trends. Are there more companies moving in or are companies moving out. The numbers don't pencil well for NYC. Look further away.
- Member since 2024 · 18 posts · 14 votes2y
Quote from @Peter W.:
You’ll get a lot of different answers here, I think most people in these forums shy away from tenant friendly states. I invest in Rochester ny (which is very tenant friendly) and the tenant friendly nature had given me issues yet, mostly it’s helped me reduce liabilities. Mostly what this means to me is you can’t fly by the seat of your pants and need to do things by the book and be very business like about it. You need to buy high quality properties, have stringent screening policies and take care of the property. Your margins also need to be better on the deal upfront because you need to have reserves to deal with a 6 month eviction process and you need to do a good job of documenting the evidence.
With that said I had a mentor who was smarter than me who said real estate in tier 1 cities is the best store of wealth. Despite them all being deep blue tenant friendly cities, they are also the engines of wealth creation in this country and therefore over a long period (20+ years) are likely to outperform everything else.
At the end of the day, you need to come up with an investment thesis you believe in. Maybe that thesis is wealth flows to the biggest and best cities like NYC therefore real estate will outperform else where in the country. One also does significantly better local so between those two things, dealing with the more difficult landlord laws are worth it. Another one might be I want to risk less money on the first deal even if investing out of state is more difficult and I need landlord friendly laws so my mistakes are less expensive.
With NYC, two house hacks are likely to get you enough for retirement. I could never be surrounded by some many people, but it’s househacking there is a great opportunity.
Go read the laws on tenant protections and come up with your own thesis. Best of luck.
Very insightful. Thank you. I will do just that. Thanks
- Member since 2024 · 18 posts · 14 votes2y
Quote from @Mohammed Rahman:
Hey @Jessenia Hartage - I'm a broker, investor, property manager, in NYC.
NYC may not be a landlord "friendly" city relative to other parts of the country - but don't be fooled by the absurd headlines you'll hear.
What I can say is that the headlines about the difficult tenants and rent restrictions cause issues or a small fraction of property owners - but you'll never hear about the 99% of cases where tenants are paying on time and respect their landlords' properties.
if I'm in your shoes, in terms of recommended criteria, I would opt for looking for strongly appreciating areas and not just monthly cashflow. Most landlords actually lose money for the first few years (if you're focused solely on profit AKA income - expenses) but the vision for most owners here is to bank on the strong appreciation of property prices in NYC.
Shoot me a DM or text me if you'd like to chat further, happy to give you my $0.02 as well.Thanks Mohammed, no focusing on the cash flow is good if you have money to carry you, but I dont have money to carry me. However, am very much interested in connecting with you and picking your brains. Thanks,
- Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes2y
Anytime @Jessenia Hartage - my contact info is in the signature, or feel free to DM me.
- 2yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @Jessenia Hartage:
Am totally new to investing, but every training session i read or listen to, says to start in your back yard. Am in queens, NY is not landlord friendly. Since this is new to me should I still consider NY like bklyn and queens or should I just stay away? If yes to invest in NY, what would be the recommendation criteria that I can implement to protect me to some degree.
Hey Jessenia, if you decide to stick with NY, focus on understanding local laws, tenant screening, and working with a good property management company to help mitigate risks. You might want to consider Columbus, Ohio, instead of Queens or Brooklyn, NY. Columbus offers strong job growth, a growing population, and is more landlord-friendly. You'll find many positive cash flow opportunities and a safer investment environment. As an investor and agent here in Columbus Ohio, if you have any questions or want to connect, definitely reach out!
Jimmy Lieu, Red 1 Realty4.9120 Reviews - Member since 2024 · 18 posts · 14 votes2y
Quote from @Jimmy Lieu:
Quote from @Jessenia Hartage:
Am totally new to investing, but every training session i read or listen to, says to start in your back yard. Am in queens, NY is not landlord friendly. Since this is new to me should I still consider NY like bklyn and queens or should I just stay away? If yes to invest in NY, what would be the recommendation criteria that I can implement to protect me to some degree.
Hey Jessenia, if you decide to stick with NY, focus on understanding local laws, tenant screening, and working with a good property management company to help mitigate risks. You might want to consider Columbus, Ohio, instead of Queens or Brooklyn, NY. Columbus offers strong job growth, a growing population, and is more landlord-friendly. You'll find many positive cash flow opportunities and a safer investment environment. As an investor and agent here in Columbus Ohio, if you have any questions or want to connect, definitely reach out!
Hi Jimmy! Thanks for your input.
- 2yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
Quote from @Jessenia Hartage:
Am totally new to investing, but every training session i read or listen to, says to start in your back yard. Am in queens, NY is not landlord friendly. Since this is new to me should I still consider NY like bklyn and queens or should I just stay away? If yes to invest in NY, what would be the recommendation criteria that I can implement to protect me to some degree.
Hi Jessenia,
I've been in the game for quite some time and have many battle scars to prove it lol
My best advice would be to always look at a worst case scenario and start from that.
By starting with a worst case scenario you will be able to quicker eliminate markets that aren't a good fit.
I don't know much about NY but personally, I wouldn't invest in any market that takes 6 months or even worse longer to evict.
Worst case scenario for example = Tenant doesn't pay rent and trashes the property.
I would want to be able to evict, fix and re-tenant as quickly as possible.
Time is money and I want to keep moving forward and not deal with financial and emotional drag.
There are many markets nation wide that are landlord friendly.
My business is based on Ohio and there is no mercy for non payment of rent.
Eviction usually takes 6 weeks max and although I never want to evict, being able to do so quickly minimizes risk of that investment.
Thanks - Member since 2024 · 18 posts · 14 votes2y
Hi Engelo!
Thank you for your advice. I have decided to shift market as I was not finding anything that cashflow. I decided to look into Georgia and South Carolina, now those two are landlord friendly state. So far, I see I get more for the money.
- Real Estate Agent · Chattanooga Tn. · Member since 2024 · 46 posts · 15 votes2y
Quote from @Jessenia Hartage:
Hi Engelo!
Thank you for your advice. I have decided to shift market as I was not finding anything that cashflow. I decided to look into Georgia and South Carolina, now those two are landlord friendly state. So far, I see I get more for the money.
Hi Jessenia, the Chattanooga Tn. market is great for both cash flow and appreciation. I'm licensed in both TN. and GA. I'd be happy to be your contact if you have any questions feel free to message me.
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