I am located in NYC and am looking to purchase my first property for long term rental investment here. I am still new to this and there is a lot to learn! Would appreciate any tips, insights, or areas of suggested research. I am looking at multifamilies in NYC versus single family homes in Jacksonville, FL (yes there is a significant price difference), and I cannot decide between the two.
Factors I am considering..
NYC:
- NYC will probably appreciate at a higher rate and shorter amount of time compared to Jacksonville homes.
- I will be able to find tenants sooner in NYC compared to Jacksonville. Depending on the area in Jacksonville, I see many listings that are 60+ days old.
- Lower down because I can do FHA loan
- Probably don't need a property manager because I live here
- With the potential rent income vs monthly mortgage price, I am probably breaking even if lucky
- Pro tenant
Jacksonville:
- Total cost of home is lower, even though I will have a higher down payment because I am buying it as an investment property
- With the potential rent income vs monthly mortgage price, I might make a couple hundred a month... which can eventually be used as a down for another property?
- Need to consider cost of property manager
- Home insurance I heard is higher in FL
- More landlord friendly I heard
Any and all thoughts, critiques, suggestions, or whatever factors I haven't considered would be much appreciated. I've never bought a home before and am new to this!
I am located in NYC and am looking to purchase my first property for long term rental investment here. I am still new to this and there is a lot to learn! Would appreciate any tips, insights, or areas of suggested research. I am looking at multifamilies in NYC versus single family homes in Jacksonville, FL (yes there is a significant price difference), and I cannot decide between the two.
Factors I am considering..
NYC:
- NYC will probably appreciate at a higher rate and shorter amount of time compared to Jacksonville homes.
- I will be able to find tenants sooner in NYC compared to Jacksonville. Depending on the area in Jacksonville, I see many listings that are 60+ days old.
- Lower down because I can do FHA loan
- With the potential rent income vs monthly mortgage price, I am probably breaking even if lucky
- Pro tenant
Jacksonville:
- Total cost of home is lower, even though I will have a higher down payment because I am buying it as an investment property
- With the potential rent income vs monthly mortgage price, I might make a couple hundred a month... which can eventually be used as a down for another property?
- Home insurance I heard is higher in FL
- More landlord friendly I heard
Any and all thoughts, critiques, suggestions, or whatever factors I haven't considered would be much appreciated. I've never bought a home before and am new to this!
Both are terrible choices NYC, super expensive and high taxes, and TERRIBLE landlord laws. Also, NYC is dead. 120 hotels house illegals! Buildings are empty. Do you have 1 mill or more to make maybe 3% net? Fl is crashing and this is only the beginning. I LIVE in FL and am from NY. I do all my biz out of state.
I am located in NYC and am looking to purchase my first property for long term rental investment here. I am still new to this and there is a lot to learn! Would appreciate any tips, insights, or areas of suggested research. I am looking at multifamilies in NYC versus single family homes in Jacksonville, FL (yes there is a significant price difference), and I cannot decide between the two.
Factors I am considering..
NYC:
- NYC will probably appreciate at a higher rate and shorter amount of time compared to Jacksonville homes.
- I will be able to find tenants sooner in NYC compared to Jacksonville. Depending on the area in Jacksonville, I see many listings that are 60+ days old.
- Lower down because I can do FHA loan
- With the potential rent income vs monthly mortgage price, I am probably breaking even if lucky
- Pro tenant
Jacksonville:
- Total cost of home is lower, even though I will have a higher down payment because I am buying it as an investment property
- With the potential rent income vs monthly mortgage price, I might make a couple hundred a month... which can eventually be used as a down for another property?
- Home insurance I heard is higher in FL
- More landlord friendly I heard
Any and all thoughts, critiques, suggestions, or whatever factors I haven't considered would be much appreciated. I've never bought a home before and am new to this!
Both are terrible choices NYC, super expensive and high taxes, and TERRIBLE landlord laws. Also, NYC is dead. 120 hotels house illegals! Buildings are empty. Do you have 1 mill or more to make maybe 3% net? Fl is crashing and this is only the beginning. I LIVE in FL and am from NY. I do all my biz out of state.
You are too tied to those two decisions, neither which are good in my opinion. I think Jacksonville is a good market, but if I had my choice of anywhere, I would steer clear of Florida right now. If you had to pick one state with the highest change of exploding insurance premiums over what they are now, other than maybe CA, it's Florida. NYC is not even a consideration in any sense. You live in NYC and are close to so many areas where you can make a more sound multifamily investment.
Most of my holdings in my life have been in NY and the landlord-tenant laws never were much of an issue because of how I chose tenants, but it's certainly a consideration. You could go mid-state to Woodstock or Saugerties for rental options, the Catskills. You could go into NJ (although the cost to play is high in Northern, but the rents can be very nice), or you could bypass and head into PA near Delaware Water Gap and get low taxes and good renter options.
I am located in NYC and am looking to purchase my first property for long term rental investment here. I am still new to this and there is a lot to learn! Would appreciate any tips, insights, or areas of suggested research. I am looking at multifamilies in NYC versus single family homes in Jacksonville, FL (yes there is a significant price difference), and I cannot decide between the two.
Factors I am considering..
NYC:
- NYC will probably appreciate at a higher rate and shorter amount of time compared to Jacksonville homes.
- I will be able to find tenants sooner in NYC compared to Jacksonville. Depending on the area in Jacksonville, I see many listings that are 60+ days old.
- Lower down because I can do FHA loan
- With the potential rent income vs monthly mortgage price, I am probably breaking even if lucky
- Pro tenant
Jacksonville:
- Total cost of home is lower, even though I will have a higher down payment because I am buying it as an investment property
- With the potential rent income vs monthly mortgage price, I might make a couple hundred a month... which can eventually be used as a down for another property?
- Home insurance I heard is higher in FL
- More landlord friendly I heard
Any and all thoughts, critiques, suggestions, or whatever factors I haven't considered would be much appreciated. I've never bought a home before and am new to this!
Both are terrible choices NYC, super expensive and high taxes, and TERRIBLE landlord laws. Also, NYC is dead. 120 hotels house illegals! Buildings are empty. Do you have 1 mill or more to make maybe 3% net? Fl is crashing and this is only the beginning. I LIVE in FL and am from NY. I do all my biz out of state.
Thanks for your input Bob! Which cities/areas do you suggest? Also, what are your thoughts on Indianapolis or Oklahoma City?
You are too tied to those two decisions, neither which are good in my opinion. I think Jacksonville is a good market, but if I had my choice of anywhere, I would steer clear of Florida right now. If you had to pick one state with the highest change of exploding insurance premiums over what they are now, other than maybe CA, it's Florida. NYC is not even a consideration in any sense. You live in NYC and are close to so many areas where you can make a more sound multifamily investment.
Most of my holdings in my life have been in NY and the landlord-tenant laws never were much of an issue because of how I chose tenants, but it's certainly a consideration. You could go mid-state to Woodstock or Saugerties for rental options, the Catskills. You could go into NJ (although the cost to play is high in Northern, but the rents can be very nice), or you could bypass and head into PA near Delaware Water Gap and get low taxes and good renter options.
I appreciate the suggestions! Will research these places! What are your thoughts on Indianapolis or Oklahoma City?
I am located in NYC and am looking to purchase my first property for long term rental investment here. I am still new to this and there is a lot to learn! Would appreciate any tips, insights, or areas of suggested research. I am looking at multifamilies in NYC versus single family homes in Jacksonville, FL (yes there is a significant price difference), and I cannot decide between the two.
Factors I am considering..
NYC:
- NYC will probably appreciate at a higher rate and shorter amount of time compared to Jacksonville homes.
- I will be able to find tenants sooner in NYC compared to Jacksonville. Depending on the area in Jacksonville, I see many listings that are 60+ days old.
- Lower down because I can do FHA loan
- With the potential rent income vs monthly mortgage price, I am probably breaking even if lucky
- Pro tenant
Jacksonville:
- Total cost of home is lower, even though I will have a higher down payment because I am buying it as an investment property
- With the potential rent income vs monthly mortgage price, I might make a couple hundred a month... which can eventually be used as a down for another property?
- Home insurance I heard is higher in FL
- More landlord friendly I heard
Any and all thoughts, critiques, suggestions, or whatever factors I haven't considered would be much appreciated. I've never bought a home before and am new to this!
Both are terrible choices NYC, super expensive and high taxes, and TERRIBLE landlord laws. Also, NYC is dead. 120 hotels house illegals! Buildings are empty. Do you have 1 mill or more to make maybe 3% net? Fl is crashing and this is only the beginning. I LIVE in FL and am from NY. I do all my biz out of state.
Thanks for your input Bob! Which cities/areas do you suggest? Also, what are your thoughts on Indianapolis or Oklahoma City?
Oklahoma City, OK
Indy you missed by 6 7 years, OC I cannot comment on as I do not know that market. I have been working in the Cleveland markets for 10 + years as have 100s from around the world. We are closing on more properties next week, SF all in 90k, rents will be 1600 1800, value 135 140k, Duplex all in 90k, rents will be 18000 2k,
You are too tied to those two decisions, neither which are good in my opinion. I think Jacksonville is a good market, but if I had my choice of anywhere, I would steer clear of Florida right now. If you had to pick one state with the highest change of exploding insurance premiums over what they are now, other than maybe CA, it's Florida. NYC is not even a consideration in any sense. You live in NYC and are close to so many areas where you can make a more sound multifamily investment.
Most of my holdings in my life have been in NY and the landlord-tenant laws never were much of an issue because of how I chose tenants, but it's certainly a consideration. You could go mid-state to Woodstock or Saugerties for rental options, the Catskills. You could go into NJ (although the cost to play is high in Northern, but the rents can be very nice), or you could bypass and head into PA near Delaware Water Gap and get low taxes and good renter options.
I appreciate the suggestions! Will research these places! What are your thoughts on Indianapolis or Oklahoma City?
I like them both, in general, but the best way to find a town to invest in outside of where you live if it's not affordable and if you don't want to be withing driving distance easily (recommended) is to make two lists:
1. every town you have ever lived in or visited for more than a month
2. every town your closest friends and family live (the ones you like)
Then you take those two lists and see where they overlap with the data or lists you are using. There is usually a close overlap that gives you a competitive advantage of knowledge or boots on the ground instead of nothing.
I invest in the Indianapolis metro area but I used to live there so I didn't just pick a random city. I rented out my primary home instead of selling it. It's in a Class A suburb (great schools, low crime) and has appreciated but I feel that property taxes are a big high relative to home value. I bought it in 2013 and it's doubled in value from 2013 to 2021. I bought Class C in Indy - I won't be doing that again.
I don't know anything about Oklahoma City except that a few California investors I know are buying there. They're experienced investors and some of them buy sight unseen in multiple states - they have a high risk tolerance.
I invest in the Indianapolis metro area but I used to live there so I didn't just pick a random city. I rented out my primary home instead of selling it. It's in a Class A suburb (great schools, low crime) and has appreciated but I feel that property taxes are a big high relative to home value. I bought it in 2013 and it's doubled in value from 2013 to 2021. I bought Class C in Indy - I won't be doing that again.
I don't know anything about Oklahoma City except that a few California investors I know are buying there. They're experienced investors and some of them buy sight unseen in multiple states - they have a high risk tolerance.
Can you buy within a 2 to 3 hour drive of NYC?
Thanks Becca. In your experience, what were the issues with class C?
I am located in NYC and am looking to purchase my first property for long term rental investment here. I am still new to this and there is a lot to learn! Would appreciate any tips, insights, or areas of suggested research. I am looking at multifamilies in NYC versus single family homes in Jacksonville, FL (yes there is a significant price difference), and I cannot decide between the two.
Factors I am considering..
NYC:
- NYC will probably appreciate at a higher rate and shorter amount of time compared to Jacksonville homes.
- I will be able to find tenants sooner in NYC compared to Jacksonville. Depending on the area in Jacksonville, I see many listings that are 60+ days old.
- Lower down because I can do FHA loan
- Probably don't need a property manager because I live here
- With the potential rent income vs monthly mortgage price, I am probably breaking even if lucky
- Pro tenant
Jacksonville:
- Total cost of home is lower, even though I will have a higher down payment because I am buying it as an investment property
- With the potential rent income vs monthly mortgage price, I might make a couple hundred a month... which can eventually be used as a down for another property?
- Need to consider cost of property manager
- Home insurance I heard is higher in FL
- More landlord friendly I heard
Any and all thoughts, critiques, suggestions, or whatever factors I haven't considered would be much appreciated. I've never bought a home before and am new to this!
I would avoid both market that you just talked about. Florida is tough because of the different hurricane insurance and flood insurance. NY is tough because of the landlord-friendly laws.
Why not look else where that is close to you? I know Buffalo, NY has some great properties at a great price. A lot of people invest there. I know a lot of investors also like to invest in the midwest in Columbus for appreciation and cashflow.
I personally invest in Columbus and buy a property or two every month and have sold over 66 properties this year alone to out of state investors. So, I can definitely tell you this market is good. The reason people are buying is because Intel, Amazon, and Google are all investing causing property prices to skyrocket.
Hi @Priscilla Chin staying local or out of state. Hands down the most powerful advantage you have is house hacking leveraging owner occupied loans. 400k property in FL will cost you $100K using 25% down. $800k property will cost you $40K down payment. Simply ask yourself the question how long will it take you to obtain 25% or 5% down. Then the next questions becomes how do you get to property #2 which once again is easy with low money down.
I've house hacked many times over never putting more than 10% down on a property. $100k essentially has gotten me multi properties instead of 1 property. On top of all this the interest rates you get will be much lower using an owner occupied loan.
Thanks Becca. In your experience, what were the issues with class C?
The short version: looks like it will cash flow on paper but in reality with repairs and potential tenant issues it won't, very affordable purchase prices (Indianapolis range is $120,000 to low $200,000 depending on the Class C area or distressed properties under $100,000, many times older homes with sewer line and foundation issues, stolen AC units (get a cage for the unit),
Class C is volatile. If you look through some of the posts on BP, you'll read many stories, specifically of investors from California and NYC buying cheap properties, frequently in the Midwest and South who have lost money. I asked a property manager in Indy how owners of Class C make money - he saidif they buy in volume, the good properties offset the bad ones. The question is will these properties appreciate enough to offset all the repairs and issues in the future? My opinion is that it's better to own 4 appreciating homes in good areas instead of 20 cheap properties.
You can read some of my previous posts and I go into detail about my experience. A quick test is if you drove around the neighborhood, would you live there? Would you feel safe walking around? Are the schools good? If you're going to buy OOS, look at Class A or B and get to know those areas on a detailed level (fly or drive there multiple times).
@Priscilla Chin if you invest in NY, recommend focusing only on Class B rentals and stay away from C & D. The tenant-friendly laws leave a landlord with too much risk on tenants with FICO scores under 660.
Some other copy & paste advice:
Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.
If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.
If you buy/renovate a Class A property in Class D area, what quality of tenant will you get?
Similarly, if you put all Class D tenants in a Class A 4-plex, what do you think will happen?
So, when investing in areas they don’t really know, investors should research the different property Class submarkets.
Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:
Class A Properties: Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation. Vacancy Est: Historically 10%, 5% the more recent norm. Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.
Class B Properties: Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation. Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support. Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 years
Class CProperties: Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts. Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages. Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.
Class DProperties: Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages. Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.
Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
The City of Detroit has 183 Neighborhoods we’ve analyzed.
PM us if you’d like to discuss this logical approach in greater detail!
Hey @Priscilla Chin, its okay to be indecisive with tough options like these. Considering you are aware of the significant price difference, I'd say consider the Landlord-Tenant Laws in NYC. Tenants wont be hard to find like you mentioned but mindfulness on the protection laws in the process will be important. Keep an eye on the trends in FL at this moment as well, especially in hurricane season, with home insurance. Hope this helps and feel free to reach out if you need more insight on this or anything else.
@Priscilla Chin I am from Long Island, lived in Jacksonville for 3 years and now live in Orlando. We have bought 150+ units in Jacksonville and manage for other owners in Orlando and Jacksonville.
I wouldn't do NYC because of landlord tenant laws, but I've never invested or bought there so I am not your best resource there. I personally never would, but I would talk to people that have that can give you an idea of what it's actually like instead of getting opinions from everyone who never have and say it's the worst.
Jacksonville, FL has been great from 2010-2022, but there has been a huge surge in building residential from 2020-2023, which severely impacted the supply and demand balance and rents have flattened or dropped from 2022-today. On top of that insurance has gone up 1.5-3x since 2022 and I'm not sure how it's going to go after these most recent storms. Right now finding deals that cash flow well is definitely difficult and we haven't purchased a property in 2.5 years despite our best efforts. However, since interest rates jumped up in 2022, new construction starts have dropped a ton in the area, so within the next 1-3 years the amount of new supply coming into the market will drop a ton, and we should see demand outpace supply again and start seeing organic rent growth come back. 2015-2022 you would see 3-10% organic rent growth per year depending on the property and submarket.
I think there is still opportunity in Jacksonville, but you have to be very particular about what you go after, it's definitely not easy to find good properties even for seasoned pros right now.
I am located in NYC and am looking to purchase my first property for long term rental investment here. I am still new to this and there is a lot to learn! Would appreciate any tips, insights, or areas of suggested research. I am looking at multifamilies in NYC versus single family homes in Jacksonville, FL (yes there is a significant price difference), and I cannot decide between the two.
Factors I am considering..
NYC:
- NYC will probably appreciate at a higher rate and shorter amount of time compared to Jacksonville homes.
- I will be able to find tenants sooner in NYC compared to Jacksonville. Depending on the area in Jacksonville, I see many listings that are 60+ days old.
- Lower down because I can do FHA loan
- Probably don't need a property manager because I live here
- With the potential rent income vs monthly mortgage price, I am probably breaking even if lucky
- Pro tenant
Jacksonville:
- Total cost of home is lower, even though I will have a higher down payment because I am buying it as an investment property
- With the potential rent income vs monthly mortgage price, I might make a couple hundred a month... which can eventually be used as a down for another property?
- Need to consider cost of property manager
- Home insurance I heard is higher in FL
- More landlord friendly I heard
Any and all thoughts, critiques, suggestions, or whatever factors I haven't considered would be much appreciated. I've never bought a home before and am new to this!
@Priscilla Chin, while I know NYC has its issues, I am curious how many that talk about how terrible it is actually have direct experience to back that up.
I will let @Jay Hinrichs break down his experiences with the dead, liberal, HCOL market rentals versus his OOS, LCOL, landlord friendly rentals.
Admittedly, I am a big proponent of local investing. It gives you much more control and oversight. You know the market much better than you do any OOS investment. You can trust but verify a lot easier. And practically, you can keep more of your money. You aren't flying to the market 2x per year. You, potentially, aren't paying the 10% management fee, and 10-20% markup on all maintenance requests. You can self manage (which I understand is work), but it also forces you to monitor your investments more, and makes you a better investor, even if you were to outsource (since you now know what goes into it).
I am located in NYC and am looking to purchase my first property for long term rental investment here. I am still new to this and there is a lot to learn! Would appreciate any tips, insights, or areas of suggested research. I am looking at multifamilies in NYC versus single family homes in Jacksonville, FL (yes there is a significant price difference), and I cannot decide between the two.
Factors I am considering..
NYC:
- NYC will probably appreciate at a higher rate and shorter amount of time compared to Jacksonville homes.
- I will be able to find tenants sooner in NYC compared to Jacksonville. Depending on the area in Jacksonville, I see many listings that are 60+ days old.
- Lower down because I can do FHA loan
- Probably don't need a property manager because I live here
- With the potential rent income vs monthly mortgage price, I am probably breaking even if lucky
- Pro tenant
Jacksonville:
- Total cost of home is lower, even though I will have a higher down payment because I am buying it as an investment property
- With the potential rent income vs monthly mortgage price, I might make a couple hundred a month... which can eventually be used as a down for another property?
- Need to consider cost of property manager
- Home insurance I heard is higher in FL
- More landlord friendly I heard
Any and all thoughts, critiques, suggestions, or whatever factors I haven't considered would be much appreciated. I've never bought a home before and am new to this!
