Determine area for rental investment

20 Replies

Hi BP!  My name is Chris and I'm starting to get more informed about where I should begin my RE journey.  I've decided I'd like to begin investing in rental properties so I can generate some passive income streams while I continue working my "regular" job.  Currently I live in NYC but would like to invest in a suburb of NY rather than the city itself due to the high cost of investment in the city.  The part I'm having trouble with is - where?

I was wondering if anyone on the forum could recommend some specific ways to figure out the best regions/towns to invest in rental properties.  Websites? Forums? Meet-ups?  State/County reports?  I would feel much more comfortable investing in something near my home rather than trying to manage it remotely, but it seems like there are an overwhelming number of places to research, so I need to narrow it down to a more specific region nearby. Although I feel like I have a decent handle on how to evaluate a property I'm finding it hard to figure out "the best" place to apply my evaluation.  Does anyone have any suggestions?  Thanks!

Hey Chris! I'm not a huge expert on NY, but I think you may be hard-pressed to find cash-flowing rental properties even in the burbs. At least from what I understand (maybe someone can suggest otherwise). The closest market I know of to you that can cash flow in Philly. Trenton used to be one but not sure the status there now. Philly and is still pretty hot though. I live in LA and have the same issues out here for cash flow so I've always invested out-of-state. If you have the right teams in place it can be great!

Cool, thanks @Ali Boone !  I spent a good amount of time yesterday trying to find an answer to this question and I'm sorta coming to the same conclusion you did - the opportunities nearby are few and far between.  Philly showed up in my research as a good location, as did Syracuse (which is pretty far from NYC - might as well just find a really good area far away instead).  I also found Rockland County showing up on a few web lists, so I'm doing a little more digging there to figure out how good that would be (Rockland is close to NYC so it would be ideal if that worked).  

Thanks again for the advice.

-Chris

Hi Chris!

I was born in the BX and raised btwn there and Yonkers. I've spent several years living in Syracuse  before I bought my first property there.

The rule of thumb I was taught was to loom within a 50 mile radius when you're starting out. Well, that kind of ddoesn't help much in the NY tri-state area. There are quite a few NYC investors that do own properties in Syracuse, but not all of them did their homework on the market and they either bought wrong, didn't keep up with the property, or hired a slummy property management team (which in my eyes falls under not keeping up with the property).

That said: Syracuse can be a really good market to start out with. Reach out to me if you'd like to know more. 

Excellent, thanks @Cerwin Haynes !  I'm going to do a first pass closer to home (50 miles does sound about right, so thanks for that) so Syracuse isn't going to be my first choice in areas.  But the NY metro area is so tough that I may need to expand my search up near you and if I do I'll definitely be in touch.

@Chris Albanese No problem!

PS I was once told a lil something about Bridgeport, CT a few years back. It's kind of outside the tri-state, and those CT property taxes are nothing to take lightly. But the prices are considerably lower vs the tri-state. 

Yup, I do know Bridgeport @Cerwin Haynes .  It's definitely a city in transition and is still a little rough, but as you said, prices are much lower than the surrounding area.  Thanks for the suggestion!

When you started investing in Syracuse, did you make that decision because it was where you lived and you inherently knew the area well, or did you do additional statistical analysis before buying?  I think that's the part I'm most struggling with - what resources do I use to figure out if Syracuse/Bridgeport/Philly/Rockland are good places to invest?

Hi Chris,

I'm a native of Syracuse and If you're interested in chatting about investing here or having me introduce you to some analysis, please feel free to reach out.

Best of luck with making your decision, Syracuse has indeed proven to be a success for many.

All of those methods you listed will help. I would search around via driving and Google maps. Find an area where the numbers work, and has a bright developmental future. 

Its all about the numbers.

I grew up in North Jersey and currently invest and live in Philly. One huge advantage this city has over the North Jersey burbs are the enormous difference in taxes. Even South Jersey has a lot more to offer, especially with a number of rail lines running into Philly. It is further than 50 miles, but its not a terrible drive.

Good luck!

To answer your question Chris, it was both. 

It's a long story, but I had three stints of living in syracuse. In btwn stints 2 and 3 is when I began my financial education and learning about investing - while i was living at home in Yonkers. So I was about to be in the same situation you're facing, except I remembered that houses in Syracuse are real cheap. So started doing my research in 2012, then I moved back to the 'cuse at the end of the year.  I roomed with my best friend for two and a half years and got my credit and money together. 

I'm sure you've heard this before, but your strategy depends on you and what your goals are. I knew I wanted to buy-and-hold because netting 500, 600, 700 a month is a big deal for me and a great building block for wealth. And wanted a property that was in good shape and could make money from day one. Admittedly, I had the advantage of making my first purchase as owner occupant via FHA (and then doing some house breaking to increase the property's income). I'm also a believer of OPM: that's one way to gain access to the resources you need.

Please feel free to inbox me if you wanna talk more. 

@Chris Albanese I am from NYC as well and wanted to invest in somewhere in Brooklyn or Queens but even the most remote areas in NYC the prices are just too high so I decided to go to Trenton, NJ. My friend recommended me to go there. It's the best place in terms of cash flow and I have been doing this for couple of years now. It's also a 53 mile drive from where I live so about an hour drive. There are properties that rent anywhere from $800 - $1500. The median sale prices are from $55,000 - $80,000 so you can get a Return On Investment of over 18% a year without even taking appreciation into picture. I know many people from NYC investing in Trenton now I feel like there are 2 - 3 years more left and then the place will be priced out. 

@Esmir O. -  thanks for the offer and the info about Syracuse! I want to first try and eliminate some local areas before I move to someplace as far away as Syracuse for my first investment, but if I do end up searching up there I'll definitely reach out

@Rosston Smith - I do want to drive the neighborhoods before investing, which is why I'm trying to find an area that's somewhat local to NYC.  Totally agree that it's all about the numbers.

@James Brand  - Another vote for Philly!  Thanks for the suggestion - I don't think South Jersey/Philly is too far if the opportunities are good.  I'm going to do some more focused research there.

@Cerwin Haynes - thanks for the background.  This definitely supports my argument for being near the area where I'm going to invest, and I do think that the goal of wealth building through passive investment/house hacking is the most logical.  Again, I feel like being somewhat local is key here.

@Naum Raz - yeah, I'm in the same boat. Even the outer boroughs seem too expensive for me to invest in, at least not without difficulty. I hadn't considered Trenton, but as James suggested, maybe South Jersey/Philly is the spot that's affordable in the tri-state area. I'll take an 18% ROI any day! Thank you again for the suggestion here.

@Cerwin Haynes @Chris Albanese   I live in Bridgeport CT and about to close my first multi unit in a couple of weeks.  The taxes are kinda high but its an up and coming city, plus the commute to NY is only 30 mins away.  Its has it good and bad neighborhoods so you will need to do your research.

Something to think about, when the pro's are doing this they often do not even talk to the tenants. They have property managers and teams in place to do everything. My first property was on the east coast, and I live on the west coast. I did have a good group that I found through a friend. they make my life easy, and I collect a good check every month. I don't feel the need to be close to your house as long as you have the right people on place

@Loubert Antoine - I do know Bridgeport fairly well because of the baseball team that's there and Two Roads Brewing which is nearby.  It certainly seems like it's up and coming, I'm just not sure how much longer it needs before it really turns.  But it's definitely reassuring that you're seeing value in the area.  I'm going to take another look at that area this weekend.  Any suggestions are which areas of Bridgeport are best?

@Merrill Delimont - I totally hear you.  I guess in that case you have to have lots of trust in the property manager or whoever has boots on the ground.  I don't even want to see the property as long as it's good, but I am a little afraid of jumping into something without doing my own personal due diligence.  What type of group did your friend turn you on to?

My friend has been investing for a couple or years and has 4 homes. He is using a different strategy than me, but I was able to tap into his contacts, and used them as a resource. 

In this game, it is a matter if having the right people working for you. In my industry we call it multiplying your self. I can only do so much, but if I have 4 people doing the menial tasks for me, I can focus on building a strategy and making money

Lived in Danbury, CT in the early '70s and commuted to Whiteplains.  I would think anything along the Hudson (where there's train service to the City) would be a viable start.

@Chris Albanese I would recommend north and south end of Bridgeport if you were looking for a place to invest. 

@Merrill Delimont -  thanks for the tips.  I'm working right now to try and make connections in the areas I'd like to invest in.  I totally agree with you that you have to surround yourself with people who know more!

@Jeff B. - I agree with you.  The Hudson line towns are a good call but the tough part is the holding costs due to taxes, which is why I'm shying away from that area.  But the train line along the CT coast is attractive to me since it's commutable to the city and the taxes are lower.

@Loubert Antoine - thank you for the suggestion!  I'm going to take a look there today.

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