Anyone Rent In an Expensive Area & Buy Cheap Elsewhere?
Most Popular Reply
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9yOriginally posted by @Mary Ann:
Ok this makes me feel better. In expensive markets like NYC, San Fran, Chicago, this sounds more common than I thought.
Just because it is common, doesn't necessarily make it a good idea ...
Run a little simulation for yourself ... look at what a property would sell for and rent for 20 years ago in your expensive area and cheap elsewhere area, then project that forward to what they sell for and rent for today ... which one would've performed better for you (estimating cashflow + appreciation, calculating IRR)? How long and consistent has this trend held? ... what if you go back 30 years? 40 years? I actually don't know the answer since I'm not familiar with the markets you are referring to, but think the exercise will be helpful either way.
That is if you bought and sold at retail market ... now riddle me this, which of those markets can you more easily find a below market property? Which of those markets can you more easily force appreciation? Which of those markets can you self manage? Which of those markets are you more familiar with? In which of those markets do you have more control over your investments? That will tilt the analysis above and should also be considered.
34 Replies
- Investor · Chicago, IL · Member since 2010 · 504 posts · 191 votes9y
I do that. I live in the city of Chicago northside on the lake and we purchase property in the south suburbs where it is much cheaper to rent. I have investors who live in expense area and partner with me for rental income. Just gotta find the right deal, manage the rehab well and make sure you manage the tenant and the asset or the property manager well. Definitely doable.
- Investor · ARLINGTON HEIGHTS, IL · Member since 2016 · 48 posts · 8 votes9y
ADDISON, IL I HAVE ONE
- Rental Property Investor · Chicago, IL · Member since 2014 · 132 posts · 74 votes9y
@Mary Ann I do exactly that as well.... I own a couple rentals in Northeast Ohio where I'm originally from and I rent on the northside of Chicago. Works great!
- Investor · Los Angeles, CA · Member since 2015 · 8 posts · 4 votes9yI'm doing that as well. I own a couple of MFR's in Los Angeles while renting a more reasonable place just outside of Los Angeles. I'm actually planning to buy another MFR before I buy a place of my own!
- Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes9y
Originally posted by @Ross French:
I'm doing that as well. I own a couple of MFR's in Los Angeles while renting a more reasonable place just outside of Los Angeles.
I'm actually planning to buy another MFR before I buy a place of my own!Wouldn't this be the OPPOSITE of what she is asking about?: Renting in a cheap area & buy expensive elsewhere? This strategy, though the opposite I believe, makes a whole lot more sense to me than the one the OP is proposing BTW. I own in an expensive area & buy in the same expensive area, done in a similar fashion as you Ross except owned in the cheaper outskirts area, have done well doing that, and have done not nearly as well buying cheap elsewhere, so I may be biased.
Also, how far away "elsewhere" is makes a huge difference ... if it is 20 minutes up the road that's one thing, if you have to hop on a plane to get there that's completely another ... will let you guess which one I'd advise against :)
- Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes9y
Originally posted by @Mary Ann:
Ok this makes me feel better. In expensive markets like NYC, San Fran, Chicago, this sounds more common than I thought.
Just because it is common, doesn't necessarily make it a good idea ...
Run a little simulation for yourself ... look at what a property would sell for and rent for 20 years ago in your expensive area and cheap elsewhere area, then project that forward to what they sell for and rent for today ... which one would've performed better for you (estimating cashflow + appreciation, calculating IRR)? How long and consistent has this trend held? ... what if you go back 30 years? 40 years? I actually don't know the answer since I'm not familiar with the markets you are referring to, but think the exercise will be helpful either way.
That is if you bought and sold at retail market ... now riddle me this, which of those markets can you more easily find a below market property? Which of those markets can you more easily force appreciation? Which of those markets can you self manage? Which of those markets are you more familiar with? In which of those markets do you have more control over your investments? That will tilt the analysis above and should also be considered.
- 9yMary AnnInvestor · Polk County, FL · Member since 2014 · 144 posts · 36 votesOP
I'm definitely talking about renting in a high place like NYC, and buying real estate to rent to others in cheaper places like Florida or even upstate NYC. The homes in NYC are lots of money and leverage you to the almighty - especially if you are strapped for cash.
Good questions from all tho.
- 9yMary AnnInvestor · Polk County, FL · Member since 2014 · 144 posts · 36 votesOP
Originally posted by @Ross French:
I'm doing that as well. I own a couple of MFR's in Los Angeles while renting a more reasonable place just outside of Los Angeles.
I'm actually planning to buy another MFR before I buy a place of my own!How do you save when you pay rent? Does it make you have more room to buy now that you know you have XYZ cash every month for rent? Or do you have to earn more income? I just always keep hearing that if someone is renting buying is even harder. Thoughts?
- Investor / Broker · Brooklyn, NY · Member since 2016 · 665 posts · 1k+ votes9y
I have been investing in NYC, Brooklyn specifically, for 2 Decades.
In my experience, ALL of my friends and family that did not buy their homes or if they didn't buy their homes, didn't invested in NYC where they actually would have loved to live, have regretted that decision.
By not buying where they wanted to live in the long term, the ones who did not buy anything, whether or not it was for living or just investing, are forever priced out.
When I was teaching, I always encouraged my students to make sure they buy their first investment (or home) in the place they will want to live in the future for the long term. If they do not, they take the risk of never being able to live in the place they actually want when they get much older.
Another options to not buying is to get a Rent Stabilized Apt. However, there is very little incentives for the Landlord to take care of the building and usually leave it in need of repair, pest control, etc.
Certain cities like NYC and SF is a must if this is where you want to eventually live for the long term.
Rents spike and continue getting higher.
Every year for the last 2 decades I keep hearing all the excuses.... it's too expensive to buy in NYC.
2 decades ago, when I bought my first Investment, a 2 Family in Brooklyn, was $350k.
Today, I can sell that investment for $1.9 Million.
BUT, instead of being happy that I have made so much money for that one single property.... what makes me more happier is the fact that I live in that Investment now (I moved back in to this Investment Property this year).
All of my relatives that lived in Brooklyn but moved out, either never bought or had bought but sold a long time ago..... cannot any longer afford to buy in Brooklyn anymore.
Even renting has become incredibly expensive.
As another example of this phenomenon, I had a friend, Steve, who lived in Manhattan.
We both invested similarly in to two different properties in 2004.
I invested in a 4 Unit property with a Purchase Price of $800k in Clinton Hill, Brooklyn. He invested in 3 rental townhouses, a 3 are 3 Units each, for a total of 9 Units and a total Purchase Price around $500k, in Bristol, CT.
Fast forward to today.
Steve's 3 buildings are still worth $500k. His cashflow has remained the same, approx. $1k per month.
My Brooklyn 4 Unit building, however, is vastly different. It started out at a slight negative cashflow in 2004. But today, it's cashflowing over $3k per month. The value skyrocketed to $2.2 Million.
Steve, unfortunately, could not afford Manhattan anymore. He moved to another State instead.
Had Steve purchased his home here in NYC instead of Bristol, CT........ Steve would have had the ability to settle down his roots here instead of being priced out of the NYC location.
I know Investors tend to think of only in terms of Today and find it very unpredictable to think of tomorrow, but please remember that even Squirrels think about tomorrow as they put away their Nuts for the Winter. If they didn't do that, they would starve when winter arrives.
The Future is VERY important.
Another analogy I like to use is to Drive your Investments like an Investment Vehicle.
When you look at past Data such as previous Sales, you are looking at the Rear View Mirror of your Investment Vehicle.
When you look at current data, such as the current Rents and Expenses to calculate your Current cashflows or your Cash on Cash Return, you are looking at the side view... watching the action go by as it is occurring.
When you look through the Windshield of your Investment Vehicle, you are looking at the road ahead.... seeing the path that it is taking you... and all the obstacles in the way.
You are less likely to CRASH your investment vehicle by focusing on looking through your Windshield than remaining fixated on the Rear View Mirror or the Side Windows.
If the bridge is out and you fail to see the bright red warning signs..... if your eyes are not looking straight through that windshield........ you will Drive your Investment Vehicle into the abyss down below.
So please..... Drive your Investment Vehicle like you drive your Car..... by MOSTLY focusing on looking through the windshield and occasionally checking your side views and rear view mirrors.
One more thing to consider. There is currently a Republican Congress and a Republican President. I have been reading that they intend on getting rid of using Debt Expenses to buy Investments. It seems to me that they are going to stop Real Estate Investors like all of us here on BP from deducting our Mortgages!!! Imagine how hard ALL Real Estate would fall. If anyone has any knowledge of this, please let us know. I'm constantly surprised that BPer's don't seem to be aware of the Republican Tax Reform proposals.
Investor Llew
- 9yMary AnnInvestor · Polk County, FL · Member since 2014 · 144 posts · 36 votesOP
@Llewelyn A. Thanks for your in depth response! It made my decision clearer. I do not wish to live in NYC long-term or indefinitely. I was born here, came back from FL for family reasons, and thought I'd take advantage of the market here. But I may end up buying/investing in Florida where I plan to settle down and get comfortable on the beach mostly.
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@? @SS backwards in my mind.. the single best tax play in the US is the 500k tax free if you sell your personal resi.. not only that most areas that are very desirable for owner occ usually appreciate like a banshee over a 20 year hold..
buying low end rentals is simply a cash flow play no real appreciation. unless you can really scale rentals the owner occ in the long run is far better
- Real Estate Investor · Arlington, VA · Member since 2012 · 300 posts · 277 votes9y
yes, people that I work with do (They live in NY, DC, CA etc). You dont just throw a dart on the board, though, we leverage a number of factors specific to you, so that you can find an out of market property you are comfortable with (where you're located, how far you're willing to travel, and finding out what assets you can leverage on the ground). This would be a great question to post in the mastermind group for low income invstors (1200 active members - see my profile for details). Good luck to you!!!
- Rental Property Investor · Dallas, TX · Member since 2015 · 283 posts · 179 votes9yAnother opinion. While appreciation in pricey markets is nice, it's also gambling. You can not look into the front window and see where an investment will go. If we could, we all would buy where it will appreciate the most and no one would have been blown up in 08. Instead we are driving on a foggy road and can only see 1 ft in front of us as we go. So buying for cash flow is prudent. Buying for appreciation (of rent or value) is more risky. I think based on your age, and net worth goals you need to weigh the two. Lastly, if you invest appropriately, you will be able to buy in whatever market you desire. But I think he poster above made some great points about buying where you want to live. Live where you want and invest where it makes the most sense. Just realize you will need to be familiar with that area and travel there often. So pick a place you like :) Best of luck.
- Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes9y
Originally posted by @Logan Turner:
Another opinion. While appreciation in pricey markets is nice, it's also gambling. You can not look into the front window and see where an investment will go. If we could, we all would buy where it will appreciate the most and no one would have been blown up in 08. Instead we are driving on a foggy road and can only see 1 ft in front of us as we go. So buying for cash flow is prudent. Buying for appreciation (of rent or value) is more risky. I think based on your age, and net worth goals you need to weigh the two.
Lastly, if you invest appropriately, you will be able to buy in whatever market you desire. But I think he poster above made some great points about buying where you want to live. Live where you want and invest where it makes the most sense. Just realize you will need to be familiar with that area and travel there often. So pick a place you like :)
Best of luck.
Is driving a cheap jalopy down a foggy road via remote control 1000 miles away prudent? Is buying a property under retail market and forcing appreciation gambling? Is assuming the 50 year historical average appreciation rate (no more, no less) over a multi decade hold period gambling? Is buying a rental property in a neighborhood with declining population and job growth but good cash flow gambling? Those who bought in NYC in 08 and held have done quite nicely I'd bet, those that couldn't hold blew up because they stretched too far financially. To each their own, but things are rarely so black and white.
- Rental Property Investor · Dallas, TX · Member since 2015 · 283 posts · 179 votes9yDavid Faulkner great, thought provoking questions. I'm west coast and I've ran some numbers and you're right people that held on since 08 have seen a rise in their value. Rents have only increased slightly, if any, so who knows the years of negative cash flow or the opportunity cost of having their money tied up. I think you make a lot of great points. Definitely comes down to running the numbers, with lots of assumptions. But I just think you invest in a growing market, that cash flows. You can't cash flow in these expensive areas. San Diego, Bay Area, Sacramento etc. I could buy 5 properties that cash flow 200 each for the same price as buying one here that is negative 1000 a month. Now, who knows 20-30 years from now which will perform better, but I believe in velocity of money and playing monopoly. After 5-7 years go from those houses to multifamily. However, a desirable place to live today will continue to be in the future. So long term 10-40 years, it's hard to argue with the safe play of buying a property for 400-900k and watching it grow 4 times in value in 30 years. Cash flow won't match that. I guess it depends on net worth goals. I plan on being a multimillionaire before 40. But I'm sure i could be at 50-60 as well with slow plays. Cheers and thanks for the thought provoking questions
- Real Estate Agent · Princeton, NJ · Member since 2016 · 1k+ posts · 1k+ votes9yI'm assuming you're not willing to full-blown house hack (meaning renting bedrooms in your own house, not just renting out half of a duplex). I bought a 5BR 3 BA foreclosed house much too big for me in Northern Virginia and rented out spare bedrooms paying the whole mortgage, utilities and repairs. This house sold for 475k in 2006. I paid $255k in 2009 + 30k in renos. It's worth about $400k today. There are many cost advantages of duplex/tri/quad/room renting - home ownership: lower interest rates on $$, higher leverage (80-97%), lower home insurance, do-it-yourself maintenance, limited property management costs, 250-500k homeowner capital gains deduction from appreciation, fewer landlord tenant laws for home owners. Expecting appreciation is tricky and risky. On average, home values increase by inflation when maintained (capex of 1-3% of value annually). I'm currently shopping bank owned foreclosures as a buying opportunity. In Central Jersey, the houses still coming up for sale were often bought 2006-2007 and are still underwater in 2017. I'm looking in nice neighborhoods around Princeton where everyone paid $300-400k in 2006 (assuming continue expected appreciation from 200k sales prices in 2000). The REO homes are selling for $150-$200 now (requiring 20-30k work). The other direct homeowner sales listings at 300k+ 80% expire off the real estate agent MLS without a sale. Those people got stuck in their homes because the area around them depreciated.
- Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes9y
Originally posted by @Logan Turner:
I'm west coast and I've ran some numbers and you're right people that held on since 08 have seen a rise in their value. Rents have only increased slightly, if any, so who knows the years of negative cash flow or the opportunity cost of having their money tied up.
Rents on my SoCal properties have all increased ~50% since 08 ... I would not call that a slight increase. Only slightly higher than the long term historical rate of rent increases, actually, as we were coming out of the great recession. They all cash flow very well ... much better than my out of state stuff in a so called "cash flow" market (Phoenix), which is why I sold my stuff in Phoenix. In a grand twist of irony, my Phoenix property actually appreciated more on a percentage basis than my SoCal stuff (bough in 2010 for ~$40k each, sold 2016 for ~$140k each), rents were mostly flat. This kind of appreciation in Phoenix is a historical anomaly in Phoenix since it got hit so hard by the time I bought (many were purchased from investors that got foreclosed in spite of their positive cash flow before the crash btw), and I would not expect it to continue into the future which is why I sold ... I'm not a gambler, after all :) You can cash flow in the expensive areas too with a bit of forced appreciation/value add ... it is tough but not impossible. This has been my experience. Not saying that investing in more affordable markets for cash flow is bad or anything, either, just saying that it is not the only way and in my personal experience not the best way if the more affordable market is far away from you ... if I lived locally in such an affordable market, I'd bet the story would be very different, but that's not the case for me or the OP.
- 9yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Logan Turner I was going to jump in before David.. but your comment on rent is inaccurate or we took the wrong way.
West coast rents have sky rocketed cash flow markets have remained relatively stable.. @David Faulkner David 2010 was a great time for FLA buys GA buys AZ buys central CA buys.
We bought 54 homes in GA in 2011 and exited late 2012 to a hedge fund.. did not do as well as you did but still made better than 50% COC .. I get the cash flow game.. but the forced appreciation game is great if you know how to play it ... but to each his own really.. and maybe a combination would be prudent
- Rental Property Investor · Dallas, TX · Member since 2015 · 283 posts · 179 votes9yAppreciate the wisdom Jay Hinrichs and David Faulkner It could my perception is not matching reality when it comes to rents and values in the California markets I'm familiar with.
- Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes9y
When the market crashed in '08 I was living on the Westcoast and was renting a 1M house, overlooking the SF bay for $ 2495/month.
I started buying properties sight unseen in Atlanta for 10K. With basic rehab I was in under 20K in each house and was renting for $ 600-650.
When I told people in CA that I was a landlord and that I was renting where I lived, they all didn't understand why I didn't go ahead and buy in California.
1) I couldn't afford to buy where I was renting. Awesome location. But it would have taken 20% downpayment. So, even those 1M houses around me crashed to 500K, that would have been 100K downpayment. Instead I took that 100K and bought and renovated 5 more houses in Atlanta and got another +3k/month in rent, while my rent was 2495 - so, it was covered. If I had bought, I would have likely had a monthly payment of 4-5K PITI per month.
So, if you can't really afford to buy where you want to live, then I get it. Don't let anyone push you into something that you can't afford. just because it might appreciate. Everybody has 20/20 hindsight.
- Investor · New York City, NY · Member since 2015 · 808 posts · 417 votes9y
Unfortunately there is probably not a right answer here.
@Jay Hinrichs is spot on the tax benefit makes buying a home, especially if somehow you can house hack a great play. This does assume Trump doesn’t do anything to those tax benefits which is uncertain right now but assuming it stays it’s a great incentive which is why its there. I would note that I think that house hacking type investments are more complicated but I will let someone like @Brandon Hall chime in as he knows that part of it much better than I do. Personally I think @Natalie Schanne also had a great strategy though since its technically not something you can do I wouldn't do it unless I could cover the mortgage out of pocket just in case airbnb started cracking down or that strategy became more problematic for whatever reason.
Outside of that though I have never been comfortable investing a ton of money into a property in NYC though I do own something here it was not a big investment (obviously in hindsight it should have been). There will always be people who made a ton of money investing here in NYC like @Llewelyn A. and will tell you buy now and or you will be priced out and you know what they are right, until one day they are wrong. This is fine if you bought when the market reasonable but a bigger issue when its priced for perfection. Its now obvious in hindsight that we should have bought much earlier but as of today its tough to get comfortable with putting such a big chunk of net worth into a market that is up so high. Some people will say NYC and CA will always be the best and most desirable place to live and only go up and maybe they are right I wish I knew. However, historically this stability certainly doesn’t stand up. At one time few people wanted to live in most parts of the city, they decamped for the suburbs and forget about the parts of Brooklyn everyone loves now. Even 10 years ago I couldn’t get out of the subway in most of those areas, heck I couldn’t even ride the subway there. For the outer areas of NYC (i.e. the commuter areas people went to) prices were higher in 2007 and are just approaching those levels and in some places still are not though in NYC (cause I know someone will mention it) prices are up relative to 2007 and a lot in some cases.
Longer term, NYC is many markets rolled into one. Will people always want to live here probably but insanely high prices are sustained by a variety of factors including FDI investment, the best jobs being here, older folks who move to the city because they sold their own home and want to live here, etc. A lot of these factors today look rosy but will companies (who need to pay higher wages) and people really be willing to pay 2X rent in most other states (higher if you use implied rents on today’s prices in NYC) for the next 10 to 20 years? Will trends once again favor wider movement of people such as the exodus to the suburbs or maybe other states? Will people in other countries want to keep their capital in NYC apartments as “parking”? These are just some of the questions.
In addition, for a homeowner there is the lack of flexibility that comes with owning a home, any home that can’t be turned into a rental or sold because of transaction costs/time on the market. This is really a lifestyle thing and I can tell you I experienced this myself during the crash when I wanted to look at certain options and couldn’t as an owner.
End of the day I think its a highly personal decision based on lifestyle choices, the amount of time you can dedicate to getting a really great deals (which work in any market) and how much value there is on flexablity as well as your own view on the market going forward. Unlike some places where there is a right and wrong answer I think something like this really only has a right or wrong answer in hindsight.
- Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes9y
It is a great strategy. As long as the numbers work. You have to be renting a really expensive place. If you were to buy a $1m place you need $200k+ down and 4300 a month at 5% ( decent rate for a jumbo loan) Add in tax, insurance HOA, maintenance etc. You could be approaching 6k+ a month. How much does the place rent for? if it is under $6k, then it may make sense. The second question is what can you do with the $1M in rental property?
The alternative is if you can purchase using FHA for 3% upd to (350K max?) down and house hack, that may be a good strategy since the money is cheap for owner occupied SFH.
- Investor / Broker · Brooklyn, NY · Member since 2016 · 665 posts · 1k+ votes9y
In 2006, I knew of a few friends of a friend, Mike, who bought low income properties in Florida... close to the Sarasota area. A friend of mine asked why I didn't do that.
I informed him that I don't believe that casflowing in these lower income areas are as stable as the cashflow I received in Brooklyn.
2 years later, my friend Mike thanked me for advising him during that time. His Cashflow Investing Friends experienced what it's like to lose their cashflow. They experienced some of their renters asking them to lower the rents because their neighbors who just moved in were paying much less than they were. They also experienced finding it so difficult to find a renter that they when without cashflow for a significant time, some even went into foreclosure.
I really don't understand this thought that once you get cashflow you always get the SAME cashflow.
I call this the Cult of Cashflow. It's a Cult to have such strong beliefs.
Analyze what really happened to Cashflowing properties and look what rental properties actually when into foreclosure.
In Manhattan, during the peak of the financial crisis, there were less than 100 out of 1/2 million rental properties that went into foreclosure.
Did the low income areas around the nation achieved such low foreclosure rates? I sincerely doubt that.
So what happened to my properties during these years? What happened was exactly the same thing that happened when the terrorists devastated NYC and the Nasdaq fell 66% (yes, the ENTIRE Nasdaq) around 2001.
All that happened was a blip. What you are paying for is the quality of the cashflow. It comes as a premium. When you buy into a 4% Cap Rate property, there are only two reasons to buy it.... 1) The quality of it is so good that you can withstand economic disasters, even if you are close to Ground Zero.... and you will achieve future Growth.
The reality is that there is a big reason why you need a HIGH Cap Rate on low income properties in C, D cities and neighborhoods. You need to get paid for the risk of the cashflow being reduced or even disappearing.
There are probably not a lot of BPers that can speak about their experience during the Dark Depth of the Financial Crisis where they were in these low income, C, D neighborhoods, that's probably likely that they quit Real Estate in General. To those Investors, they understand that if you had Cashflow now.... it's not a Guarantee.
BTW, I'm certainly not saying that you will always get Cashflow in an A or B area either. But one thing about places like NYC is that over years, your Cashflow will MOST LIKELY increase and you will get both the Cashflow you want and the QUALITY of that cashflow.
AND, I'm not saying that buying in a C, D area is bad either. What I was addressing is that if you wish to LIVE in an area where the Rents move up Dramatically, you are better off owning that Rental with a Fixed Rate Mortgage or you can easily be priced out as you can no longer afford the place you rent. In fact, this is why people move! They just can't afford the rent ANYMORE!
Once you buy your place to secure that you will never become priced out of the place you really wish to live... well.... go ahead.... by all the Cashflowing B, C, D Investments you want.
Also, if you do the math, if the apt you rent is moving up $200 or $300 per year or more... but your Cashflowing investments don't.... you technically are losing Cashflow. The only way to do better is to continue and buy more Cashflowing investments. But how does this all makes sense when you can just buy the place you want to live in first?
Investor Llew
- Investor · New York City, NY · Member since 2015 · 808 posts · 417 votes9y
Who said anything about cash flow? I never mentioned it. Other markets don't necessarily equal cash flow markets. TX, AZ NC, etc. are more growth markets for sure. You can argue they have also gone up so maybe already happened but they are still reasonable in cost compared to NYC or many markets in CA.
Cash flow vs. appreciation is a separate discussion that has been discussed to death here on BP.
I was more referring to NYC itself. Personally I have seen more than 100 myself in terms of foreclosure here so not sure how thats true but I can't disagree NYC escaped the crisis hell it went up. A 2 bed condo that sold for $1MM then is now worth $2MM but that was the point you have to invest with the price at $2MM, the fact that people made money before or that prices went up before means nothing not a thing.
As for rents moving up thats a risk for sure and its why many people buy despite the rent to price ratios being way out of wack. However, at least to me, the risk that you have to move somewhere a little further beats the risk of losing a good amount of capital
Also, you mentioned the NASDAQ. If you bought the NASDAQ anywhere near its high you would have waited about 13 years to come back. It had already gone done a lot by Sept 11. Many other top buying stories are about the same.
None of this means I think NYC will crash anytime soon, I just don't know, the prices seem high and risk seems higher than I am comfortable with. There would seemingly be better plays. It also matters how you buy and what your strategy is. I assume you are a lot more active and if you buy a property at a low enough basis to some extent your risk is mitigated a little bit as it is if you have a ton of cash flow from your previous investments and can wait. I can think of few primary occupants that fall into that category and fewer who can hold their property if its upside down and they have to move, lose their job etc.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.