BUY in nyc or out of state ?

24 Replies

Hey everyone! I want to begin my investing career but not sure where to start , I make about 20k/year w2 and another 20k from tips , I currently am renting in nyc for $700 a month , I have 65k cash saved up . And another 9k in stocks, about another 1k in crypto currency.I️ was wondering if you were me , what would be the best way to put myself in a better position for the future . My ultimate goal is to build up enough cash flow to where I no longer have to work for other people, do you think I️ should try to buy a rental , or should I️ try to get my foot in the door somewhere here in nyc so I️ can eliminate my rent. Any input , any advise is welcome! Also , moving out of NYC is not an option . I live with my parents and they do not drive, nor do they speak English . so house hacking in nyc is the best option for me. But what loans/ strategy can I use to get my foot in the door here in nyc ?

If you want cash flow, I assume that you mean rental income coming in. You should follow the 1% rule, which can be read about here and in many books, but NYC is probably much like the DC area and likely won't happen locally.

(Monthly rental should equal at least 1% of property purchase price). This is only a quick method to tell you if you need to do more research into the property in question, and shouldn't be your only factor in deciding.


Maybe find a duplex and do some "house hacking" so the other person covers your mortgage and you get to live for "free", may work in NYC area.


Many investors are buying in regions outside of the area, where they live.

This help at all? I am new also, but have been reading everything I can get my hands on.

Ehh.. it depends. NYC is a big place and the prices are high. What areas are you looking at? Not that I would advise you to put every last dime into a deal with no reserve capital left but a $75k downpayment for an investment property that you do not occupy would give you a $300k loan (I'm assuming a 25% down payment and a conventional mortgage). $300k doesn't buy much in this city unfortunately. Check with a mortgage banker though because the rules are different out here and a lot of the mortgage transactions I appraise for are 90% finance deals, but these are for primary residences and the prices are in the millions. 

There definitely are downpayment assistance and first-time homebuyer programs that might make a purchase more attainable but overall  in my experience as an appraiser out here small multi-family townhouses don't make a lot of sense financially and you'll still be paying quite a bit out of pocket if you buy at today's prices. The ones making a killing are the ones who bought in the 70s and 80s when the city was bankrupt and essentially giving away foreclosed and boarded-up properties.

If after debt service and taxes and all of that you are paying less than $700/month (which is almost unheard of in NYC these days btw) then maybe its a good thing, but you would still have to tie up so much capital to add a few hundred dollars of savings each month. I don't know if that's worth it.

I'm not saying look out of state either necessarily. I would say keep investing in your education first and keep studying various sub-markets of NYC and the surrounding metro area. If you are looking at any specific properties or neighborhoods I can probably help you more. 

You can try looking into house hacking in the areas you mentioned with an FHA loan. You likely won't be able to live for free but the additional rental income will subsidize your mortgage.

I’m a new investor from Queens as well and looked to go down a similar route but after exploring the market and surrounding areas, ultimately have settled on investing in Upstate NY. 

Originally posted by @Faysal Alam :

@tarik I didn’t know they still do stated income loans . I thought that was a thing of the past

 Yes they sure do.. Best bet for people with low income tax returns or gift money since funds aren't sourced 

Hey @Faysal Alam , do you have anyone that could co-sign with you on a loan if you were to house hack ? It seems like you have enough money saved for a low money down FHA loan on a duplex in the areas you mentioned, however the issue here would be the income. If you can find a way to increase the income either on your own or through a guarantor that would allow you to make something happen sooner rather than later.

@Faysal Alam New York can be a tough market and a little more risky than the Midwest, for example. Follow the 1% rule (Monthly rent being about 1% of the value of the house). You’ll find that there are certain locations where this is very achievable. Research markets and find somewhere that you can find a great deal. Try to make as many connections as you can, talk real estate, and learn from others. Never buy a house unless it’s a GREAT deal!

You’re biggest barrier is your income. Even though you have the down payment and I’m assuming a good credit score, you simply don’t make enough money to get approved for a loan in NYC. You’re obviously are a rock star at saving money! So that’s fantastic. I say you’re best bet is to find a co-signer, or a business partner. If it were me personally I wouldn’t even bother with NYC, I’d just go buy rentals out of state. I would continue to rent in NYC. The fact that you have the drive and discipline to save $65,000 on a low income shows me that you’re going to make it eventually. You’ve got what it takes. Good luck!

House hacking in NYC sounds good. I wouldn't try to buy a small multi in NYC strictly for investment purposes. Midwest is so much nicer for cash flow. But house hacking, even a SF and airbnb the extra BR's is a solid plan! If you buy in the right neighborhoods, there are probably down payment assistance programs to get you in with almost no money out of pocket. They were doing that around here for a while, they might still be doing it for all I know.

Hi Faysal and welcome to BiggerPockets,

Take a look in Cleveland, OH market.  Prices are more reasonable and your dollar will go further. Feel free to reach out with any questions.

Best of luck. 

I would suggest not buying real estate at this time and focus on increasing your W2 income.  What if you made an extra five figures per year and still maintained your current lifestyle?  What if you need cash from a curveball life will throw at you and all of your cash is tied up in real estate?  Consider risk management...

FYI - I live in Brooklyn and I’m currently in the process of getting my first rental via turnkey.

Hey dumb question, what's a turnkey?

Originally posted by @Aaron Wade :

I would suggest not buying real estate at this time and focus on increasing your W2 income.  What if you made an extra five figures per year and still maintained your current lifestyle?  What if you need cash from a curveball life will throw at you and all of your cash is tied up in real estate?  Consider risk management...

FYI - I live in Brooklyn and I’m currently in the process of getting my first rental via turnkey.