Multi family price craziness
I am current resident of Hoboken, NJ, and a yet-to-be property investor. I am currently looking for a great place to invest my money. I have spent a decent amount of time understanding the basics of equity investing, and other than placing my money in index funds, i do not think it is for me. At least not at this point in my life.
My Journey has led me to real estate investing. At this point, i have devoted a substantial amount of time to real estate investing and feel that i have a fairly decent understanding of the basics. Obviously without doing a deal, and actually collecting rent i have yet to fully understand any of the practical aspects of it. However, i do believe i have enough of an understanding to know when something is a "good" deal, at least on paper.
It befuddles me understand the current marketplace surrounding me, and i am hoping some of the more experienced investors can chime in and help me understand it. I am, of course, talking about the NYC Metro area. I have yet to see a multi family property, whether that be in Hoboken, Astoria, Brooklyn, Jersey City, or even any parts in Queens, that come any where close to providing 10% Cash on cash return, after taking into account all necessary expenses. In fact, many properties are listed at prices where the collected rents will not even cover the mortgage payment. This to me, seems ludacris, and i do not understand what "investor" would possibly put their money into such a thing.
Please do not respond back to me "you need to look outside your local area", as you will be missing my point. I am interested in understanding the price dynamic for these "investor" properties, which are supposedly based upon their income. Is it based upon pure speculation regarding market appreciation? Is it a bubble market? Is it too many investors (like Mr. David Greene's recent great article speaks to)? Or have i completely overlooked something?
Your feedback is greatly appreciated!
Mark