Newbie from Manhattan, New York City

[Vik C.]

Hi all,

I am a 30 year old guy from NYC looking to slowly transition from a salaried income to a real-estate income via rental properties. I am very well-versed in finance and financial modeling so this stuff is very fun for me to think about, but my only practical experience is buying my own apartment a couple of years ago. I'm sitting on about $150K of liquid assets at the moment, but could move some things around to get to $300K or so if I saw opportunities. My goal is to have $50,000 in annual rental income within 7 years. I think I can make more in the stock market, but I am very focused on early retirement and therefore am more interested in low-volatility income than "high-risk, high-returns". Goal is a consistent income within 7 years, not maximum assets after 40 years.

What I know best is the New York City rental market, so I was planning on getting started with single apartment units or single-family homes in the city and surrounding areas, including Connecticut which I also know well. 

I know that Manhattan and to a lesser extent the outer boroughs have very low cap rates compared to other locations in the US. This sucks, but it leaves me with a choice of a market I know with low returns or investing out-of-state and getting higher returns at higher risk. I would like to get a true 4-5% cap rate if possible (including taxes, maintenance, insurance, utilities, vacancy, etc.). 

What I would love to connect with some of you on is:

• Are there any good resources on small-scale real estate investment for income in NYC? It seems to a be beast unlike any other, particularly due to the predominance of co-op buildings.
• Is a 4-5% true cap rate attainable in NYC?
• What are average property manager fees in NYC, if I go that route? Is a 3-4% cap rate still possible using a management co?
• Which neighborhoods are good bets? From what I have researched, within Manhattan the UES seems best for price-to-rent ratio.

Thank you. I hope to be able to add value to the forum as I get settled in.

Cheers,

Vik

[Ali Boone]

Just make sure you really can get positive cash flow there, if that's your goal! I've never heard of it working in NYC. Watch out for condo fees too, those can knock cash flow out completely.

I live in LA, so same problem here. I've always just bought out-of-state instead.