Understanding the New York Market (Long Island)

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Understanding the New York Market (Long Island)

Daniel Lewis
Member since 2021 · 3 posts · 2 votes

I am a college senior who is looking to start investing in RE on Long Island, New York after I graduate. I would love to first talk to investors in this area to understand how to navigate around an expensive market while still receiving a good ROI. I am reaching out to see if anyone would like to have a brief conversation to share stories and strategies that you have seen as beneficial in this market. I look forward to hearing from everyone and would greatly appreciate any knowledge that could be shared with me.

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Abel CurielBusiness Member
Real Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
5y

Hey @Daniel Lewis!

I think you've received some great advice on here regarding the house-hacking strategy.

@Alexander Szikla & @Shawn Mcenteer are on point with the MFR suggestion. As @Ashley Czarnecki mentioned, house-hacking in areas with a younger crowd can make room rentals an attractive option. That should yield the highest ROI but will require more management than your other strategy options.

We've seen success with the house-hacking strategy in Long Beach, Patchogue, Massapequa, Valley Stream, Lynbrook, West Babylon, Holtsville and a few other LI towns.

Prices are a bit inflated due to such low inventory and high demand but if you're holding long-term, you should be able to find something that makes sense financially. Most house hackers lower their living expenses $6,000-15,000 in year 1 then take their savings, refinance, and use their equity after year 2 to get into their next house-hack. 

On their next house-hack, they lower their living costs even more, have a cashflowing asset (house-hack deal #1) and decide whether to do it a 3rd time, invest in larger units, or settle in their 'forever home'.

Best of luck to you moving forward!

Abel

REbuild Team - eXp Realty5234 Reviews
WebsiteView Page
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  • Alexander Szikla
    Real Estate Agent · New York City · Member since 2020 · 819 posts · 641 votes
    5y

    Why LI and not NYC? The suburbs are expensive right now and the city is on sale. Besides, the city would be more fun and you'd get more purchasing power via FHA.

    Definitely house hack via FHA in NYC right now. If you can get a 4 unit and a basement, that would be ideal and create major cash flow and equity creation, plus you can not worry about a property manager and boost your yield.

    Personally, I am very bullish on New York and NYC itself. Sure it suffered due to COVID, but you want to buy when there is distress. I think all the folks who moved away are already getting bored and already coming back. Plus, the vaccine is getting rolled out which will curb the spread tremendously. Now is the time to buy.

    Cap rates came all the way down to 3% (or below!) during the "boom" times but COVID has loosened everything up and now 5% can be had in Manhattan, 6%-7% in Brooklyn and even 8% in the Bronx. Nationwide rates hit a low of 2.7% - so there has really never been a better time "spread" wise.

    Long term, I think NYC will come back as it always has time and time again. I am also a great believer in investing when there is distress and deploying capital when you can.

    If you are looking for yield in the short run, Manhattan may not be for you. However, it is certainly the most attractive it has been in years from a cash flow perspective. If you are seeking out asset accumulation and equity appreciation over the long term then there are certainly fortunes to be made. And there is still plenty of cash flow opportunities in the outer boroughs if you buy right!

    1Reply
  • Daniel Lewis
    OP
    Member since 2021 · 3 posts · 2 votes
    5y

    Hi Alexander, I appreciate the response! Since I grew up around there I always figured I would start there, however when looking at it as an investment property you have to break down all the numbers. I agree completely the best time to buy into investment is during distress because properties are undervalued. I do feel that Manhattan may be still overpriced for me but I'm going to start looking into all 5 boroughs to get a full understanding of what is out there. Other than Zillow and MLS is there any other sites you would recommend in using to find new properties?

    0Reply
  • Ashley Czarnecki
    Real Estate Agent · Long Island, NY · Member since 2020 · 5 posts · 1 vote
    5y

    Hey! @Daniel Lewis Long Island is definitely a harder market to start investing in because of how expensive it is! I'm not sure what type of investing you plan on doing but, one that I always suggest in an expensive market is "house hacking" definitely lowers your mortgage costs or gives you a ROI !

    There was also a BiggerPockets podcast about someone in an expensive market who bought large houses and rented it out by the room to get a great ROI while keeping rent lower then renting apartments in the area for a younger crowd!

    There is also a new group for wholesalers on Long Island if you’re looking to go that route!

    Let me know if you need anything else ! I’m a real estate agent on Long Island (specifically suffolk) but I know great people in Nassau too!!

    1Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    5y

    @Ashley Czarnecki MFR is great way to go. Being in north Jersey, we find ways to win with house hacking. Producing some serious returns and huge upside for equity. How is the MFR on LI?

    973-975-3895
    House Hacking New Jersey563 Reviews
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  • Ashley Czarnecki
    Real Estate Agent · Long Island, NY · Member since 2020 · 5 posts · 1 vote
    5y

    @Shawn Mcenteer There are definitely situations where you get a ROI especially with more bedrooms to rent however, MF are so few and far between here and they go for so much more than SF which makes it a challenge! I try to look for SF with finished or unfinished basements that can be turned into MF down the road. Usually more in rehab but can still be cheaper than a MF.

    0Reply
  • Abel CurielBusiness Member
    Real Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
    5y

    Hey @Daniel Lewis!

    I think you've received some great advice on here regarding the house-hacking strategy.

    @Alexander Szikla & @Shawn Mcenteer are on point with the MFR suggestion. As @Ashley Czarnecki mentioned, house-hacking in areas with a younger crowd can make room rentals an attractive option. That should yield the highest ROI but will require more management than your other strategy options.

    We've seen success with the house-hacking strategy in Long Beach, Patchogue, Massapequa, Valley Stream, Lynbrook, West Babylon, Holtsville and a few other LI towns.

    Prices are a bit inflated due to such low inventory and high demand but if you're holding long-term, you should be able to find something that makes sense financially. Most house hackers lower their living expenses $6,000-15,000 in year 1 then take their savings, refinance, and use their equity after year 2 to get into their next house-hack. 

    On their next house-hack, they lower their living costs even more, have a cashflowing asset (house-hack deal #1) and decide whether to do it a 3rd time, invest in larger units, or settle in their 'forever home'.

    Best of luck to you moving forward!

    Abel

    REbuild Team - eXp Realty5234 Reviews
    WebsiteView Page
    3Reply
  • Daniel Lewis
    OP
    Member since 2021 · 3 posts · 2 votes
    5y

    Hi @Ashley Czarnecki, @Shawn Mcenteer and @Abel Curiel thank you all for your responses, this is my first time using this forum as a tool to reach out for information and you have all gave me great advice. My strategy was to alway house-hack a MF house to start then build my portfolio from there. I never thought of renting out each individual bedroom to increase ROI, that's a great idea. When I've been looking at properties to at least analyze I saw same as you @Ashley Czarnecki MF are extremely expensive for what you get compared to a SF. I'm going to continue to look for potential properties for the future especially in the areas you discussed @Abel Curiel. Thank you all again, I will definitely keep you all in mind for the future, hope to talk soon! Best of luck to all three of you, have a great week!

    1Reply
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