Is Rental income worth it in NY

[Keren Adaki]

Hi everyone!

I am a mother or 3 children under 6 and am driven and determined to make it through real estate.

I currently own a small 3 bedroom ranch w a finished basement on Long Island, NY (own for 7yrs). The home is lovely but too small for us at this point. ideally I would love to buy a bigger home for us but keep this small ranch in the family and rent out. The only problem is that from speaking to ppl I am told that NY rental rules are not in favor of landlord. According to my calculations, I can make 1k of passive income renting this ranch out after all expenses are paid for.

My question is should I take the risk of being a landlord in NY? Or should I sell and use proceeds to invest close but out of state, like in PA or Connecticut buy purchasing a duplex or something that can generate passive income?

Many real estate investors from NY advice me to own my residence in NY but not rental income. Any advice? Need to secure my children’s future!!!! Thank you in advance.

[Alexander Szikla]

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. The kicker here is that rates are much lower than the 7% that OP noted. Today 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!