I happen to own in a very popular area in BK as well. I wouldn't sell it any time soon as rent has been really excellent -and- the property is appreciating. Plus, like you mentioned, we don't pay for realtor screening in NYC. While I wonder if I'd sell one of my other properties, the one in BK is a definite hold. Quite simply, it would take a lot more to get back into the market if I were to sell. While $200k appreciation isn't shabby (it sounds like you'd bought in at around the bottom of the market), I don't see a lot of opportunity to own in NYC at anywhere close to what I'd bought in on back in the day...
Also the tax rule changed as of 2009: IRS exclusion amount is based on proration of amount of time the property has been held as a rental since Jan 1, 2009. There is an EXCEPTION to this rule, which is that under section 121 (b)(4)(c)(ii) is that if you've lived there for 2 years during the past 5 and held it as a rental after moving out, that period still counts as qualified use. This would likely mean that you may get 2 years + 18 months aka 3.5 out of the 5 years. So roughly .07 * $200k => $140k.
Of course this is before you factor in things like the 6% that goes to the agents. $658-$500=$158*.7=>$110.6k that you'd not get taxed on vs the $140k mentioned above.
If you're cash flowing, you may want to consider if that rental income bumps you into a higher tax bracket. There are a lot of reasons to hold or sell and a lot of it will depend on what you're looking for and your larger strategy. At the end of the day, running the numbers will better help you make that decision. None of us here will have insight on your larger financial picture (aka other income) and that can factor hugely in planning.
@Jeremiah H. re: cash flow being better / worse in NY - NY is a big place and there is a lot of variance. BK specifically has gone bonkers in the past 5+ years. Limited land mass and lots of people wanting to live there.
@Lesley Resnick As for people moving away from urban areas and living in the burbs, that's not been the trend at all in NY metro area, or San Francisco Bay area. Maybe this is a Florida thing? I've seen no evidence of this. And as @Will Wong said, NYC is an international market. Owning in NY is considered "bragging rights" to a lot of non-US people.
That said... Midwood is lovely in its own right but just outside the "very desirable" area. Once you're past the park, the areas will likely not appreciate as quickly as parkside and towards Manhattan. One subway line is "ok", "very desirable" for BK is more like one or more of the following: access to 2+ subway lines, <20 minutes to midtown, vibrant restaurant scene, gentrification from people with children wanting good schools.
Midwood is an area is unlikely to attract the "international" scene as it's too far away so you're mostly betting on appreciation in local market and people moving further out.
For comparison... If you were in say, Fort Greene, Park Slope, Gowanus, Prospect Heights, Washington Heights, those areas are more likely to retain value / appreciate more / get higher rent over the years. Rents for 2 bedrooms in those areas can run around $4k/month and very very small 2 beds are going for $800K+.
Unless you are a large scale investor 1000 plus units, NYC is a tough market. The laws slant to the tenant, since as a percentage home ownership is among the lowest in the country. As a result the city has stepped in and created rent control. Look for more of the same as places like park slope continue to escalate in cost.
At $4k a month for an $800k place you are underwater every month. Assuming 20% down 640k assuming 5% mortgage will cost you at least $3200 a month plus tax and insurance. I am not sure the cool factor is worth losing money every month. For $800k, I could generate anywhere from 8k-16k a month gross, taking off half for expenses, a cash flow of $4-8k a month. I am not sure the appreciation in NYC can keep up with that for a sustained period.
@Lesley Resnick I agree $4k on $800k does not equal cash flow. I never said that it did, I merely said that as a corollary of what properties go for in that area are (if you were to buy in today). The folks who are holding getting $4k on the 2 bed may not have bought in at $800k. Actually from what I've heard it's much worse than that. Anyway, ff they have bought as an investment vs a place to live, good luck to them and glad I'm not one of them.
As for rent control, that's not how rent control works in NYC. As an example, no rent control in my particular unit, but there is rent control on a very similar unit in the same building. Rent control in NYC is not a "blanket" thing meaning just because someone buys into NYC it does not mean that that unit is subject to rent control. Now if you were in Vancouver, BC it _is_ a blanket thing.
NYC has both rent control and rent stabilization, they are quite different. There are even particular laws around very specific buildings. It's not the easiest market to navigate, for sure. And yes, very strong tenant laws. Not as strong as San Francisco though.
I would _not_ recommend NYC as a market for those who are uninitiated, meaning, if you've never lived there, don't have an affinity for the place for whatever reason, hate NYers (no, seriously, people don't take this into account, NYC is not for everyone), and can make better numbers elsewhere, obviously invest where you're comfortable. I was lucky to get into that market at the right time and even if it stops appreciating _completely_, I'm cash flowing and have been from day 1.
One other thing, if you are a large scale investor and you're losing money, you'll just lose it at a larger scale.
I can't speak of the FL market since I know absolutely nothing about it. Zilch! :)
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