Is investing in NYC worth the headache?

Question

Interested to see if anyone here has experience buying and LTR within NYC.  I have looked all over the country for rental property and finally found some positive cash flow in properties in my own backyard in solid A/B neighborhoods.  My question is - everyone gets scared off of NYC because it is so tenant friendly and you often hear horror stories of being unable to evict people - is the risk worth the reward?

Abel Curiel · Answer

Agreed with @Mohammed Rahman, screening tenants effectively will play a huge part in avoiding eviction problems.

@Chris Schmitt, keep in mind, you will have the opportunity to interview tenants after they pass the initial sniff tests - rental application; supporting documents (paystubs, proof of funds, credit report, references, etc); background check.

On the interview, you/your broker will be able pick up on red flags, discrepancies, true motivation for moving, etc.

Jonathan R McLaughlin · Answer

Keep in mind that places that are “tenant friendly” are usually that way because people have been making a lot of money in real estate for a long time

Kevin Wright · Answer

Hi @Chris, I'll echo what Mohammed and Abel have said here and add that part of it is the story of a yield curve, similar to all other types of financial markets in terms of risk/reward.  Typical returns can be lower here due to high asset prices going-in, but asset prices are high because there is less of a risk premium baked into the valuations - ie. everyone knows that NYC is one of the most resilient and consistently performing markets year after year, so they're willing to pay a bit more and accept a bit less fundamental return on their money.

Mohammed Rahman · Answer

Hi @Chris Schmitt - I'm an investor & broker in NYC, I can speak to this at length.

It boils down to what your appetite is as well as what your goals are.

NYC is not a cashflow market, so if you do find a property that cashflows then you're already off to a great start. The name of the game here is appreciation, equity, and tax writeoffs. I typically see my clients hit cashflow positive within years 3-5 of ownership, and usually by that time they've also hit a 6-figure appreciation too.

In terms of risk vs. reward with tenant laws. Don't let the loud headlines of the few bad apples ruin it for you. The overwhelmingly majority of people, & tenants, in NYC just want to pay their rent and go on with their lives.

Yes NYC is tenant friendly, but it's only the few that actually take advantage of the system.

In terms of what YOU can do as a potential landlord, there are ways to efficiently (& legally) screen tenants and spot potential "bad behavior" in order to avoid ever accepting them as a tenant.

Reach out to me if you need a broker that knows what he's doing to help you avoid headaches.

Is investing in NYC worth the headache?

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