I believe investing in the New York City property market is a bit like raising a child. It always seems to be growing quicker than you realize, you need to invest hundreds of thousands of dollars before you see any kind of return, and it demands constant attention. As the father of three, I like to think that understanding this analogy gives me an upper hand.
But while it’s true that I’ve been a pretty successful New York City investor, my success has nothing to do with my abilities as a parent. I’ve been able to gain and retain an advantage by keeping my finger on the pulse of the market at all times. If I know what’s happening in the market right now, I have a shot at predicting what will happen in the future. Based on what I’m seeing at the moment, here are two principles I’ll be using when buying investment property in New York City in 2018.
Investing in NYC Property? Forget about Manhattan if You Want to Grow
Next year, I’ll be looking thoroughly at all of the other NYC boroughs before I think about turning my attention to Manhattan. While it may be fine for luxury developers backed by multi-million dollar companies, it’s certainly out of the reach of every independent investor I know. Manhattan’s lack of popularity with smaller investors is starting to show. According to a recent “Emerging Trends in Real Estate” study, Manhattan plummeted from 13 to 46 in their list of real estate markets to watch.
The trouble with buying an investment property in Manhattan is that it can bottleneck your entire business. Rental income from one property will probably never be enough to live on, and it will seldom be enough to take out a mortgage in order to expand your inventory. If you’re new to the investment game, 2018 should be about growing your real estate investing business. Focus on turning your investments from a sideshow to the main event.
The Best Investment Bet: Look for Fixer-uppers in Outlying Boroughs
As confidence in the housing market grows, the number of buyers increases. So too, then, does your competition. To avoid competing with deeper investor pockets while still achieving solid potential returns, I recommend looking towards Queens, or some of the best emerging Brooklyn neighborhoods for a property that has yet to peak in price. Nearby, buying investment property in New Jersey also offers a much more affordable market in which to find investment opportunities.
Then, when it’s time to sell, you can still be fairly confident of getting a decent return. Properties in the more affordable boroughs, such as Queens, are getting snapped up quicker than ever before. And, according to data compiled by StreetEasy, listings in Astoria were available for a median of 59 days. In Woodside and Sunnyside, homes were snapped up even faster. Compare that to Manhattan’s Flatiron and Tribeca neighborhoods, where properties were on the market for a median of 100 days and 142 days respectively, and you can see why investors might find it easier to find a property outside of Manhattan in 2018.
As investors, we don’t like competition. More competition leads to higher prices and worse cap rates. That’s why I’d turn my attention to properties the bigger players aren’t interested in—ugly homes and fixer-uppers for sale. Today, one in ten residential mortgages in New York City is seriously delinquent. That rate is six percent higher than the national average. Whether you buy from a foreclosure auction, search online or approach distressed owners directly, securing a distressed home and renovating it will help you to add significant value to the property for resale.
Invest in yourself in 2018
In the same way that many parents read parenting books to help them successfully raise a child, the best investors spend time and money investing in themselves. If you can improve the tools and knowledge that you have at your disposal, you’ll gain an edge over your competitors. By far the best investment I ever made in my real estate business was becoming an independently owned and operated HomeVestors® franchisee. Joining the HomeVestors® franchise network gave me access to the nationally-known “We Buy Ugly Houses®” brand for marketing. Thanks to this, I don’t have to attend property auctions anymore. Instead, distressed owners come and find me.
If you are ready to find the best leads on New York City investment property, give HomeVestors a call today.
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