The streets of New York have a reputation for being tough. You have to be aware of your surroundings and keep your valuables close or you’ll end up being mugged like a tourist. The same holds true when investing in New York real estate. It takes a bit of grit and strategy to stay competitive.
As a native New Yorker and full-time real estate investor, I’ve graduated from the school of hard knocks. Let me spare you some bumps and bruises by sharing a few things that I’ve learned. When it comes right down to it, there are three simple and effective ways to maintain your edge in New York real estate investing: define your niche, study your competition, and offer creative deals that are apt to win over home sellers. Once you have addressed all of these areas, you simply need to stay the course and maintain your strategy.
How to Win When Investing in New York Real Estate
Many of us have spent too much time defining and refining our real estate investment strategy, only to lose a deal time and again to another investor. Our local market is still viewed as a safe haven for real estate, drawing cash-flush investors from all over the globe. That means smaller investors like you and I must elbow our way into the market, leveraging clever tactics and well-thought-out strategies. Here are the top three strategies for carving out a space in the New York real estate investing market so you can gain an edge over the competition.
Define a niche.
There many types of real estate; it’s usually best to focus your investing activity on one of those property types. In recent years, new developments in areas such as Manhattan and Brooklyn have shown strong activity, especially for luxury properties. But while this niche can certainly deliver the highest per-transaction returns, you are exposed to increased market volatility. Recent data strongly suggests that the million dollar-plus market bubble has burst. In the third quarter of 2017, for example, the median sale price of new developments fell by 23% when compared to the same quarter in the prior year. When you consider the price-points of these properties, taking a hit on almost one-fourth of the value can seem like it’s rather hard to swallow.
I’ve personally found that the sweet spot for real estate investing is with some of the more affordable properties. While price gains have been modest, this niche has not shown the flighty ups-and-downs of the new development market. Median home prices for this sector continue to hold strong, increasing 1.9% over the last year. I get the best returns on these properties when I buy an NYC fixer-upper from a distressed homeowner facing foreclosure.
Structure creative deals.
When a real estate investor finds a lead on a distressed property, it can be a good opportunity to structure a transaction creatively. Some investors, however, get themselves into uneasy ethical territory by misrepresenting options to a seller or pressuring the homeowner into a transaction that they don’t understand. “Subject to” deals can be especially difficult for homeowners when an investor fails to pay the mortgage (which remains in the seller’s name).
You can gain more leverage with a distressed homeowner by understanding their concerns and offering a win-win deal that allows the other party to walk away from the property. More often than not, this means putting cash on the table and being willing to take care of any repairs that the property requires.
Study your competitors.
Let’s face it: many struggle to find leads on good New York investment opportunities, so take a good look around to find out what your competitors are up to. What lead generation services are they using? Do they have advertising in specific neighborhoods or online venues? Are they putting out high-quality marketing collateral with a strong value proposition for the home seller? Are there any opportunities that those competitors are failing to leverage? If so, you can strategize to take advantage of those opportunities.
These three core strategies can guide your real estate investing business in reaching new heights in New York. But you’ll need to find a way to put it all together into a cohesive and comprehensive business strategy.
Gain and Maintain Your Edge With a Comprehensive Strategy
I didn’t go into real estate investing thinking that I was going to make easy money. Rather, my eyes were wide open; I knew it was going to take a lot of work to make it in the competitive New York market. It took a bit longer than I’d anticipated to realize the kind of results that I desired. But I finally got all of the puzzle pieces into place when I became a HomeVestors® franchisee, with an independently owned and operated business. Buying distressed houses to rehab and sell can be a wonderful niche because the demand for affordable housing in New York is only increasing. And, to be frank, the other local investors just can’t compete with the widely-recognized “We Buy Ugly Houses®” national marketing campaign that I am able to leverage as a franchisee.
Perhaps it time for you to get a leg up on the competition too. Get in touch with HomeVestors today to learn more about this real estate investing franchise opportunity.
Each franchise office is independently owned and operated.