So much analysis of New York real estate focuses on the Big Apple. It’s not hard to understand why. As the largest city in the country and one of the most expensive places in the world, the New York City market is incredibly valuable. But the city might be facing a rocky 2018. Luxury prices fell in 2017 and may continue to do so throughout next year. Rents are also falling in the city. And, at the same time, concessions are rising to combat this. But, despite it all, the market as a whole will remain as unaffordable as ever for many investors.
But there’s another side to New York residential property investment—and it’s one that offers genuine opportunity. While there’s one neighborhood to be recommended in the city, upstate New York is where it’s at. For much of upstate New York, the housing recovery isn’t complete although it is showing signs of improvement.
A growing yet affordable market in New York? That sounds very promising indeed. It’s exactly the kind of market that offers good buying deals and still lets you sell at a rising market value.
Opportunities for New York Residential Property Investors
You don’t have to invest in Manhattan or Brooklyn to have a viable real estate investing business in New York. In particular, there are three areas that provide ample opportunity right now.
If you really want to invest in the New York metropolitan area, there are few better places at the moment than Queens. While the sales rates and values of luxury apartments are falling, affordable housing in Queens is in the middle of a comeback. In fact, Queens is recently outpacing Brooklyn and Manhattan for sales swiftness. The driver behind Queens’ real estate growth is Millennials and young families looking to escape Manhattan and Brooklyn for a more affordable and more suburban lifestyle. And the lifestyle these home buyers are seeking will only get better. A whopping $267 million in capital investment has been promised to improve schools, parks, and infrastructure in East New York.
There’s even more good news for investors with a buy-and-hold or a buy-and-sell strategy: rents have kept pace with the growing population. At the midway point of 2017, the average rental price in Queens was $3,059—an increase of 5.2% from the year before. There was also a 2.6% year-on-year increase in new leases. Sale prices are up too and look set to continue to rise. The average sale value of a property in Queens in Q3 2017 was $614,492, a year-on-year increase of 9.3%. So whether you buy-to-hold or buy-to-sell, opportunities for optimal returns are likely in Queens.
Much of Buffalo remains plagued by zombie homes. That means the city offers a unique opportunity when it comes to New York residential investment property. Believe it or not, but it takes almost three years for banks to foreclose on Buffalo homes. That’s a whopping 14 months longer than the national average. Unfortunately for the city, that’s done nothing to improve either the property market or the neighborhoods. While zombie homes are a blight on the neighborhood, they can be excellent investment vehicles for property investors looking to make a profit and make a difference in a community. Because Buffalo zombie homes have often been left vacant and neglected, these properties are available at well below market rates. Of course, renovation will be necessary, but sweat equity often brings the best returns.
The state’s capital provides another interesting market for investors to consider. Despite lacking the allure of the Big Apple, Albany is more popular than ever. Offering the perfect combination of trendy hipster culture with genuine affordability, Albany is a top home-buying hotspot for Millennials. It’s one of the reasons that Albany has managed to sidestep the high levels of migration that have been plaguing other counties in upstate New York.
As a result of Albany’s popularity, it has become harder for buyers to find the perfect property. According to Trulia data compiled by the Associated Press, the number of houses listed for sale in the Albany metro area has dropped 14% since 2016. Surprisingly, however, the price of homes hasn’t increased at the same rate. The year-on-year increase in median sale price is only 3.5%, taking the figure to a hugely affordable $190,500. Rental prices in Albany are nothing compared to New York City, but they aren’t to be sniffed at either. They’ve also been steadily increasing, too. If you can find an investment property in Albany, a buy-and-hold strategy could be a winning one.
Which New York Real Estate Sectors Are the Best Investment Bets?
The beauty of the New York real estate market is the sheer diversity of property types available to investors. Now isn’t the right time to be investing in every New York property niche, however. Here’s where the smart money is.
- Luxury properties. The luxury market is synonymous with New York, but it’s not faring too well at the moment. Falling demand has hit this sector and many new builds lie vacant. Prices have fallen, but it would be a bullish investor to commit the capital required to purchase this type of property in the current climate.
- Multi-family apartments. Multi-family units can be as expensive as a single Manhattan apartment in some areas of the state. Falling rent rates and rising concessions make them an even more unattractive prospect. Investors will be hard pushed to find a promising cap rate on most New York City multifamily units in this kind of market. We recommend missing out on opportunities to acquire multi-family buildings at the moment.
- Single-family homes. If you’re looking to invest outside of New York City, single-family homes could well be the way to go. With areas like Albany experiencing Millennial population growth, single-family homes, the type of places where someone can put down roots, are remaining popular. There should be no shortage of these types of properties wherever you look and they will always remain popular.
- Distressed and foreclosed homes. Due, at least to some extent, to New York’s high property taxes, distressed and foreclosed properties are still in high supply across the state. Whether they are bought from the bank, from auction or from an owner desperate to get out of their current living situation, these homes offer a promising niche for investment. With a little TLC, a solid return on investment can be anticipated on these homes.
Overall, single-family homes that are distressed or even downright “ugly” offer the best investment bet for 2018—regardless of the part of New York you choose to grow your real estate investing business.
Finding the Right Investment House at the Right Price
If you plan to target distressed single-family properties to add to your real estate investment portfolio, HomeVestors® is here to help. Thanks to the nationally-known “We Buy Ugly Houses®” advertising and industry-leading real estate investment tools, HomeVestors® independently owned and operated franchisees receive leads on distressed houses around New York every day. With this housing sector holding so much opportunity in 2018, it makes sense to position your real estate investing business to take advantage of current market trends.
Are you ready to buy the right houses at the right price? It’s time to get in touch with HomeVestors.
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