Where Are the Best Places to Find Rental Property in New York?
Most people list a few common reasons for wanting to own a business: working their own hours, being their own boss, and establishing some financial independence. I find these to be noble pursuits and will add one of my own principal purposes for becoming an entrepreneur. I wanted to establish a legacy—a growing asset, that if managed properly, could provide wealth and income for future generations. Thus, as time passed, my idea of a succession plan grew even more important. My three young sons have their own interests and careers, but I always emphasize to them that having a “Plan B” never hurts and often constructs a nice economic safety net. Besides, one of those lads may opt to hang their own shingle someday and I’ll eventually desire to step back, fish some more, travel a bit, and not be so beholden to my mobile phone.
The idea of career independence crept up on me as I made my bones advising individuals on investments and insurance. It wasn’t a bad gig but the bank I had worked for had been bought out a few times in a decade and I witnessed many of my older colleagues struggle to retain their lifestyles after “layoffs” forced them to start over in other industries. I resolved to have a solid backup should I eventually suffer the same fate. Income properties seemed like a great start and I began investigating the best places to buy rental property in New York. Many friends and relatives already dabbled in real estate investing and I fancied myself a quick learner. Creating a 10-year time horizon in which to establish an adequate income level, my strategy also focused on developing a supporting cast who could take over the reins if necessary.
Where Should You Buy Rental Property in New York?
I should have been careful what I wished for. When my oldest son and I scouted out neighborhoods to buy rental properties, we often disagreed on which neighborhoods and towns would yield optimal cap rates. Yet another reason to have a second opinion: it’s prudent to have reasonable “discussions” with familial partners about location in order to find out that your first instinct might not be your best. It is with those “discussions” that I found excellent locales for rental properties in New York that, for the record, were mutually agreed upon.
Outside the Big Apple, New York presents investors with a number of diverse markets across a fairly expansive geographic area. It’s sometimes difficult to fathom that the state stretches all the way from Lake Erie in the west to the Atlantic Ocean in the east. Back east in Schenectady, one of the major appeals for me to buy rental properties was the small amount of capital it took to get started. The average list price for a home comes in at around $145,000 in 2018. There are a great number of homes on the market and with a little patience, I was able to connect with sellers that had to let go of their rentals at prices below market. Granted, a search of the popular websites reveals many listings. However, my strategy for an acceptable return on investment (ROI) mandates that I pay a prescribed price for properties that can command a certain level of rent.
With my cap rates—net income divided by acquisition price—in line, I like to get inside the head of potential tenants in any given town. What draws them to these locales and more importantly, is that attraction sustainable? It’s difficult to overlook the job market and things have been trending up in Schenectady. Since 2012, unemployment rates have been nearly cut in half, and that’s definitely a positive sign for the area. Along with the improving jobs picture, local government officials have secured grants for some restoration projects in the downtown area. That spirit of cooperation leads me to believe that a pro-business environment is being created and investment from attentive landlords will be welcome. Put it all together and I don’t see any issues filling well-maintained rental properties with carefully prescreened tenants.
I like the vacation rental market for a number of reasons. In my opinion, the market is always fluid and a lot of availability exists due to a variety of circumstances. Often, second-home buyers see the novelty of owning two properties wear off or a financial emergency causes them to quickly exit the market. A recent buying boom in the Catskills and the Hudson Valley indicates increased interest from city dwellers who have shucked the Hamptons for the mountains. I witnessed the phenomenon for myself last summer while cruising up and down the Hudson River, docking in Kingston, which had some quaint marinas and some cool places to eat and drink. The people I met weren’t locals for the most part. They were boaters and vacationers from all over New York and Pennsylvania who didn’t have to travel very far for some solace in the country and on the water. Wearing my real estate investment hat, I was out the next day looking for some waterfront properties that I could rent for top dollar in the peak season.
One compelling reason for my investment is the variety of properties available for purchase. It’s as easy to find condos and townhomes in the $250,000 price point as it is to find cozy cottages on a few acres in the $100,000 range. The right price certainly helps my pursuits but I also have noticed some regional growth in median list prices in the past year. Demand has pushed sales prices about 10% above list prices and consequently, home prices are on the rise in Kingston and tiny neighboring villages such as Port Ewen. Since I usually hold onto rentals for 10 years, the prospect for appreciation in these assets boosts my projected ROI considering the fact that I can increase rents as those values rise. If my succession plan holds to form, I may even consider longer holding periods while using the income to fund other purchases.
It’s my gut instinct that young families seek the best schools for their children and frequently their search extends to little towns with a manageable commute to larger cities. Skaneateles is a village of fewer than 10,000 residents that sits about 22 miles away from Syracuse. From the elementary level through high school, the town’s schools have garnered some top ratings among state educational institutions. High school SATs scored well above the national average in 2017, a rare feat for secondary schools in more urban settings. Couple quality schools with a very low crime rate and it’s a no-brainer for me to buy below-market rental properties in the lakeside town.
Like most of Central New York, Skaneateles is seeing home prices catch up to pre-financial crisis levels. It’s a slightly more affluent area than its surrounding blue-collar locales with median home prices in the low 300s. Home values are helped by upscale mansions along the shores of Skaneateles Lake, a spot where President Clinton and family had vacationed during his tenure in office. I keep an eye out for lakefront properties that will undoubtedly be affected by the new tax legislation, passed in December 2017, which limits state and local deductions from earned income. As I target luxury rentals, I’m more than willing to explore homes on the water that could be rented out for top dollar in peak season. Along with single-family mansions, there are a number of multi-family units in town that make for some interesting opportunities. Small, desirable villages such as these allow me to diversify my rental holdings among dwellings on the upper- and lower-end of the pricing scale.
Unionville and Surrounds
High-end Empire State home values will likely be affected on the legislative end and the other side of the coin sees foreclosures in New York increasing even as the national numbers decrease. It’s a tough situation but in this industry, I’ve learned to separate my emotion from the business end of things. Orange County, bordering the Tri-State area which includes Pennsylvania and New Jersey, has the highest foreclosure rate in any New York county. One out of every 159 homes in Unionville is on the auction block and one party’s misfortune could easily spell an opportunity for me. Buying auction properties without an inspection is a practice I discourage. With many of these transactions, you never know what you’re going to get, and yet you must investigate distressed homes from all angles. That’s why I buy directly from property owners before a foreclosure happens.
I find off-the-map burgs such as Unionville and other nearby tiny Orange County towns to be great places to scoop up dirt-cheap rental units. There are a couple different factors at play other than the numerous foreclosures available. Tenants who inhabit my homes in areas such as these tend to be people who want to be off the grid—much like the towns in which they live. In many instances, I’ve rented to folks who live simply, rarely make any costly upgrade demands, and pay their monthly dues like clockwork. Furthermore, my experiences have shown tenants in this class to be stable, longer-term renters who would rather write a monthly check than be subject to real estate taxes and insurance premiums.
Kew Gardens, Queens
Last but not least, a real estate investment overview wouldn’t be complete if a piece of the Big Apple weren’t included. Manhattan is a crap shoot and finding great deals can be challenging. Brooklyn has handled the overflow from the big island, pushing median values skyward, and in the Bronx, median rents have had difficulty keeping up with that borough’s rising prices. So, Queens it is. I can buy a home for about pennies on the dollar for what it costs in Brooklyn or Manhattan. Neighborhoods such as Kew Gardens showcase some Tudor dwellings and rowhomes, some of which I bought for substantially less than the median price. From a sales and occupancy perspective, demand has been historically strong for rental homes in the five boroughs. However, one of the trends I’ve witnessed in Kew Gardens is a slight increase in inventory, and I’ll hop on any movement that might leverage my acquisition price downward.
While Queens residents may need to travel outside the borough for work, there’s enough going on to keep them within the borders on evenings and weekends. Among its many green spaces, Flushing Meadows-Corona Park houses the vestiges of the 1964 World’s Fair- highlighted by the Unisphere, an enormous globe that is readily associated with the village. One need not leave Queens to take in a professional baseball game at Citifield, home of the Mets—the younger of the two New York baseball franchises. Art, museums, and ethnic flair add to the allure for renters who can find studios starting at $1,000 monthly—more affordable than comparable confines across the East River.
Scaling Your Investment Business in New York
I’ve covered a lot of ground here—figuratively and literally. Traversing the expanse of the Empire State is necessary if you want to take advantage of the diverse markets that offer all sorts of real estate investment opportunities. One of my biggest challenges in any region I explored was continually finding leads on distressed rental properties that needed to be sold quickly and at a reasonable price. HomeVestors® had that additional territory covered for me. Through the nationally-known and trusted “We Buy Ugly Houses®” marketing campaign, I receive regular leads from motivated sellers. Between you and me, it’s the best kept secret in the real estate investment industry—and my son wholeheartedly agrees. Together with HomeVestors’ training, my local HomeVestors® franchisees and my seasoned Development Agent, we are building a real estate investment business that will position our family well for generations to come.
Contact HomeVestors® today to see how you can make the rubber meet the road in your own real estate pursuits.
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