As an increasing number of people prefer renting over buying, property management becomes one of the most profitable sources of passive income – and for a good reason. Real estate investment is less risky than most of the other options, and it allows you to get a steady flow of money with a little effort. But there’s one catch: in the rental industry, it all comes down to the right location. That’s why it’s critical to make a thorough research before investing in buy-to-let properties.
To cut a long story short, New York City is one of the least risky places for rental investments. It is considered a home to the majority of America’s wealthiest tenants, and the rental prices are usually on the rise there. What’s more, the local vacancy rate is below 3 percent compared to the national 7 percent. But it doesn’t mean you should jump off the deep end and invest in the first rental property that looks like a good deal. The Big Apple is big, and not all areas are equally good for property investments.
In case you’re not local, here’s your quick intro to the city of lights: NYC is made of five boroughs, including Manhattan, Queens, Brooklyn, Staten Island, and the Bronx. Each one has its own pros and cons, but the goal of this research is to consider which borough is better in terms of rental investments. So let’s take a closer look at each of the five.
Manhattan
Median rental price: $4,527/mo
Median resale price: $1,864,075
When it comes to New York City, Manhattan zip codes are deservingly called the most prestigious. And although you see what you pay for, the local resale prices for the property might be too high even to those considered wealthy. Apart from it, numbers confirm that Manhattan’s county is the worst for landlords in the entire country.
Given the local resale prices, taxes, and utility expenses, landlords get approximately 3 percent in annual gross yield. And if it doesn’t ring a bell, enjoy the hint: 3 percent is one of the worst rates nationwide. However, if becoming a Manhattan landlord is your cherished dream, there is a fact that will calm you down. New York County, aka Manhattan, is known for getting increasingly expensive over the years (2016 is the only exception), which means that sooner or later you’ll congratulate yourself with a smart investment.
Queens
Median rental price $2,449/mo
Median resale price: $n/a
Since the median resale prices grew by 6 percent only in one year, it’s safe to say that Queens is the next big thing in the housing market of New York City. As researchers confirm, Queens appears to be the third fastest-growing housing market in New York. Just like Brooklyn used to do years ago, Queens is now welcoming those who cannot afford an address in Manhattan. Chances are good that the prices in the area will continue to grow, so 2019 might be the best time for buying-to-let in Queens.
There are two obvious reasons to choose Queens over Manhattan. Firstly, you can buy three rental properties in Queens for the price of just one in Manhattan. Secondly, your annual gross yield will vary between 5.87 and 6.35 percent depending on the precise location (while it’s only 3 percent in Manhattan).
Brooklyn
Median rental price: $3,170/mo
Median resale price: $250,000
Gone are the days when Brooklyn was considered a cheap place to live. In 2016, the real estate prices in the borough have reached a new peak. And there are grounds to assume that they will keep trending upwards. Last year, the median resale prices reached a record $606,000. And although the expected median resale prices for 2019 is slightly lower, it’s safe to say that Brooklyn can make you a lot of money in a long-term perspective.
As market research suggests, your annual gross yield will be around 4 percent in Brooklyn. And while the entire city is no longer in a housing growth mode, Brooklyn seems to follow in its own direction. The city’s most populous borough, Brooklyn is getting increasingly costly to live, and this trend is gaining momentum.
Staten Island
Median rental price: $2,154/mo
Median resale price: $n/a
According to experts, the rental market in Staten Island is remaining steady because the borough doesn’t experience the same level of rent escalation as Brooklyn or Manhattan do. Four years ago, The New York Times assumed that Staten Island had reached its turning point in terms of housing, and now it’s safe to say the assumption was right.
As both rental and resale prices in Manhattan are ridiculously high and Brooklyn is no longer a cheap option either, New Yorkers are looking for new housing opportunities. Given this, it comes as no surprise that a fresh crop of renters is flocking to the borough. They say that demand determines supply, which means you as a landlord can get a lot out of this Staten Island opportunity.
The Bronx
Median rental price: $2,704/mo
Median resale price: $n/a
As numbers confirm, Staten Island is not the only borough that’s benefited from the housing buzz of the last few years. Back in 2016, the prices for local property soared by 35 percent, and the climb confirms to be steady. While it might be not good news for renters looking for affordable housing, it’s sure a great thing for landlords interested in new investment opportunities. Given that the local gross rental yield varies between 5.46 and 6.28 percent depending on the location, the hype over the Bronx housing market should not surprise anyone.
To dispel your doubts, here’s an insight from an industry expert:
‘We advise investors in NYC multifamily to foremost consider the Bronx, which had the largest rent gains of all five boroughs in 2016. With excellent proximity to Manhattan by subway, there are several Bronx neighborhoods that are particularly attractive to cost-conscious millennial renters and can be key to a millennial-oriented real estate investment strategy. ’
Alex Cohen, Lead Commercial Specialist at Core
To be more specific, Alex Cohen recommends Kingsbridge and Mott Haven as the most attractive Bronx neighborhoods in terms of investment returns and potential appreciation.
Investment in real estate is popular and relatively safe, but it’s not the reason to take it lightly. Just like any other investment opportunity, this one comes along with both risks and opportunities. So don’t act in the heat of the moment, study the market carefully, and make an educated decision. Check out statistical reports and various media sources to get insight into forces that drive up the market value of the properties and rentals. Another good tool is the New York real estate blog that would allow you to keep up with the trend of the real estate industry. This way, you’ll surely get the most out of your investment.
