Queens (NY) Rental investment question

[Caroline Yoo]

We are interested in purchasing a studio in Queens, NY as a rental property investment. We can put down about $60K as down payment, which means that we can probably purchase a $300K studio in Woodside, Jackson Heights, or Rego Park, according to Zillow. 

However, a quick search on Zillow seems to suggest that a typical monthly rent for a studio in these areas is only about $1500. This means that the monthly cash flow will be negative when considering the mortgage, property tax, etc. According to a spreadsheet that I have downloaded from the web, the cash ROI is -9.48% and the yearly total cash flow is -5K to -6K for twenty years or so.

Does this analysis mean that investing in a studio as a rental property in these Queens areas is a bad idea? Or should we rely on any appreciation. Even then, such an investment doesn't look good compared to investing in an index fund.

On the other hand, the real estate market in Queens, NY these days (especially after the Amazon HQ2 announcement) seems to be hot. What am I missing here?

Any thoughts would be appreciated.

[Account Closed]

I'm new myself, but I would guess Queens is hot because it is close to Manhattan.

Are you open to out of state investing?  For example - You could take $30k and put down on a income producing property and put the rest into a index fund.  There's a lot of options for you with $60k outside of NYC.