Familiar with market in NYC?

Question

Hey BP community and RE pros

What is going on in the NYC market? I’m having a hard time getting a sense of how things are moving.

I ask because i own a 1br apt in the east Village that i have used primarily as a rental- it has no subletting limits. I’ve owned it for close to 15 years now and have lived there myself about 6 of those 15 years.

I’m cash flowing at $900 a month right now. i consider myself very lucky to have gotten through COVID while keeping a tenant in place. The current tenant is definitely paying above market and lease renewal is coming up quickly. If i go beyond the 2.5 years and want to sell in a year it will be taxed differently.

Okay the question: should i sell this unit or hold on to it?  I still have 200k on the mortgage. A few years ago i was told i could list it for 700k but now (?)

On about every other forum here i would be advised to sell and split the equity over 4 new properties. I totally see the value in that but I’m home for some RE professionals perspective here.

Thank you!

Jason Lee · Answer

The sales market is pretty hot with a record number of contracts signed each week. Inventory is down, even taking into account the seasonal slow down and so things look like they will remain hot for at least the rest of the summer. Despite the volume it doesn't look like median prices are increasing. Things look flat and we're still below the peak. If you hang onto it I wouldn't expect much appreciation anytime soon. Does your building allow subletting from day one or open subletting after a certain period. If it's day one then it will add a premium for being open to investors, unless the concentration of investors is too high and the building isn't warrantable... then that would hurt you. $900 month from 500K equity doesn't sound great. You can do better. Not sure what you mean by taxed differently... So you owner occupied for at least 2 years within the past 5 years?  Then yes, you'll want to 1031 into something higher performing.

The rental market has improved dramatically and is getting better every day. It seems like E Village will be back to pre-covid rates soon. If you were in Midtown or Fidi then maybe I'd worry about vacancy and rents but I think you'll be fine if you keep it as a rental.