Why we don't invest in New York, even though we're based here

[Jonathan Twombly]

People frequently ask me why I don't invest in deals in New York, even though we're based here.  The reason is simple:  it's too hard to make money for your investors in New York.  That's a huge reason why we invest in the Southeast, along with more owner-friendly laws, a growing population, etc.

But this Real Deal article I just came across says it all:  Data shows that New York County (i.e., Manhattan) is the least profitable county for owners in the entire United States.

http://therealdeal.com/blog/2014/04/01/least-profitable-county-for-rental-landlords-new-york-data-shows/

[Michael G.]

Jonathan - 

Gonna have to disagree here - I think New York generally and Brooklyn specifically (especially the HOT areas like Prospect Lefferts Gardens, Flatbush, ParkSlope, ProspectHeights/CrownHeights, Gowanus and of course WillyBurg, Bushwick, B-Stuy, etc..) are incredible places to invest. It's just that one has to actually know what they're doing is all. I say F'k what TheRealDeal says... Prices are expensive if you try to buy a property off of MLS or from a Broker (Brokers are absolutely useless to anyone who really knows a local market.)

Buying off-market, buying at auctions, foreclosures, or buying fixer-uppers and renovating & flipping - especially now that we can borrow so easily thanks to crowborrowing sites like PatchofLand.com and others - is the best way to generate very respectable profits even in NY. 

I won't even look at a NY (or Brooklyn) opportunity unless I can realistically expect a Net Cap rate of around 9 to 9.5% +

It's doable.