Best Ways to Invest in RE When Living in NYC

[Matthew Wiltse]

Hi BP community!

I am a 24 year old living and working in NYC. This past winter (Feb 2017) I got the Real Estate bug by stumbling upon Clayton Morris's podcast. I listened to episodes 1-100 in a matter of months. I read Gay Keller's Millionaire Real Estate Investor, Getting the Money by Susan Lassiter Lions, and I am now starting the famed Rich Dad, Poor Dad. I was living in Philadelphia earlier this year so I went to 3 REIA meetings in that area and met with an investor with 50+ properties in Indiana (now living in Philadelphia). I've become a member of BiggerPockets and also listen to all of the podcasts on BP. I'm trying to immerse myself into the RE investing world and learn as much as I can.

Because of work, I had to relocate to NYC. I do not want this move to deter my RE investing goals. I primarily want to focus on rental properties and have done most of my research on SFH in B/C neighborhoods, but I am aware of the advantages of a duplex and multiplex investing. I know it's important to continue building my knowledge base (and my capital) but I am getting anxious and fearful that I won't make as much progress in New York.

I would love to hear from those currently living in NYC on where/how they invest. If anyone is available to grab coffee and discuss in further detail I would be very appreciative.

Looking forward to hearing some of the responses.

Thanks all!
Matt

[Jonathan Twombly]

@Matthew Wiltse

In New York, you are probably looking at 40% down to make the deal cash flow.  When properties are trading for $1mm or more on average, that's a lot of money to put down.   

Basically, in New York, you are banking on appreciation.  Because it's New York, where real estate always appreciates.  Except when it doesn't.  As in the late 1980s.  And the 2000s.

I had a colleague at work who thought they were really smart buying an "investment" condo in New York because their tenants were "subsidizing" their costs (i.e., the rents only covered a portion of the carrying costs; the rest came from their pockets).  They were planning to make a killing on the appreciation when they sold.  That was 2007.

New York just really isn't the place, in my opinion, to be a small-time real estate investor.  Out of state markets are much better.  I'd look in places like Albany and Troy, in the Hudson Valley, where you can buy properties at much more affordable rates, get cash flow, and build a portfolio.  Even in prime Albany, near the state capitol, where all the best jobs are, you could pay 100% cash and buy three units for less than the downpayment on a $1mm condo where the rents won't even cover the costs.

Oh, and don't forget about the horribly tenant-favorable landlord-tenant laws in New York.  It's easy for tenants to squat in your property for months without paying rent.  Just TRY and get them out.  You'll find out that, in the view of courts here, you are the most horrible person in the world for trying to get a poor, pitiable deadbeat tenant out of your property.