New York vs California

[Anthea S.]

Why is there not much investors here in New York as there is in California ?..…….What is your take on New York for investing in Real estate….would you say that New York is comparable to the California market? What are the advantages /disadvantages of investing in New York where prices are so much higher than in a market like Ohio where house prices are much lower…Finally, is it safe to assume that NY market might be good for Landlording/ cash flow because the rents are so much higher and the vacancy rate might be also good? Please share your thoughts and ideas … greatly appreciated…

[Anthea S.]

no one have any thoughts on New York and California markets ?...... no one ?

[Account Closed]

There are plenty of investors in NY. Just because you haven't met them doesn't mean they aren't there.

[Josh Keys]

Not sure whether you are referring to upstate New York or NYC. If referring to NY state prices in comparison to Ohio - I have to disagree. Prices in the Buffalo region (incl Jamestown) + Albany and Rochester etc are extremely low and yields are strong.

Advantages of NY state:
- reasonably low vacancy rates in comparison to other cheaper areas. Look at yahoo real estate and best places for more info on the area you are looking at though as it varies greatly
- strong yields due to low prices

Disadvantages of NY state
- high taxes and expensive to setup an LLC
- job market. high unemployment in the rust belt

I dont know much about the california market so am unable to comment on your comparison. From what I have seen rents in NY state are very affordable. Certainly not high.

As far as NYC, I doubt you would see many investors on BP purchasing here for cash flow. More so for long term growth if/when they expect the market to pick up. The yields would be terrible given the rents in comparison to prices. This is the case with most expensive cities though. eg San Fran, Boston. Happy to be proven wrong though.

[Anthea S.]

PNW,
I didn't say there was no investors in NY, I said there wasn't as much in comparison to California....thanks

[Anthea S.]

djjk1,

I appreciate your response...I was primarily talking obout NYC including the five boroughs...I know in the Bronx, for example, a 3-bedroom apartment averages $1500. I know it is higher in Manhattan...so I'm thinking that although prices are higher , it is probally one of the best time to invest in NYC , especially with foreclosures and prices being lower than before...

You mention high taxes and high cost to setup an LLC, that maybe among the top reasons...

I am a newbie , so i am learning everyday myself....so sorry if some of my questions and/or responses are elementary...

Thanks again for your post,

[Brian Levredge]

Just because a property can command a higher rent because it's in an area like NYC, or L.A. for that matter, doesn't mean it's a good deal. The median price in L.A is 300k. You PITI payment is going to be over 2k per month with a 60k down payment and you haven't even covered vacancy, management, and maintenance which could run another 30%. To get even a 10% ROI, you'd have to get $3500+ per month in rent and you're just not going to get that on a 300k house out here.

If you go out to the Inland Empire, you can get homes for cheaper and the rents are still decent. The problem out there is that real underemployment is running about 25%. That's not really a market you want to be investing in. In short, you don't want to be looking at doing buy and holds in areas where appreciation outstripped cash flow long ago.

[Josh Keys]

Originally posted by Brian Levredge:

If you go out to the Inland Empire, you can get homes for cheaper and the rents are still decent. The problem out there is that real underemployment is running about 25%. That's not really a market you want to be investing in. In short, you don't want to be looking at doing buy and holds in areas where appreciation outstripped cash flow long ago.

Brian - can you explain what you mean by appreciation outstripped cash flow long ago in Western NY?

[Brian Levredge]

Originally posted by djjk1:

Originally posted by Brian Levredge:

If you go out to the Inland Empire, you can get homes for cheaper and the rents are still decent. The problem out there is that real underemployment is running about 25%. That's not really a market you want to be investing in. In short, you don't want to be looking at doing buy and holds in areas where appreciation outstripped cash flow long ago.

Brian - can you explain what you mean by appreciation outstripped cash flow long ago in Western NY?

I didn't mean anything by appreciation outstripping cash flow in Western NY because I never said that. Appreciation outstripped cash flow in NYC and L.A. quite awhile ago, which was the point. In the more 'rural' areas that is not the case. But like I said, you have to look at a lot more than just the purchase vs, rents.

[Steve Babiak]

I think there was some confusion over the geographic meanings of "Inland Empire" (located in California) and the Empire State (being NY state). Someone thinking "Inland Empire" is referring to NY would consider that the western part of that state. But it is really an area in California.

[Josh Keys]

Thanks for the clarification Steve.

Inland empire is not something I would ever have associated with California. You learn something new everyday!

[Anthea S.]

Thanks for the clarification , Steve. Appreciated...

[G. F.]

New York doesn't have nearly a big problem compared to California. We were doing fine until Lehman went under. If you are looking to find investors in NYC, search thru ACRIS for transactions involving a business. There is a foreclosure problems mostly concentrated in areas such as the North Bronx and in Queens (tons of houses in Jamaica).

Most of the investors are developers who can't get financing to build so buying REO's are the next best thing. My experience is that they don't go to REIA meetings and don't mess around with wholesalers and bird-dogs. Why? One reason is because their are only a handful of real estate agents that handle reo's. For instance, Joe Hasselt handles more that half the reo's in the Bronx . When he has a deal, he calls those who have purchased from him in the past. If you don't have cash or access to private money, your not getting a call for the better deals. IMO, wholesaling can be done in all area's but it is tougher in areas such as NYC.

[Joseph M.]

I think that you have to really consider that all real estate is local. One part of New York State or one part of California might have properties that will cash flow, and others might not. You can just generalize how the market is in an entire state. There are $30,000 properties in California and there are $50,000,000+ properties in California...the same is true for NY. You just have to find an area where you can employ your strategy and make a profit.

[Mitch Kronowit]

Originally posted by djjk1:

Inland empire is not something I would ever have associated with California.

I regard the term "Inland Empire" as somewhat facetious. Yes, it's inland, but it's not exactly an empire. :mrgreen:

Sure, the area just east of LA and Orange County is pretty developed, but the remainder of the area is large and sparsely populated.

[Robert Mack]

In NYC you also have many areas which are rent regulated and the laws are very much pro tenant - two big cons for any investor.

A lot of the successful investors I see in NYC are the people with multi of millions of dollars in net worth and many are also 2nd,3rd,4th generation real estate investors in the area and either focus on or have a good amount of commercial space.

Larry Silverstein
Bill Rudin
Don Durst
Leonard Litwin
Sheldon Solow
Donald Zucker

[Michael Quarles]

Why aren't there as many Investors in NY as in Ca?

Because we have better beaches and Plastic Surgeons

[Anthea S.]

G. F , now that might explain why i never received a call back from an Reo I was inquiring about in Bronx after 5 attempt.Thanks for the info

[Anthea S.]

Thanks for the great info Robert, I've heard of
Silverstein but none of the others, I will research them to learn more...

[Anthea S.]

Michael you are too funny..lol

[G. F.]

Anthea, I don't want to discourage you. There are still deals around. Check out this post by David H. (http://www.biggerpockets.com/forums/88/topics/47942-ideal-real-estate-strategy - 400K in equity). I just wanted to let you know what your up against and motivate you to work harder.

[Anthea S.]

Thanks G.F....no I really appreciate all the info and thanks for the link also...