Cap Rates on Long Island

[Chris Skutnik]

Hi BP Community!

I am in the initial stages of planning a house hack in Nassau County on Long Island. One thing I have no yardstick on is what a realistic Cap Rate is in Nassau County. I know Cap Rates can vary widely by market, so anyone with a local knowledge that can give some guidance would be greatly appreciated. I want to make sure I am being realistic and not overshooting here.

Thanks!

Chris

[Art Perkitny]

@Chris Skutnik

Traditionally cap rates aren't used to assess residential real estate (less than 5 units), which I figure is what you are in the market for. 

With that in mind, we can still use cap rates to get an idea of the returns we should expect in a given market. The caps will be rather low compared to commercial properties in the same market due to how residential real estate operates. 

The map below shows cap rates for single family properties on long island tabulated by zip code: 

As you move west to east cap rates change from the low 1s to high 3s and 4s. 

These figures were computed using data from the American Community Survey and assume the 50% rule when calculating NOI.

Hope this helps!