Astoria, Queens: Two-Family Properties, good investment?
Intro
Astoria, Queens, has long been known for its culture, heavily influenced by European countries like Greece, Italy, Germany, Poland, Croatia, and other countries throughout the Eastern world. Many families, including my wife’s family, migrated here and laid roots in the early to mid-1900s.
In recent years, Astoria has become a popular destination for younger generations to dine, hang out, work, and live. I have had office space in Astoria for 5 out of my 7 years in the business and it remains my favorite place to work.
Newer developments present a wide range of opportunities, including:
- Affordable housing rental units
- New high-rise condominium buildings
- Small boutique condo developments
- Mixed-use buildings
- 2-4 family new-construction residential properties
- Film studios
Astoria’s high cost of living is akin to other neighborhoods in the ‘outer boroughs’ with Manhattan views or proximity to the island. Other neighborhoods like Astoria’s southern neighbor, Long Island City (LIC), Brooklyn’s Williamsburg & Dumbo, and the Bronx’s Mott Haven have seen similar patterns.
With the rising cost of homeownership and growing popularity, prospective property owners in this iconic neighborhood are understandably drawn to two-family residences during their home search.
Why this approach?
Well, if you are within walking distance of coffee shops, restaurants, and Astoria Park and just 20 minutes from NYC, only one thing can make homeownership more special.
Rental income.
Our loved ones, too… they’d make homeownership here very special. OK, that makes two things.
Tenants can account for about 40% of a 2-family property owner’s mortgage in Astoria, given average rents and median sale prices. While rents increase gradually each year, mortgage payments remain the same. With the area’s growing popularity, house hackers can have half of their mortgage paid by tenants in just a few years.
In this article, I will examine market trends to show how the two-family market in this landmark section of Northern Queens has fared over the last three years.
2-family Property Values in Astoria
Thus far in 2024, Astoria sellers seem to be anticipating a bit of a standstill on property value increases. This is understandable since we saw a 1% DECLINE in median sale price from 2022 to 2023. As seen below, the median Asking/Listing price for 2-family properties in Astoria is the same as it was last year.
So, how has this impacted sale prices?
Have values gone down since the asking prices have remained relatively unchanged over the last 6-12 months?
Not at all!
In fact, values are up over 11% for two-family properties in Astoria as shown in the median sales price so far in 2024. This increase in sale prices is happening despite the fact that there are more properties available this year.
Inventory and market demand for Astoria Duplexes
Year to date, we have matched 2022’s total of new listings. As of late July ‘24, 71 new 2-family listings have hit the market. This puts Astoria on pace to see 121 new listings by year’s end which would be a 53% increase from 2023’s total of 79 new listings.
This is what folks have been waiting for! More listings means more options to choose from and could mean better deals.
The latter seems out of reach as the market currently stands. One of the main reasons for prices soaring is real estate investor demand for 2-family properties. Properties are selling faster in 2024 than they were in 2023 by an average of 7 days. This is a solid indicator that sellers still remain in power within this high-demand neighborhood.
Can this trend continue? Will we continue to see properties sell 1-week faster than last year despite so many more properties coming on the market?
The Fall and Winter months typically see less activity than the Spring and Summer. We could see less homes come on the market as well as duplexes that sit for longer periods of time before going into contract. The outcome will depend on the consumer’s priorities. With the start of the school year, many residents are reluctant to pick up and move. Landlords/owners feel their rental apartment will be vacant for longer while others prefer to wait until more inventory arises in the warmer months.
Astoria Rentals
While New York City’s metro area as a whole, especially desirable areas like Astoria, is not considered to be a ‘cashflow’ market, there is upside to purchasing rental properties here.
Median rent prices have risen from 2022-2024 as follows:
- Studio rents up 30%
- 1-bedroom rents up 19%
- 2-bedroom rents up 18.5%
- 3-bedroom rents up 21%
* While 4+ bedroom rents have increased as well, the findings are insignificant due to limited data/inventory for this apartment type. Just 7 apartments with 4+ bedrooms have been rented over the last 2+ years.
So what does this mean for househackers in Astoria?
Assuming a 20% down payment on a median-priced 2-family ($1,450,000), househackers can have 37% of their mortgage payment covered by their 2-bedroom apartment tenants. If they choose to live in a smaller unit and rent out their 3-bedroom apartment instead, the househacker’s tenant will be paying about 45% of their mortgage payment.
While this still leaves househackers short of cash flowing during the initial years, there are significant benefits to consider.
Mainly:
- Annual Depreciation (About $50,000 for 27.5 years)
- Mortgage paydown
- Ability to refinance and lower your payment when rates decrease
- Ability to use tax deductions for rental property expenses
- And More!...
*This is not tax advice! Please consult a tax professional for the most accurate information specific to your situation.
The Four Astorias
11105 Zip Code
Most of the 2-family inventory can be found in Astoria’s Northernmost section which falls within the 11105 zip code. So far this year, 31 duplexes have been placed on the market here. This area is found North of the Grand Central Parkway and extends from 49 Street going westward to Shore Blvd. As hinted by the streetname, Shore Blvd runs adjacent to the East River.
11103 Zip Code
The 11103 Zip code has boasted 20 new listings year to date, 2nd most in Astoria. Neighboring other Queens neighborhoods such as Woodside and Long Island City, this section of Astoria begins just south of the Grand Central Parkway and the 11105 zip code. Located within this area is one of Astoria’s most popular and busy streets - Steinway Street - which is home to shopping, restaurants, Hookah lounges, Bars, and hundreds of other small businesses.
11102 Zip Code
Coming in with the 3rd most duplexes listed in Astoria is the 11102 Zip Code. The most popular attraction here is the scenic Astoria Park. The park is located along the East River between Hells Gate Bridge and the RFK Bridge, formerly known as the Tri-borough Bridge, connecting Queens, Manhattan and the Bronx. This area is also known for its abundance of coffee shops, brunch spots and European dining venues.
11106 Zip Code
Astoria’s southern most section had the least amount of 2-family properties listed over the first half of the year with just 7 new duplexes. This is surprising given the fact that it is one of Astoria’s most densely populated areas. The 11106 zip code is home to Kaufman Studios which spans about 5 city blocks and has produced hit TV shows from Netflix, Showtime, Amazon, Starz, and NBC.
Astoria Duplex investment property: By the numbers
I hope you like spreadsheets! We used our good friend, Jon Schwartz’s, househack calculator to give you the best illustration of a duplex investment property in Astoria.
Click here to review the Astoria Duplex deal and feel free to make a copy so that you can change the numbers to fit a specific deal.
Why the househack calculator? It is the only calculator of its kind to help you determine: if househacking is a better investment than a traditional home purchase, how long to hold onto the investment before selling, how long to live in the property, and which unit to occupy.
If this will be a traditional rental property investment (not a househack), select ‘renter’ for all units under the Summary Tab’s ‘Property Information’ section.
Metrics used for the deal analysis:
The purchase price is based on the median sale price - $1,450,000
Unit bed/bath counts are based on the median 5 bed/3 bath counts for sold Astoria 2-family properties this year.
Projected rents are $3,200 and $3,900 respectively as shown in our median rents for 2 bedroom and 3 bedroom apartments.
Not included in the analysis is ADU income. Garden-level or street-level ADUs are common in New York multifamily properties. These are typically lower levels with separate entrances. In Astoria, these units can bring in an extra $2,000-2,500/month.
For more information on the spreadsheet that we used, follow Jon!
Challenges for investors in Astoria
As seen in the analysis/spreadsheet, achieving positive cash flow on a duplex will take at least 4 years. Whether you use a 20% down payment or a 50% down payment, this will be the case.
Some of the main reasons are that operating expenses, acquisition costs, and capital expenditures take a substantial amount of any would-be profits. The same can be said for investment properties in other locations… We can even make the argument that profits and cash flow in ANY business are limited in the first few years of operation.
Aside from a small or non-existent return on investment over the first 3 years, competition is another challenge in Astoria.
As illustrated in our “Days on Market” graph, demand seems to be stronger than last year. Although we have more listings available, we are seeing just how many folks were sitting on the sidelines the past few years in anticipation of more duplexes for sale.
How to compete in a competitive multifamily market
A couple of recommendations for tackling any market with strong demand:
- - View properties promptly. Be the first, or one of the first, to visit a property once it is on the market.
- - Be decisive. If it is a property worth pursuing, express your interest to your agent so that the due diligence and negotiation processes can begin.
- - Submit a strong first offer. Catch the seller’s attention with a competitive offer that will at the very least, produce a counter offer. The goal is not to hit a bullseye on the first try but instead to stand out as a worthy counterpart so that you have the upper hand amongst competing offers and other prospective buyers.
- - If a property owner has already received other offers, consider using an escalation clause.
- - If a property has already been on the market for longer than the average DOM, consider an offer that has terms/conditions favorable to the owner while maintaining a purchase price amount that is favorable to you. I.e. purchasing a property as-is, inheriting cooperative tenants who are paying below-market rent, etc.
Outro
On the rise in Astoria, Queens are median rents, median sale prices and overall housing inventory. Demand for duplexes has kept up with supply and then some. As a result, two-family properties are selling faster than they were last year.
Despite increased inventory and new developments, the barrier of entry continues to rise making investing here more challenging. All 4 zip codes have something special to offer which makes it no surprise that it is one of New York’s most desirable neighborhoods.
If the recommendations shared here will not make this a feasible area to invest in today, consider neighborhoods closer to the 1% rule. The 1% rule is met when the annual income of an investment property is equal to or greater than 1% of the purchase price. Most of the neighborhoods with more favorable returns will be further from Manhattan.
As it currently stands, given median sales prices and median rents, Astoria’s duplexes do not meet the 1% rule. The ratio here is at .49%. East Elmhurst, a neighboring town located just East of Astoria, is at .57%. As you go further southeast to Jamaica, NY, you’ll reach .62%.
While the 1% rule is not commonly met in New York, you can still use the formula to get a sense of which areas will allow you to reach positive cashflow more quickly and abundantly.
Long-term thinking goes hand in hand with buy & hold rental property investing. It is imperative to adopt this approach/mindset/strategy in areas where cash flow is almost a half-decade away.
When investing here, think long-term. The hold period in prime areas like Astoria is usually longer than other areas. This is why we see relatively low inventory here when compared to Queens and Brooklyn neighborhoods that are further from Manhattan.
Many properties here have been owned for multiple generations and that says A LOT! It means that local residents value their community and want to be part of it for decades to come.
Happy Investing and thanks for reading!
