Rental Properties in New York

Rental Properties in New York

It can be very tempting to settle for a property when you are buying rental properties in New York, or any other region, for the first time. Your imagination has you dreaming of a regular rental income and the ability to move up the success ladder. So the anticipation can easily turn to impatience. Most first time investors are surprised by how many home tours, negotiations and effort is required before finalizing on a property. On an average it takes 4-5 months to close a property deal from start to finish. But definitely be prepared for the process to be longer, especially when the housing market is hot and in areas where the buying competition is fierce. It is a laborious process indeed.

Here’s a stronger incentive to stay in the grind. The outlook for investing in rental properties looks great. Between November 2020 and November 2021 rental prices have increased by 12% to 15% [1] – the outlook looks positive for future landlords. This is despite the pandemic’s looming shadow on the housing market. The question then arises, is the outlook just as positive for New York specifically?

Here’s how you can understand what you stand to gain or lose when purchasing rental properties in New York. LitPoodle’s aim has always been to inform our readers on the pros and cons of each part of the investment process. So you step in with the right expectations and benefit from your investment. So we have compiled an exhaustive list of everything you should consider before finalizing on rental properties in New York.

The median home price in New York is $ 736240 [2] and the median rent for 2 bedroom household is $ 5748 per month [3]. These then tell you that your estimated rental yield is 9.37 % [4]. Also, the vacancy rate in New York is 5.5 % [5] – this is an integral metric that sheds light on the demand and supply balance of rental properties in the neighborhood. With these metrics you understand your approximate return on investment and whether it aligns with your expectations. Go back to your investment goal with these metrics – draw a comparison and understand if you are looking at a negative or positive net cash flow. Also if these terms are confusing then give our blog on investment terms a quick read.

Rental properties in New York are not just about finding the ideal place with the best facilities. It’s about understanding the region and the neighborhood and the economy that underpins it. The local economy impacts the housing demand in that region and ultimately the appreciation value of your property. For instance, in an economically and socially vibrant region, you can expect a higher influx of residents. As the demand rises, so does the rent and the value of your property. Here are a few pointers to keep an eye on to understand what factors or metrics directly affect the appreciation of rental properties in New York.

1) Local Employment growth rate
2) Local Population growth rate.
3) Local household income
4) Local Unemployment rate.

In the case of New York, the local employment growth rate is 6.5% [6], the local population growth rate is 6.8% [7], the local median household income is $ 68304 [8] and local unemployment rate is 6.3% [9].

Rental Property In New York, you consider the following neighborhoods/cities for investment:

  • Premium (high median home price): Manhattan
  • Mid-market (medium home price): Brooklyn, Yonkers
  • Affordable (low median home price): Hempstead, Bronx

Take a look at historical metrics and future projections to understand whether the region is showing a consistent increase or decrease for these parameters. Also, be sure to compare these metrics with those of the states and the countries. This would provide a relative perspective to those metrics and you can see for yourself if the local region is performing better or worse than the state or the country. If you want all of this good data on one page, then look no further than Litpoodle.com. LitPoodle offers these on our intuitive platform. Use this platform to get a quick estimation of your rental income (post taxes) and your rental yield.

LitPoodle also offers curated recommendations that show the best among the listed properties for a particular region. If you are agnostic about which region you want to invest in, then based on the parameters you key in for rental properties in New York, our platform will offer suggestions on similar properties in other investment worthy regions.

To start, check out the footer section below and click on the appropriate links to see a sample of properties. Using our platform, narrowing down on an investment worthy property becomes a less time consuming exercise.

Need a guide on what to look for and what to do before finalizing your first investment? Head to our next section.

Some things to Consider Before Finalizing A Real Estate Investment

Estimate your Returns

We are reiterating this from our previous points because it’s one that shouldn’t be missed. This is also one of those investing steps that most first-time investors avoid like the plague. There is a sense of fear when it comes to dealing with investing figures. This dread is unfounded. Understanding the rental yields and the cash flow scenario can help you make a sound investing decision. For a simple understanding, just glance at our Poodle-O-Meter to understand whether a property is investment worthy or not.

Look At Insurance

Now investing in a home, like any other tangible asset, makes it susceptible to damage. Natural calamities, fires, break-ins are rare occurrences but also likely. So it’s important to know what insurance coverage you can avail on your property.  If the area is susceptible to natural disasters, like for earthquakes for instance then it might not be prudent to initiate or increase coverage for that particular disaster. Also make sure you get landlord insurance from your insurance provider as opposed to homeowner insurance. These are integral decisions you need to make before Investing in real estate.

Understand Property Taxes & plan for it

Property taxes vary widely from state to state and from county to county and from neighborhood to neighborhood. So even within the same city, there might be differences in property taxes between one neighborhood and another. Certain neighborhoods might fall under special assessment zones and as a result taxes might be higher. So it is critical to understand what the property tax rates and special assessments are. Make sure you ask the seller or the seller’s agent for complete details. You can also cross verify this information at the county tax office.

Taxes can seem like a hassle but put away something every month towards tax payments so that it doesn’t feel like a big burden during fiscal year end. If you lack the discipline to consistently sock away something, then considering using an escrow account that automatically deducts every month.

Have the Property Inspected

Sometimes you may stumble upon a property and think “Hey, a few repairs and this place will shine”. We love your optimism but ask yourself – at what cost? Or even worse, some investors skip the property inspection step altogether trying to skimp the inspection charges. That is a recipe for disaster. You don’t want to find that the foundation of the property isn’t strong enough after you purchase it. So hire a professional property inspector to assess the place for you. A professional inspector will inspect the house for structural integrity and associated aspects. The other aspect to consider is pests. Often infestations lurk beneath the surfaces. To avoid additional costs of cleaning termites or wood-leaching insects, it’s best to have the property inspected before purchase.

Property Management

This step usually comes after you close the deal and gain access to the property. If you thought house hunting and finalizing the deal was time-consuming, then you are mistaken and you probably haven’t yet been introduced to the property management step. You will have to market the property, find tenants, whet them and take care of their needs once they are in your property. You can choose to do it on your own. But it’s best to have access to a property management company you can trust. Such companies help you manage tenants, rent collections and address repair issues and maintenance. Property Management services act as first responders to your tenant. They are the first point of contact if anything minor goes wrong – eg; plumbing issues, electrical issues, AC, heat and so on. When these little aspects are taken care of it helps you save time and focus on future investments.

LitPoodle offers access to comprehensive property management services. along with free access to our intuitive and easy to use property management dashboard. So Litpoodle is a one stop shop solution that helps first time investors make the best investment decisions and help manage it stress-free. Head to LitPoodle, Sign up for free and benefit from these services.

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Sources:

  1. https://managecasa.com/articles/us-rental-property-market/
  2. Median Home Price as of November 2021: https://www.zillow.com/
  3. Median Rent as of September 2021: https://www.apartmentlist.com/
  4. Median Rental Yield = (Annual Median Rent / Median Home Price)*100 (Unit = %)
  5. Vacancy Rate as of September 2021: US Census Bureau
  6. Employment Growth Rate (June 2021 vs June 2020): US Bureau of Labor Statistics
  7. Population Growth Rate (2010-2020): US Census Bureau
  8. Household Income (Annual): fred.stlouisfed.org
  9. Unemployment Rate as of October 2021: US Bureau of Labor Statistics