Investing in New York Real Estate: Best Places to Invest in NY

Michele Lawrie, CREO - HomeAbroad  by Michele Lawrie
17 min read
Investing in new york real estate

Investing in New York Real Estate offers attractive returns and rental income opportunities for individuals looking to invest. With a population of over 19 million people, the Empire State is full of potential tenants who could benefit from your real estate investment.

In this article, we’ll discuss the benefits of investing in real estate in New York State and provide some essential tips to help you get started.

Overview of the New York State Real Estate Market

Real estate investment has become a popular investment opportunity for many individuals.

  • New York State is one of the most populous states in America, with an estimated population of over 20 million people as of 2019, which means there is a large pool of potential tenants looking for rental housing.
  • Property values in New York can vary widely depending on location. The median home value in New York City was $622,026, whereas the median home value in Buffalo, NY, was only $197,579.
    Borrowers looking to invest in real estate in New York have a wide range of options, depending on their investment goals and budget.
    While property values may be higher in urban areas such as NYC, there are still opportunities to invest in more affordable areas within the state.
  • The rental yield in New York is also excellent, with an average of 4% across the state. So, real estate investments in New York State can be lucrative and provide good returns on investment.
  • The state offers diverse real estate options, from single-family homes and condos to apartment buildings and larger multi-unit complexes.

Investment Property Mortgage Calculator

Calculate your investment property mortgage!

Calculate how much investment property you can afford.

NYC Rental Market is Strong; Why Invest in NYC?

Investing in New York Real Estate

Not one but many reasons make NYC real estate investment strong, some of which are discussed here:

  1. High population density and continued job growth create a steady demand for rental housing.
  2. New York City is a popular tourist destination with millions of visitors yearly, creating a strong demand for short-term rental properties.
    The average daily rate for an entire home/apartment listed on Airbnb in NYC was $429 as of 2022. However, rates can vary widely by neighborhood and time of year.
  3. The real estate market has remained strong despite the challenges posed by the COVID-19 pandemic, with Median prices for Manhattan luxury apartments up by 21% compared to 2019.
  4. There is limited space for new construction, creating a supply shortage and driving up rental prices.
  5. Rental properties offer flexibility, which is appealing to many renters who value the ability to move more easily compared to homeownership.
  6. The real estate industry in New York City is highly regulated, providing stability and predictability to the market.
  7. Various rental options are available, from luxury high-rise apartments to more affordable walk-up buildings catering to various budgets and preferences.
  8. New York City’s reputation as a global city with a thriving cultural scene and world-class dining, shopping, and entertainment options attracts renters worldwide.
  9. Many employers offer relocation packages and temporary housing assistance, increasing demand for rental properties.

As we have discussed the strength of the NYC rental market, it’s important to consider where to invest in the city. This will involve evaluating factors such as location, property type, and potential for growth to identify the most promising investment opportunities.

NYC Real Estate Investment: Where to Invest in New York City?

Investing in New York City real estate can be lucrative due to the city’s strong rental demand and many neighborhoods offer promising investment opportunities. It’s where investors can find the right property for their budget and investment goals.

  • The average rent for an apartment in New York City is $3,300 per month, representing a 5.48% increase compared to the previous year.
  • While the median home value in NYC may seem high at $622,026, our loan products make it possible for borrowers to invest in promising properties in certain neighborhoods. With the right qualifications, borrowers can use our lending options to secure the funding they need to invest in the right property for their budget and investment goals.
  • Despite its high cost, New York City offers great opportunities for investors looking to capitalize on its booming real estate market.
  • Areas such as Manhattan and Brooklyn are particularly popular with investors due to their high rental rates and proximity to the city’s many amenities.

Manhattan

  • Investors looking to invest in Manhattan should note that the average rent for an apartment is $4,614 per month. The median home value in Manhattan is $1.4 million, making it one of the country’s most expensive real estate markets.
    However, investors should note that these high prices translate into valuable opportunities for those seeking higher rental yields.

Brooklyn

  • Brooklyn is another popular location for investors looking to invest in New York City due to its proximity to Manhattan and other boroughs. The average rent in Brooklyn is slightly lower than in Manhattan at $3,250 per month, with a median home value of $950,000 as of the last quarter of 2022-23.

Additionally, areas like Queens and Staten Island offer lower prices, making them a good option for those looking for more affordable investments.

Queens

  • Queens offers investors a lower rental rate at $2,801 per month and a median home value of $555,954.

Staten Island

  • Staten Island also has relatively low prices compared to other boroughs in NYC, with an average rent of $2,500 per month and a median home value of $599.900.

Now there are other cities and neighborhoods throughout New York State that offer promising investment opportunities. Let’s have a look at them in the next section.

Best Places to Buy Rental Property in New York 2023

In this section, we’ll examine some of the best places to invest in rental properties in New York State, beyond the borders of New York City.

1. Buffalo

Buffalo, one of the best places to invest in NY
Buffalo, NY

Population: Buffalo is the second-largest city in New York State, with over 250,000 people, which makes it one of the first choices for the best places to invest in NY.

Affordable Housing: Buffalo’s real estate market offers relatively affordable housing, with the average home price at around $169.900.

Strong Rental Market: According to recent data, the average rent in Buffalo is around $1,237 per month, making it an excellent location for real estate investors looking for affordable rental properties.

2. Rochester

Rochester, NY skyline

Population: Rochester is the third-largest city in New York State, with over 200,000 people.

Affordable Housing: Rochester’s real estate market offers relatively affordable housing, with the average home price at around $138,000.

Strong Rental Market: According to recent data, the average rent in Rochester is around $1300 per month, making it an attractive location for real estate investors.

Additionally, Rochester has a low vacancy rate of around 7%, indicating high demand for rental properties in the area.

Strong Job Market: Rochester has a diverse economy with strong job growth in the healthcare, education, and technology industries.

3. Syracuse

Syracuse University Area

Population: Syracuse is the fifth-largest city in New York State, with over 140,000 people.

Affordable Housing: Syracuse’s real estate market offers relatively affordable housing, with the median home price at around $159,000, lower than the national average.

Strong Rental Market: According to recent data, the average rent in Syracuse is around $1,447 per month, making it an affordable location for real estate investors looking for rental properties.

Student Population: Syracuse is home to several universities, including Syracuse University and Le Moyne College, creating a steady demand for rental properties.

4. Albany

Albany, NY Skyline

Population: Albany is the capital of New York State and has a population of over 97,000 people.

Affordable Housing: Albany’s real estate market offers relatively affordable housing, with the median listing home price at around $229,000.

Strong Rental Market: According to recent data, the average rent in Albany is around $1,100 per month, making it a desirable location for real estate investors interested in rental properties.

Strong Job Market: Albany has a diverse economy, including government, healthcare, education, and technology sectors, which can provide stability to the local real estate market.

Albany is also a college town, home to several universities and colleges, which can provide a steady stream of renters for real estate investors.

5. Poughkeepsie

Poughkeepsie, NY above the town view

Population: Poughkeepsie is a city in the Hudson Valley region of New York State, with over 30,000 people.

Affordable Housing: Poughkeepsie’s real estate market offers relatively affordable housing options compared to nearby cities like New York City and Albany.

The average home price in Poughkeepsie is around $315,000, significantly lower than the average home price in those larger cities.

Strong Rental Market: According to recent data, the average rent in Poughkeepsie is around $1,961 per month, making it an attractive location for real estate investors.

Proximity to New York City: Poughkeepsie is located just 75 miles north of New York City, making it an excellent location for commuters.

6. Ithaca

Ithaca, NY

Population: Ithaca is a college town in upstate New York with over 30,000 people.

Affordable Housing: The average home price in Ithaca is around $305,000, which is higher than the average for the state of New York.

However, there are still opportunities to find more affordable housing options in Ithaca, mainly if you are willing to look outside the city center or consider smaller properties. Additionally, various government programs and initiatives aim to support affordable housing development in Ithaca.

Strong Rental Market: According to recent data, the average rent in Ithaca is around $1,353 per month, making it an affordable location for real estate investors looking for rental properties.

Substantial Student Population: Ithaca is home to Cornell University and Ithaca College, creating a steady demand for rental properties.

7. Saratoga Springs

Downtown Saratoga Springs, NY

Population: Saratoga Springs is a city in upstate New York with over 28,000 people.

Affordable Housing: Saratoga Springs’ real estate market also offers relatively affordable housing, with the average home price at around $496,000.

Additionally, the city has programs in place to support affordable housing initiatives, including the Saratoga Springs Affordable Housing Task Force, which works to increase the availability of affordable housing options.

Strong Rental Market: According to recent data, the average rent in Saratoga Springs is around $1,700 per month, making it an attractive location for real estate investors.

8. Schenectady

Night View Schenectady, NY

Population: Schenectady is a city in upstate New York with over 65,000 people.

Affordable Housing: Schenectady’s real estate market offers relatively affordable housing options, with the average home price at around $256,000.

Strong Rental Market: According to recent data, the average rent in Schenectady is around $1,300 per month, making it an affordable location for real estate investors looking for rental properties.

9. Binghamton

Binghamton, NY

Population: Binghamton is a city in upstate New York with over 45,000 people.

Affordable Housing: Binghamton’s real estate market offers relatively affordable housing, with the average home price at around $110,000.

Strong Rental Market: According to recent data, the average rent in Binghamton is around $750 per month, making it an attractive location for real estate investors.

10. Yonkers

Yonkers, NY

Population: Yonkers is the fourth-largest city in New York State, with over 200,000 people.

Affordable Housing: Yonkers offers relatively affordable housing options compared to nearby New York City, with the median home price at around $400,000.

Strong Rental Market: With an average rent of around $2,350 per month, Yonkers has a strong rental market and high demand for rental properties, making it an attractive location for real estate investors.

Investing in real estate in any of these cities can be a profitable opportunity, but it’s essential to do your due diligence and conduct thorough research before making any investment decisions.

Factors to Consider when Investing in Rental Properties in New York State

When investing in rental properties in New York State, there are several factors to consider to make an informed decision. Here are some key factors to keep in mind when looking for the best places to invest in rental properties in New York State:

1. Rental demand and vacancy rates

One of the most critical factors to consider when investing in rental properties is the rental demand and vacancy rates in the area. High rental demand and low vacancy rates indicate a robust rental market, making it an attractive location for real estate investors.

According to recent data, some of the top locations for rental demand in New York State other than New York City; are Buffalo and Rochester.

2. Employment rates and job growth

Employment rates and job growth in an area are critical factors when investing in rental properties. Areas with stable employment rates and job growth are more likely to have a stable rental market, making it a sound investment option for real estate investors.

3. Population Growth and Demographics

Population growth and demographics can also impact the rental market in an area. Areas with a growing population and a diverse demographic tend to have a more stable rental market, making them attractive locations for real estate investors.

4. Housing Affordability

Housing affordability in an area is a crucial factor to consider when investing in rental properties. Areas with affordable housing are more likely to have a stable rental market, making it an attractive option for real estate investors.

5. Property tax rates and regulations

Property tax rates and regulations vary by state and can significantly impact the profitability of rental properties. Researching the area’s property tax rates and regulations is essential before investing in rental properties.

6. Location

The location of a rental property is a critical factor to consider, as it can impact both the rental income and the potential for appreciation. In New York State, factors such as job growth, population growth, and access to transportation can all impact the value of a rental property.

7. Property Type

The type of rental property is another important factor to consider. In New York State, investors can choose from various property types, from single-family homes to multifamily buildings to commercial properties. Each property type has its advantages and disadvantages, and investors should choose the type that aligns with their investment goals.

8. Financing

The financing options available for rental properties can also impact the investment decision. In New York State, investors can choose from various financing options, including traditional mortgages, hard money loans, and private financing.

Why It’s Not About Rental Yield?

Regarding the best places to invest in NY, many investors focus solely on yield or return. However, focusing on yield alone can lead to poor investment decisions and missed opportunities.

Understanding Yield in Real Estate Investing

  • Yield is the return on investment, typically expressed as a percentage of the initial investment.
  • While yield is an important factor when investing in rental properties, it should not be the only factor.

Why Yield Isn’t the Only Factor to Consider

  • Yield can be a misleading metric, as it does not consider factors such as appreciation potential and tax benefits.
  • In some cases, a rental property with a lower yield but a higher potential for appreciation may be a better long-term investment than a property with a higher yield but limited appreciation potential.
  • Additionally, tax benefits such as depreciation and deductions can impact the overall return on investment.

How to Invest in Real Estate in NY?

In this section, we’ll take a closer look at how to identify emerging areas in New York State and what factors to consider when making investment decisions.

  • Look for neighborhoods with rising property values and increasing rental demand.
  • Research local economic trends and job growth in the area.
  • Look for areas undergoing development or revitalization, such as new commercial or residential projects.

2. Consider the Demographics of the Area

  • Look for neighborhoods that are attracting young professionals or families.
  • Research the area’s population growth and consider if there is a need for additional rental properties.
  • Consider the accessibility of the area, including transportation options and proximity to amenities like shopping and entertainment.

3. Analyze the Rental Market in the Area

  • Look at the average rent in the area and compare it to the cost of purchasing a property.
  • Research the vacancy rate in the area and consider how quickly rental properties are being leased.
  • Look at the types of rental properties in demand, such as apartments or single-family homes.

4. Work with a Local Real Estate Agent

  • A local real estate agent can provide valuable insights into emerging areas and investment opportunities.
  • Consider working with an agent specializing in the rental properties you are interested in.

5. Shop for the Right Lender

  • Not all lenders are the same. Shop around for the best loan terms and rates.

Find the best investment mortgage lender for free.

6. Gather Documents

  • Lenders will require documentation to verify your income, assets, and other financial information.
  • Be sure to gather these documents ahead of time to streamline the application process.

7. Apply for the Loan

  • Once you have gathered your documents, you can apply. This typically involves filling out an application form and submitting your documentation to the lender.

8. Get Approved

  • After the lender reviews your application and documentation, they will decide whether or not to approve your loan. You will receive a loan commitment letter outlining the loan terms if approved.

9. Home Inspection

  • Before closing on the loan, the lender will require a home inspection to ensure the property is in good condition and worth the loan amount.

10. Underwriting

  • The lender will also underwrite the loan, which involves verifying the information provided in the application and documentation.

11. Closing

  • Finally, you will close the loan and take ownership of the property.

Benefits of Investing in New York Real Estate

Investing in New York real estate can offer many benefits, making it a popular choice for many investors. Here are some of the potential financial benefits of investing in real estate in New York:

1. Appreciation

New York’s real estate market has a proven track record of long-term appreciation.

  • The past 100 years show real estate prices have continued to rise and have been appreciated almost 1,000 times every decade.

This means that investors who purchase property in New York may see significant returns on their investment over time.

2. Rental Income

One of the main benefits of investing in real estate in New York is the rental income potential.

The city’s high demand for rental units and limited housing supply has driven up rental prices, making it an excellent market for investors seeking a steady stream of passive income.

  • The average rent for an apartment in New York City is $3,200, representing an increase of around 6% compared to the previous year.

3. Tax Advantages

Real estate investments offer tax advantages that can help investors maximize their returns.

For example, rental income from real estate is generally taxed at a lower rate than other types of income, and investors may take advantage of deductions such as mortgage interest, property taxes, and depreciation.

  • Additionally, New York State has implemented an Angel Investor Tax Credit program, which provides a credit of up to 20% of the capital invested in qualified businesses for investors.

Here are some more reasons why you should invest in NY State:

  1. New York State has a population of over 19.3 million, making it the fourth most populous state in the US.
  2. The median rent for a two-bedroom apartment in New York State was $1,474 in 2019, higher than the national average.
  3. In 2022, the vacancy rate for rental properties in New York State was 4.3%, lower than the national average of 5.8%.
  4. New York State offers a variety of tax incentives and exemptions for real estate investors, including the 421-a tax abatement program for new construction or renovation of residential buildings.
  5. The state’s economy is diverse and robust, with major industries, including finance, healthcare, and technology, providing a stable job market for renters.
  6. The median home value in New York State is $405,327, indicating a potential for appreciation in property values over time.
  7. New York State is a popular tourist destination, with over 265.5 million visitors in 2019, providing short-term and long-term rental income opportunities.

Challenges of Investing in New York Real Estate

Investing in New York real estate can be lucrative but comes with challenges and risks. Let’s take a look at some of the challenges that investors may face:

  • High Costs: The cost of entry for Investing in New York Real Estate is high, making it challenging for some investors to get started.
  • Competition: With so many investors eyeing the New York market, competition can be fierce, making it harder to find good deals.
  • Potential Market Volatility: The market for Investing in New York Real Estate can be volatile, and the value of properties can fluctuate quickly.

To mitigate these risks and maximize your returns, there are a few tips you can follow:

  • Do Your Research Before investing in any property, do your due diligence and research the market thoroughly. This will help you make informed decisions and avoid costly mistakes.
  • Build Relationships – Building relationships with real estate agents, brokers, and other professionals can help you stay on top of new opportunities and gain an edge in the competitive market.
  • Be Patient – The New York real estate market can move quickly, but it’s essential to be patient and wait for the right opportunity. Don’t rush into a deal because you’re afraid of missing out.

By following these tips and knowing the potential challenges and risks, you can navigate the New York real estate market and build a successful investment portfolio.

Tips for Investing in New York Real Estate: Rental Properties

1. Conduct Thorough Research on the Local Rental Market

  • Before investing in rental properties in New York State, it’s important to conduct thorough research on the local rental market to understand the supply and demand dynamics in the area.
  • This research should analyze rental trends, vacancy rates, and property values. You can use online resources like Homeabroadinc.com to gather this data and get professional help.

2. Work with a Local Real Estate Agent

  • Working with a local real estate agent can provide valuable insights into the New York State rental market, including trends and investment opportunities.
  • A local agent can also recommend the best areas to invest in based on your investment goals.

3. Consider Hiring a Property Management Company

  • Managing rental properties in New York State can be time-consuming, particularly for out-of-state investors.
  • Consider hiring a property management company to help manage your investment properties and handle tenant issues.
  • Property management companies can help you stay updated on local regulations and rental market trends.

4. Have a Solid Financial Plan in Place

Before investing in rental properties in New York State, it’s essential to have a solid financial plan in place. This includes:

  1. Creating a budget for your investment.
  2. Determining your desired return on investment.
  3. Considering factors such as mortgage costs, property taxes, and maintenance expenses.

5. Stay Up to Date on Local Real Estate Laws and Regulations

  1. Real estate laws and regulations in New York State can be complex and change frequently.
  2. It’s essential to stay updated on local laws and regulations related to rental properties, such as tenant rights, eviction procedures, and building codes.

Investment Property Mortgage with No Personal Income Verification – DSCR Loan

If you are looking for an investment property mortgage, then DSCR could be a great option. This loan program solely relies on your property’s income and not yours. So, if you want a loan without personal income verification, then the DSCR loans are a great option for you.

For DSCR loans, the property you are financing should be capable enough to generate income to cover the mortgage payments.

To know more about this loan program, consider this guide on DSCR loans in New York.

Check your eligibility for a DSCR loan in New York.

Conclusion: Investing in New York Real Estate is a Smart Move!

Investing in New York State real estate can be a lucrative and rewarding experience. You can make informed decisions and maximize your returns with the right strategies and knowledge.

Do your research, build relationships with experts, be patient, stay updated on local laws and regulations, and have a solid financial plan for success.

Good luck, and happy investing!

FAQs

What Makes NYC Real Estate Investment Attractive To Investors?

Despite its high prices, New York City’s huge population makes it an extremely popular and highly sought-after real estate market. The city’s real estate market remains competitive due to its strong demand.

What is the Mansion Tax in New York City, and Should Investors Avoid it?

The mansion tax is applied to properties worth $1 million or higher and is calculated incrementally based on the property value. The tax should not be the sole reason to avoid investing in real estate in New York City.

Is Investing in New York Real Estate overpriced?

New York real estate is often considered expensive due to its high median home value and rental rates. However, these prices reflect the city’s strong economy and job market, making it a valuable investment.

How much do Real Estate Investors make in NYC?

The amount real estate investors make in NYC varies depending on property location, type, and investment strategy. With potential for long-term growth can be profitable for those willing to invest in the right properties.

Is NYC Real Estate in a Bubble?

While there may be concerns about a potential real estate bubble in NYC, the city’s strong demand and limited supply make it a unique market that may not follow typical bubble patterns.

Is NYC a Good Investment?

Despite its high cost of entry, NYC can be a good investment for those willing to research and choose the right property in a desirable location with strong rental demand.

How to Identify Emerging Areas in NY?

To identify emerging areas in NY, research local real estate market trends, consider the area’s demographics, and analyze the rental market. Online resources like Homeabroadinc.com to gather this data and get professional help can be beneficial.

Where to Invest $150,000?

There are many factors to consider including your investment goals, risk tolerance, and market conditions. It’s important to research and work with a trusted advisor to determine the best investment strategy for your unique situation.

Is NYC a Good Place to Buy a Rental Property?

While NYC can be an expensive market to invest in, it offers strong rental demand and the potential for long-term appreciation. It’s important to consider a knowledgeable agent or advisor carefully to make an informed investment decision.

Michele Lawrie, CREO - HomeAbroad
About the author:
Michele Lawrie is the Chief Real Estate Officer at HomeAbroad and has worked as a real estate professional for the past 15 years, helping domestic and foreign national clients navigate the home buying and selling process.
She is passionate about real estate and strives to educate read more...