3 Ways to Invest in New York City Real Estate
:max_bytes(150000):strip_icc()/nyc-5bfc3ca146e0fb0051c22395.jpg "3 Ways to Invest in New York City Real Estate")
New York City real estate is renowned for investment opportunities. As one of the most famous cities in America and the world, New York City property presents unique investment opportunities.
There is one problem, however. Real estate in New York is expensive. Because of this, one might believe the high prices leave little investment opportunity. That is not the case. There are ways to invest in New York City real estate even if you don’t live there. Here are a few of the best ways to do so.
Key Takeaways
- Though the New York City real estate market is one of the most expensive in the world, there are unique investment opportunities available.
- Investors can utilize turnkey properties or property management services to invest in NYC real estate without being a resident there.
- Investors can gain access to NYC commercial and residential properties through real estate investment trusts (REITs).
- Buying property directly can be costly and difficult but can be lucrative in the long run.
1. Invest Through a Turnkey Property
A turnkey property allows investors to buy a property, turn around, and rent it immediately. This may sound impossible to find, but there are companies that specialize in selling these properties. This presents a unique opportunity for those who want to invest in real estate in New York City but don’t live there.
A property management company or a local employee may eat into profit, though it can go a long way to help manage your investments.
2. Try a REIT
Much like investing in a turnkey property, a real estate investment trust (REIT) allows local and global investors to invest in New York City real estate. There are a number of REITs that are heavily tipped toward New York real estate, including Vornado, SL Green Realty, Paramount Group, and Empire State Realty Trust.
A REIT, in many cases, allows investors to invest in commercial or residential property as well as mortgage loans. What’s unique about New York City REITs is their singular focus on commercial or retail buildings in prestigious properties like Grand Central Terminal or Union Square.
A REIT, generally speaking, allows investors access to a grouping of such properties that trade like a stock. By their nature, this provides dividend income (as they’re required to distribute 90% of their taxable income annually through dividends) as well as diversification opportunities. They’re also prone to risk in rising interest rate climates.
In 2024, the average purchase price of a one-bedroom condo in Manhattan, New York City was $1.2 million.
3. Buy Property Directly
A final, though likely cost-prohibitive, opportunity to invest in New York City real estate is through purchasing properties directly. This is easier said than done due to the inherent demand within the city. That being said, there are often stricter requirements investors face if they choose to invest in real estate in New York City.
What to Look For
Due to the extreme popularity of real estate investments, there are some things to keep in mind if you plan to invest. The first key is to realize you’re competing with many other investors. However, that isn’t the only thing to look out for:
- Rent is determined by the number of bedrooms, not their size.
- Lower-income areas tend to have more maintenance issues as well as higher turnover.
- Compare sales price against what you can earn in rent so you don’t over-leverage yourself.
Ultimately, there is an opportunity to invest in New York City real estate if you’re able to act fast and have a good plan in place.
What Is the Average Return on Real Estate in New York City?
The average annual appreciation rate for real estate in New York City is 6%. The cumulative appreciation rate over 10 years was 79.16%.
Is Investing in New York City Real Estate Worth It?
Yes, investing in New York City real estate can be profitable. Because New York City is a thriving, popular metropolis, and a global financial and cultural hub, it has strong appreciation rates and high rental demand. Though the real estate market is expensive and can be hard to enter, it can be a good investment. Like any real estate market, it is important to understand the specific dynamics, property taxes, real estate laws, risks, and profit potential before committing to any real estate investment.
What Is the Average Rent in New York City?
For 2024, the average rent for a studio apartment in New York City was $4,050, for a one-bedroom, $4,997, and for a two-bedroom, $7,573.
The Bottom Line
New York is world-renowned for its real estate as well as the high cost of its properties. There are numerous ways to take advantage of it and grow your wealth, whether that be investing in REITs, turnkey properties, or buying property directly. Just make sure to evaluate the costs, risks, and upside potential before making any high-cost investments.
link
