New York City real estate is not typically the first option that jumps to mind when investors are looking for properties to buy. While the Big Apple is known for high demand, real estate here has been historically overpriced and unlikely to be budget-friendly. The secret to investing in NYC real estate comes down to knowing how to identify good neighborhoods to buy into and finding properties under the cost.
Traditionally, investors would look at comparable historical data and measure home sales and new developments in the market to see if they have a deal on their hands or not. However, with the impact of the coronavirus still lingering, these measures might not provide clear answers that they used to. This means that for investors to be successful in this specific market, they’ll need to make additional considerations to buy a property that will offer a high return.
2020 has seen plenty of changes being introduced into the NYC real estate market, and one of the most beneficial to buyers has been a slowdown in competition. More time allows the investor to do more thorough research and look at deals from all angles before making an offer, not usually the case in this competitive market. Signs have emerged that real estate in the city is starting to pick up again, and the number of listings has grown somewhat even if the total is lower than last year’s records.
Another important factor to consider when looking at real estate in NYC is how COVID-19 has affected buyers and tenants. Extended lockdowns have seen many decide to move away from apartment living, and demand for townhouses or more boutique-style living is growing. Others have decided to leave the city behind for the space and safety that suburbia can provide.
Still, there are several NYC neighborhoods that hold a lot of potential for real estate investment and with the goal of buying for less, there might not be a better time to get into the market. We’ve put together our list of neighborhoods to watch in every price point below:
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#1: The Upper East Side
Manhattan may be the hub of NYC but with fewer investment opportunities this is not necessarily a lucrative market to buy into. This is even more true for investors that are only just starting out. The reality is that investors will have much more luck looking towards the Upper East Side if they’re interested in luxury properties, and there are several reasons for it. The Upper East Side has long been a good area of investment, and more buyers are sitting up and taking notice. Known for having many co-op buildings, the Upper East Side is set up to stand strong against market downturns.
One of the reasons why The Upper East Side is proving more popular with buyers is because of the great location and luxury style of living, At the same time, living there still puts buyers and tenants in close enough proximity to the Downtown hub and all of its amenities.
Average property prices for the Upper East Side currently come in at $1,090,671 with projections for growth up to 8% in the next year.
#2: Bay Ridge
A more central option located close to the NYC metro is Bay Ridge. Cheaper than many of the other metro areas in New York City, Bay Ridge offers the suburban feel that buyers are now flocking to in droves. Bay Ridge’s distance from Manhattan has helped to keep prices lower and negated attempts to build denser developments.
Despite the commute distance from Manhattan, Bay Ridge is now primed for a boom as a direct ferry service has been set up between the neighborhood and Wall Street. Other non-housing developments like new subway lines are a promising sign of incoming growth and demand. Also home to good schools, Bay Ridge is a stable area with a lower cost of living.
Compared to the other property locations listed in this article, Bay Ridge has one of the lowest costs for real estate. Investors can expect to pay $493,668 for a residential property, down 6% from the average back in 2019.
#3: Chelsea
The next option on the list is the neighborhood of Chelsea which is seeing rapid growth bolstered by the close-by Hudson Yards development project. The development will see the introduction of more residences and spaces like malls, office buildings, and hotels with the first phase opening to the public in 2019.
Chelsea has seen an influx of interest with the launch of this development, and investors that are able to get into the market now will have the advantage of this influx to count on when it comes time to find tenants or put the property up for sale.
The median property price for real estate in Chelsea, NYC is $882,122 following a decline of around 7% due to the economic downturn experienced this year. Still, this price is expected to start recovering again over the duration of 2021.
#4: Inwood
Inwood has consistently been a more affordable investment option than Manhattan and some of the other popular neighborhoods in New York. But what makes Inwood worth investing in compared to the other locations in this article?
The answer is that Inwood has not seen any major developments in recent years, meaning housing prices have not skyrocketed as much as they have in other areas. Inwood’s close proximity to New Jersey might seem like a strange place to buy property if you want city properties, but the area has many single-family homes and condominiums that offer steady rates of appreciation.
Although Inwood has several options available for apartment-living, the area has strict restrictions on how high apartment buildings can be. This means there has been a shortage of affordable flats that offer high-density. If the investor was able to buy a property that can be redeveloped to meet this need, the potential for a good ROI is high.
Inwood also has the added draw of green space and open air. Known for parks and natural forest areas, Inwood has several popular walking trails but is still close enough to the amenities of Downtown to be worthwhile to buyers and tenants.
In Inwood, investors can expect to see property prices around $539,904 with minimal impact caused by the virus.
#5: Washington Heights
Providing investors with steady appreciation at a lower cost than the streets of Manhattan can provide, Washington Heights is an up and coming neighborhood that investors should consider when looking for their next deal. Where else in New York can you find condos that cost under a thousand dollars per square foot?
Washington Heights is the ideal investment space for investors that want exposure to the NYC market but at a more beginner-friendly price point. Condos are particularly popular in this area and the tax abatements that investors can benefit from make them even more desirable.
In terms of amenities, buyers and tenants love this location for another reason: top educational institutions. There are several noteworthy colleges in this location, and with excellent rental rates, investors can be sure their income will be consistent.
Investors hoping to buy into this market should spend some time looking at comparable real estate data to ensure they are getting the best deal. Washington Heights is one of the more affordable investment locations on this list with the average property price being $508,320. This is a decrease of over 5% from prices at the same time last year, a temporary decline that is projected to have corrected within a few months.
#6: Hudson Square
Hudson Square might be known for its commercial investment options, but there is some housing inventory thrown into the mix. Mostly made up of townhouses, condos, and factories, Hudson Square has made this list for one specific reason: Google.
The tech giant has recently announced plans for a major expansion into Hudson Square, leasing space that will in the near future become the new base of operations for Google NYC. This expansion makes it an ideal time to buy residential and get in on the neighborhood before employees start to rush in and look for homes to match the new company. The demand is forecasted to raise home prices significantly so there is no time to waste.
The general property asking price in Hudson Square is $296,000, making this option more suitable for beginner investors than some of the other high-priced locations on the list.
If there is one thing that the outbreak of the virus has brought about that has a silver lining, it’s the possibility of investing in NYC real estate with lower carrying costs and interest rates. Even in a post-pandemic world, there are opportunities for investment out there in the hottest city neighborhoods and now in more suburban areas too.
With the circumstances of this year looming over them, many sellers have opted to accept offers below their asking price or risk not selling the home at all. This means for the next few months at least there will be investment potential in spaces there might not have been before.
Final Thoughts
Following the health implications of this year, it’s important to bear in mind that buyers and tenants are looking towards more suburban living as a solution to social distancing and safety. The key is to make moves quickly before the market starts to recover to pre-COVID valuations.
Buying real estate in NYC is not always a straightforward process, but it can be rewarding if the investor knows where to look. The expensive New York market is not an easy one to take on but using comparable data and specific tools for real estate investors will clarify a lot of the considerations that need to be made.
One such tool is FlipScout from New Silver. This free property-finding tool can be used to look for undervalued or pre-foreclosed homes in locations across the country, including the sought-after New York market.
Now more than ever the NYC real estate market has become more buyer-friendly, and with the temporary softening of property prices now is a good time to buy if you have the capability. The even better news is that financing the next big real estate deal is as easy as filling in a 10-minute application online with New Silver.
Lastly, it is worth mentioning that flipping houses in NY is still a very popular practice among property investors. While houses tend to be expensive, there are plenty of rundown homes and distress properties that will always present opportunities for investors to exploit, provided they have a firm grasp of the after repair value.