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I'm 22yrs old and make a 6figure income and I've always wanted to invest in something that my money works for me. I've spoken to a lot of ppl and they say ny is not a good market to invest in unless you have a million dollars or more. Is this true or is it still possible to invest in nyc without too much risk?
Well you do have to be able to buy a building or a condo that is typically going to be close to a million or well over that. When it comes to figuring out how much one would need for a minimum to get started, you would need 20% of the cost of a place, which you can do the math if a place costs $1.5 million. So that should give you a general idea.
I purchased a 2/2 fixer upper condo in Pelham Pkwy, Bronx fifteen years ago for under 100k. It was to live, not an investment; however, as an investment, it was probably one of the best for me. I had the foresight to know that purchasing a 2/2 was far more appealing than a 1/1, even though I was a young, single buyer. That increased the pool of buyers from singletons to families. My unit also had a third bedroom conversion already in place, so in reality I had a 2/2 with an office. I had the foresight to know that the area I bought in would withstand time -- the location was prime, walkable, next to parkland, and had easy access to all major highways and public transportation. I sold that unit in 2003, as the market started to get hot. It sold within a day with multiple offers, all over asking. I ended up pocketing more than double what I paid for. My mother lives in Shorehaven..she purchased around the same time as I did, and her unit was around 100Kish...now it's worth at least 3-4 times that...she doesn't need to worry about retiring. Like me, she's planning on pocketing the cash and moving to a place that has a lower COL. NYC real estate is incredibly lucrative, but you never buy when it's a hot market..and I'd never roll it over into another place in NYC. I'm not sure if the market will ever be like it was in 1997..that was just good timing on our part.
If you are starting out with an investment, be realistic and spend what you can afford to lose because the market conditions can change. Remember the Guiliani-Bloomberg years have been very favorable to the city as a whole, and especially to value creation in the real estate sector. Many of the market considerations did come into play during Guiliani's first term, and that began in 1994 -- so roughly twenty years of favorable policies that have helped to shape NYC, and were sustained by Bloomberg's policies to help the city through the recent financial crises.
In all honesty, looking at a $200-$300k investment, I would look to buying in an area that is popular with families and has decent schools. Forest Hills, Northeastern Queens, and Riverdale in The Bronx come to mind as being places where a multi-family residence could be purchased and rented to middle/upper middle-class families. Families tend to be a bit more stable financially than singles, especially if you buy a property that has rent that requires a split among two or more roommates. It is an even better proposition if you are looking for a live-work arrangement, where you live in one unit and have your part-time job as a real estate investor at the same house. However, you should pay your rent as well, to buy down the mortgage and create a reserve fund for the property, and then building up funds for additional property purchases.
A friend of ours inherited a tidy sum, and went on a buying spree of rental properties, not listening to experienced investors and buying the wrong types of properties, too many in good Manhattan areas with high rents and carrying costs, because she subscribed to the maxim that "NYC real estate only moves in one direction, up!" Owing to changes in employment and relocating out of state for a while, it became a financial drain to keep up the rental properties as management had to be contracted out. One property saved her investment, such that she only lost about $75k when the dust settled, and a key reason for that was the tenant offered to buy the unit for more than she paid.
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there is a big difference though in buy costs vs rents in the better areas of manhattan. you are not going to be profitable for many years more ofton then not.
i would not call it a stable anything. your income vs expenses can be all over the place and you may have to support that property many years to even flip it.
the closing costs to buy and sell require big gains just to get to the gate and that takes years.
5% to get in and 10% to get out are common costs that need to be gained just to break even.
real estate is a waiting game and the problem is most amatuers don't have the resources to wait.
they listen to other ill informed people who tell them the path to riches is buy something and then they go down the tubes because of lack of staying power and comittment.
we waited 30 years for our investment to really pay off. we had apartments with young stabilized tenants and the game plan was hang in long enough until they take a buy out or die .
it was a long lucrative wait but it requires staying power and comittment. that is not to common these days as you can see by those who could well afford their monthly mortgages but walked away because they were upside down and did not like that.
It's staple meaning the prices for the homes are not affected much by whats going on in the market. For example, the current recession we are STILL in. Chicago homes depreciated in value by 20-30% avg. In other states 50%. Homes in NY are still relatively high-increasing in value-not affected at all by this housing bubble (compared to other states).
If I had bought a 700,000 condo in Bronxville 6 years ago guess what its still worth 700,000 today. If I had bought a 5 million dollar apt in Manhattan 3 years ago guess what its probably worth 4.9-5.1 mil now. That is what I mean by staple or stable.
Property value will neither increase or decrease by much, it will remain the same. The reason why some say it's not a good idea right now is because property values of homes are expected to rise, but at a snail's pace. However, most home owner's buy homes not to rent, but to to live in. They view their home as an asset to rely on if things go south and then expect to resell the house at sale price or higher. For the avg. person, if their home is still worth the same as when they bought it xyz years ago, did not lose anything technically. In their eyes at least. After all, they still have an asset worth 5 mil (NYC example).
my market investments since 1987 blew my real estate investments away ,even our best of breed by central park.
in fact the investment newsletter i use is available, documented and available to anyone who wanted to do it. these were nothing special plain ole fidelity funds.
no one knows whats next or how things will be but if i had to do the past over i would have scrapped the real estate.
in fact the home we bought in kew garden hills in 1987 for 169k was sold in 2003 for 335k. the same amount in the market portfolio was just about 2 millon.
even the co-ops in the city did not see that growth .
no one can predict the future but anyone who thinks real estate is the key to riches better get a good education on investing before they act .
they need to fully understand that believing their own bull-sh*t is the quickest way of comitting financial suicide , as many already did thinking it was a no brainer flipping houses.
my market investments since 1987 blew my real estate investments away ,even our best of breed by central park.
in fact the investment newsletter i use is available, documented and available to anyone who wanted to do it. these were nothing special plain ole fidelity funds.
no one knows whats next or how things will be but if i had to do the past over i would have scrapped the real estate.
in fact the home we bought in kew garden hills in 1987 for 169k was sold in 2003 for 335k. the same amount in the market portfolio was just about 2 millon.
even the co-ops in the city did not see that growth .
no one can predict the future but anyone who thinks real estate is the key to riches better get a good education on investing before they act .
they need to fully understand that believing their own bull-sh*t is the quickest way of comitting financial suicide , as many already did thinking it was a no brainer flipping houses.
fidelity insight . since 1987 i have been using it. takes the pressure and 2nd guessing off of me.. so many times left to my own devices i would have tried to time things and so many times got it wrong.
now i devote 30 seconds a week to an update and that is the extent of my portfolio managment.
fidelity insight . since 1987 i have been using it. takes the pressure and 2nd guessing off of me.. so many times left to my own devices i would have tried to time things and so many times got it wrong.
now i devote 30 seconds a week to an update and that is the extent of my portfolio managment.
Thanks. I think I have invested enough in residential RE. Unless I get investors to pitch in, i don;t want to spread myself too thin. I would like to take a closer look at commerical RE but I need to educate myself thoroughly. I also wanna get into stocks. I have stayed away just looking and practicing on some fake trading sites that allow you to play the market with fake money/investments since 2008. I guess the key is diversifying.
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