New York Overview
New York City is the financial, media, and cultural capital of the world.
New York’s population of nearly 8.4 million people makes it the largest city in the US as well as the most densely populated major city nationwide. New York is the center of the New York metropolitan area, which with a population of nearly 20 million residents constitutes the largest metro area by urban landmass globally and one of the world’s most populous megacities. The Big Apple is also the center of the combined statistical area with a population of 22.7 million residents.
New York City is made up of five boroughs – Manhattan, Brooklyn, Queens, The Bronx, and Staten Island. Each one of these boroughs has the status of a separate county in the State of New York.
NYC is a national and international political, commercial, technological, research, educational, tourism, arts, sports, and fashion hub. As home to the UN Headquarters, the city is also an important international diplomacy center. Economy-wise, if New York was a country, it would have had the 12th highest GDP. New York hosts the two largest stock exchanges: the New York Stock Exchange and NASDAQ.
New York is a real cosmopolitan and global city. In recent years the ATKearney 2019 Global Cities Report has ranked NYC as the top global city worldwide. Furthermore, according to the 2018 the Globalization and World Cities (GaWC) Research Network ranking, New York is an Alpha++ global city.
NYC is also a major educational and research center. It is home to over 120 colleges and universities including the globally renowned Columbia University, New York University, and St. John’s University.
The City That Never Sleeps is not only the most visited place nationally but also one of the most popular tourist destinations globally. Every year NYC welcomes over 62 million visitors including both domestic and foreign tourists. This figure comprises leisure tourists which come to visit one of the numerous famous tourist attractions and business travelers who come to do business in the financial capital of the world. The Big Apple is home to some of the most popular global tourist attractions including the Statue of Liberty, Times Square, Broadway Central Park, the Metropolitan Museum of Art, Rockefeller Center, Wall Street, Grand Central Terminal, South Street Seaport, Chinatown, and Little Italy. This is also the most photographed city around the globe. Taking into consideration the status of New York, it comes as no surprise that Airbnb New York is among the largest short term rental businesses both at the national and international level.
The Economist Intelligence Unit Worldwide Cost of Living 2019 ranking placed NYC as the 7th most expensive city globally. Moreover, the Big Apple is home to the highest number of billionaires in the entire world.
The New York City’s skyline is dominated by skyscrapers. The New York real estate market is famous for its notoriously high prices. Commercial and residential property prices are frequently unaffordable for both local and out of state real estate investors. The high home values are the main reason why the City That Never Sleeps has one of the highest percentage of renters (77%) vs. homeowners in the entire US housing market. This translates into a very strong demand for traditional, long term rental properties.
New York Real Estate Market 2019 Overview
- Median Property Price: $1,128,200
- Average Price per Square Foot: $893
- Real Estate Appreciation: 136% since 2000 (significantly above the New York State real estate appreciation rate and the US average)
- Days on Market: 136
- Listings for Sale: 6,550
- Price to Rent Ratio: 33 (high)
- Buyer’s Market or Seller’s Market: A buyer’s market
- Renters’ Percent of Population: 77%
New York is one of the greatest cities in the world. Thus, it comes as no surprise that the New York City real estate market ranks among the best places to invest in real estate in 2020 not only in the US but also worldwide. The Emerging Trends in Real Estate: United States and Canada 2020, published by PwC, positions New York-Brooklyn as #14, New York-Other Boroughs (Queens, the Bronx, and Staten Island) as #39, and New York-Manhattan as #40 among the most important US Markets to Watch for Overall Real Estate Prospects. According to the report, both investor demand and opportunities for real estate development and redevelopment are strong in the NYC housing market. PwC highlights the job opportunities, the rise in the technology sector, and the diverse economy as the main drivers of the performance of the New York real estate market.
After the massive rise in NYC real estate prices in the past years, the New York housing market is currently a buyer’s market. This fact makes NYC similar to other hot places for real estate investing such as the Miami real estate market and the Los Angeles real estate market. Demand for real estate properties is slowing down, partially due to the unaffordable NYC property values. Another reason for the decrease in demand is the failure of the Amazon HQ2 deal in the Long Island City neighborhood in the Queens borough. Currently New York real estate listings spend an average of 136 days on market, and there is a good inventory of New York houses for sale: 6,550. The presence of a buyer’s market is particularly beneficial for first-time real estate investors as it means that they can buy a rental property without entering into bidding wars with highly motivated homebuyers and more experienced property investors. Moreover, with 6,550 homes for sale in New York, investors can easily find the most profitable rental property which meets their budget and other investment criteria and requirements. To find and analyze income properties quickly and efficiently, investors should get access to the must-have real estate investment tools in the US housing market for rental property analysis.
One of the most important factors which real estate investors should consider before deciding to buy rental properties in the NYC housing market is the extremely high property values. New York real estate market analysis shows that the median property price in The City That Never Sleeps exceeds the national median home value of $231,000 by $388%. Overall, New York real estate prices , comparable with those in the San Francisco real estate market, are prohibitively expensive for local investors, out of state investors, and foreign investors. This means that property buyers should figure out a solid rental property financing method before even starting a property search in the NYC real estate market as cash purchases are virtually impossible.
Over the past two decades, New York City real estate prices have experienced a very high natural appreciation at 136%, exceeding both the state and the national averages. After the Great Recession, home values in NYC quickly picked up and went above the pre-2006 levels. In 2020, prices are expected to grow very slowly, at below the nationwide real estate appreciation rate. This is one of the indicators that New York will continue to be a buyer’s market in 2020.
Rental demand is strong for both types of NYC investment properties: long term and short term rentals. New York has one of the highest shares of renters vs. homeowners in the entire US housing market, accounting for nearly 6.5 million tenants. The high price to rent ratio in the New York real estate market of 33 also shows that residents prefer to rent rather than own in the Big Apple. This extremely high demand is one of the most important drivers of profitability for traditional NYC real estate rentals.
The situation is similar in the short term rental market. The status of NYC as a top tourist destination globally and a major economic, financial, business, commercial, educational, cultural, and arts hub worldwide makes it one of the most popular Airbnb destinations, together with Tokyo and Paris. The more than 62 million tourists who visit New York City every year assure high Airbnb occupancy rate and high return on investment on NYC short term rentals.
Best Property Types for Investing in the New York Real Estate Market
- Single Family Homes for Sale in NYC: 1,971
- Median Property Price: $779,200
- Average Price per Square Foot: $721
- Average Monthly Traditional Rental Income: $2,360
- Average Traditional Cap Rate: 1.0%
- Average Monthly Airbnb Rental Income: $2,920
- Average Airbnb Cap Rate: 1.4%
- Condos for Sale in NYC: 2,868
- Median Property Price: $1,342,100
- Average Price per Square Foot: $953
- Average Monthly Traditional Rental Income: $3,270
- Average Traditional Cap Rate: 0.7%
- Average Monthly Airbnb Rental Income: $4,240
- Average Airbnb Cap Rate: 1.3%
- Townhouses for Sale in NYC: 240
- Median Property Price: $683,900
- Average Price per Square Foot: $366
- Average Monthly Traditional Rental Income: $2,220
- Average Traditional Cap Rate: 1.2%
- Average Monthly Airbnb Rental Income: $2,990
- Average Airbnb Cap Rate: 1.4%
- Multi Family Homes for Sale in NYC: 1,223
- Median Property Price: $,1270,100
- Average Price per Square Foot: $1,285
- Average Monthly Traditional Rental Income: $2,660
- Average Traditional Cap Rate: 0.5%
- Average Monthly Airbnb Rental Income: N/A
- Average Airbnb Cap Rate: N/A
- Foreclosure Homes for Sale in NYC: 159
- Median Property Price: $691,400
- Average Price per Square Foot: $414
- Average Monthly Traditional Rental Income: $2,510
- Average Traditional Cap Rate: 2.2%
- Average Monthly Airbnb Rental Income: $2,270
- Average Airbnb Cap Rate: 2.2%
Condos for sale in New York City are the most numerous property type among all homes for sale in New York, with 44% of the market share. This is a major difference between the NYC real estate market and other best places to invest in real estate, where the vast majority of listings comprise of single family homes. Single family homes for sale in New York City constitute 30% of all real estate listings, followed by multi family homes with 19% and townhouses for sale in New York city with 4%.
Why Investing in Single Family Homes in New York
Single family homes for sale in New York are one of the best investment property types in the Big Apple. They are suitable for beginner real estate investors and other investors with limited budget as they are listed for only 69% of the median NYC property price. At the same time, buyers have 1,971 rental properties for sale to choose from which allows them to find a money-making investment property responding to all their expectations in terms of price, rate of return, and other criteria. Single family homes offer the second highest return on investment for both rental strategies.
Why Investing in Condos in New York
Condos for sale in New York City are another top choice for investing in rental properties in terms of profitability. However, NYC real estate investors should take into consideration the fact that condos are 19% more expensive than other property types. These real estate properties are particularly expensive when you look at the price per square foot due to the amenities which they come with. This makes financing the purchase of a condo in the New York real estate marker even more challenging than buying an investment property of another type. Nevertheless, with 2,868 of condos in NYC for sale, investors can find an affordable and profitable rental property with the help of a Property Finder. Before deciding in favor of a condo investment, you should check the HOA’s rules and regulations to make sure that long term and short term rentals are allowed.
Why Investing in Townhouses in New York
Townhouses for sale in New York emerge as the best real estate investing strategy in The City That Never Sleeps. First of all, they cost only 61% of the median city level NYC real estate prices. Second, townhouses offer the best rate of return on a rental property for both rental strategies: as long term rentals in NYC and NYC vacation rentals. The only downside when investing in townhouses for sale in NYC is the fact that there are only 240 such real estate listings, which limits the choice of investors. Nevertheless, with the help of a Property Finder tool, investors can find a profitable rental property within their budget
Why Investing in Multi Family Homes in New York City
Multi family homes for sale in New York are also a viable real estate investment opportunity. Before deciding to buy a multi family home in the New York City real estate market, investors should be aware of the fact that this property type sells for about 13% more than other NYC houses for sale. However, multi family homes in general provide a major advantage. Namely, they allow investors to buy several rental units within the same location all at once, which means that they diversify their real estate investment portfolio immediately without complicating rental property management unnecessarily. If you want to be a DIY landlord, managing several rental properties within the same building is much easier and cheaper. If you are in search of passive real estate investing strategies, hiring a professional property manager for a multi family home makes a lot of financial sense. Furthermore, despite the higher price, multi family homes for sale in New York City are easier to finance with a mortgage. Banks and other lending institutions perceive multi family home investors as more trustworthy borrowers as having zero rental income is less of a risk than with a single family home, a condo, an apartment, or a townhouse.
Why Investing in Foreclosed Homes in New York
Foreclosed homes for sale in New York City offer an important opportunity for real estate investors to push up their return on investment. On average, NYC foreclosures sell for only 61% of the median property price in the New York real estate market, which makes them an affordable option even for beginner investors. Moreover, after a few repairs and fixes, they can easily be listed for the same rental rate as other investment properties, which means that investors will benefit from a better rate of return. In addition, applying some fixes to foreclosed homes is a good real estate strategy for benefiting from forced appreciation. With 159 foreclosures for sale in New York, real estate investors might be able to find just the right rental property they are looking for.
Important Stats for New York Real Estate Investors
Safety in the New York Real Estate Market
- Crime Rate Index: 30 (100 is highest)
New York is safer than 30% of US cities, with a high overall crime rate of 21 crimes per 1,000 residents.
Access in the New York Real Estate Market
- Walk Score: 98
- Transit Score: 100
- Bike Score: 88
New York is one of the most walkable cities in all of the US. It is ranked as a walker’s paradise, a rider’s paradise with world-class public transportation, and a very bikeable city. Running daily errands in NYC does not require a car.
Affordability in the New York Real Estate Market
NYC is a very expensive city. The average cost of living in NYC index excluding rent is the highest among major US cities. Rent is among the highest nationwide, second only to San Francisco. Overall, the average cost of living in New York City plus rent index is the highest in the country, followed by San Francisco and Washington, DC.
NYC Real Estate Taxes
- New York State Average Effective Property Tax Rate: 1.677% (above the national average of 1.08%)
- New York County Average Effective Property Tax Rate: 1.925% (above the national average of 1.08%)
- New York City Average Effective Property Tax Rate: 0.90% (below the national average of 1.08%)
New York State real estate taxes are paid on the assessed value of the property, not the current market value. The property assessment is conducted by a local official or a city or town assessor.
Real estate taxes include a state rate, a county rate, a city rate, and a school district rate. In some districts additional tax rates for funding projects such as parks and libraries also apply.
The effective property tax rate in New York State is high compared to the national average. However, the NYC real estate tax rate is actually low at 0.90%. Nevertheless, New York City real estate taxes are high with an average value of $8,237 because of the extremely expensive property prices in the local housing market.
In case you’d like to explore real estate investing opportunities in states with no property tax in order to reduce your recurring expenses and increase your return on investment, check out Texas, Hawaii, Alabama, Louisiana, West Virginia, and Wyoming.
New York Real Estate Market: Traditional Rentals
- Average Monthly Traditional Rental Income: $2,840
- Average Traditional Cap Rate: 0.8%
- Price to Rent Ratio: 33
- Renters’ Percent of Population: 77%
- Optimal Property Type: Townhouse or single family home
- Optimal Number of Bedrooms: 0 (studio) and 4
- Traditional Rental Listings: 63,416
- 3 Best Neighborhoods in NYC for Investing in Traditional Rental Properties: Arverne, Fieldston, and Stapleton
- 3 Worst Neighborhoods in NYC for Traditional Rental Properties: Longwood, Mill Basin, and Bay Terrace
Investing in traditional rental properties in NYC is one of the best real estate investment strategies in 2019, 2020, and beyond. The main driver of this strategy is the high rental demand in The City That Never Sleeps. New York has one of the absolutely highest proportions of renters vs. homeowners in the entire US housing market. A major reason for these NYC real estate trends is the unaffordable home prices which exceed one million dollars. Another positive factor is the high price to rent ratio. This means that renting makes more sense than buying a home for most people, which is great news for real estate investors in long term rentals.
National real estate data analysis points out that the New York City real estate market offers one of the highest traditional rental income levels in the US. Moreover, prices in the NYC rental market are increasing at the fastest rate since 2016, and this trend is expected to continue in 2020. From the perspective of real estate investors, this means that profitability will go up as New York real estate prices are projected to stay relatively unchanged, while rental income is forecast to continue increasing.
Real estate prices are one of the most important factors which investors should take into consideration. In general, property values determine whether a certain housing market is affordable for an investor or not. They also affect how easy or difficult it is to secure financing, whether cash or mortgage. In addition, the current market value of a rental property determines its return on investment, in terms of both capitalization rate and cash on cash return. The high property prices in New York are of concern for real estate investors. Not many investors can afford to pay a rental property price exceeding one million dollars. Thus, investors should consider the following two options. First, they can search through multi family homes for sale in the NYC real estate market. Despite the higher price, multi family homes are easier to finance because lenders see them as a lower risk investment due to the fact that 100% vacancy rarely happens. Second, investors should look into the NYC foreclosures which sell for only a fraction of the price of regular real estate listings. New York City real estate market analysis reveals that they are not only more affordable but also provide a higher rate of return because of the lower initial investment.
In terms of return on investment, experienced real estate investors might find the city average traditional cap rate of 0.8% to be discouraging. This is much below the recommended good cap rate of 8-12%. However, investors should consider the fact that this is only the average capitalization rate for the NYC real estate market, while the best NYC neighborhoods as well as individual investment properties for sale offer a significantly higher rate of return on a rental property. Furthermore, nationwide real estate market analysis shows that this cap rate is comparable to the return on investment in the rest of the best places to invest in real estate in 2019, 2020, and beyond.
New York real estate data points out that townhouses and single family homes are the most profitable investment property types to be rented out traditionally. That’s ideal for all those considering investing in traditional rental properties in the Big Apple. Townhouses and single family homes tend to attract good tenants, mostly comprised of young professionals and small families. These tenants pay rent on time and cause only reasonable wear and tear. This makes rental property management both easier and more cost-efficient. In NYC, the optimal number of bedrooms for traditional rentals is 0 (New York studios for rent) and 4.
Landlord-Tenant Law and Regulations in the New York Real Estate Market
When buying investment properties to operate as long term rentals, investors should have a look at the local landlord-tenant laws and regulations to ensure that they comply with all requirements. The good news for potential traditional rental real estate investors in NYC is that both the state and the city level landlord-tenant laws are generally landlord friendly. In mid-2019, the State of New York made some important changes to the New York Landlord-Tenant Law, which were passed under the Housing Stability and Tenant Protection Act and which provide more protection and rights to renters. Nevertheless, NYC landlords’ rights are fully assured and taken care of.
In terms of tenant screening, landlords in the NYC real estate market can charge potential tenants an application fee. However, the upper limit should not exceed the cost of conducting a credit and background check or $20, whichever is lower.
Investors in long term NYC rental properties are allowed to require a security deposit of value up to one month’s rent. They have to return the security deposit no later than 14 days after the tenant moves out together with an itemized list of all deductions. Furthermore, before the renter moves in, the landlord is obliged to offer an inspection conducted by both parties to take note of all existing damages. In this way, the landlord cannot make deductions from the security deposit for any damages that were not done by the renter.
Late fees can be imposed for late rent only once per month and cannot exceed $50. Late fees can be requests only 5 days after the deadline for paying rent.
Moreover, nonrenewal of the lease agreement by New York City landlords and increases in the rental rate by 5% or more need to be communicated to the tenant in advance. The required time ranges between 30 and 90 days, depending on the length of the rental agreement.
If you are interested in investing in rental properties in other landlord friendly states with even fewer regulations, you should search for investment properties for sale in Texas, Indiana, Colorado, Georgia, Kentucky, and Alabama.
Best NYC Neighborhoods for Investing in Traditional Rentals
- Median Property Price: $470,400
- Average Price per Square Foot: $337
- Average Monthly Traditional Rental Income: $2,630
- Average Traditional Cap Rate: 2.9%
- Walk Score: 77
New York real estate market analysis shows that the Arverne neighborhood heads the list of the best neighborhoods of NYC for investing in traditional rental properties. This is also one of the cheapest neighborhoods in NYC, which makes it perfect for beginner real estate investors and other property investors with a limited budget. The low home prices are one of the main reasons for the high return on investment in Arverne. Overall, this is an urban-lifestyle neighborhood in Queens which provides its residents with numerous entertainment opportunities including parks, restaurants, and coffee shops. Buying a rental property in Arverne allows investors to make money in real estate in the New York housing market.
- Median Property Price: $830,700
- Average Price per Square Foot: $469
- Average Monthly Traditional Rental Income: $3,020
- Average Traditional Cap Rate: 2.3%
- Walk Score: 60
This New York real estate market report 2019 ranks the Fieldston neighborhood as the 2nd most profitable location for buying an investment property to rent out traditionally. This should come as no surprise considering the fact that Fieldston is one of the best New York City neighborhoods to raise a family in the local housing market. This is also one of the safest neighborhoods in NYC which features above-average public schools, excellent diversity, and good nightlife opportunities. Investing in rental properties in Fieldston is a top real estate investment strategy in New York in 2019.
- Median Property Price: $725,100
- Average Price per Square Foot: $365
- Average Monthly Traditional Rental Income: $2,100
- Average Traditional Cap Rate: 2.2%
- Walk Score: 85
The Stapleton neighborhood is the 3rd best place for traditional rental properties according to analysis of current New York real estate data. This area has a mixed urban-suburban lifestyle where most residents rent, which translates into strong rental demand from the point of view of real estate investors in long term rentals. New York real estate prices here are lower than in the rest of the market, which makes this neighborhood a more affordable choice. Buying an investment property in Stapleton to rent out on long term basis is a profitable real estate investing option in 2019.
- Median Property Price: $572,000
- Average Price per Square Foot: $366
- Average Monthly Traditional Rental Income: $2,570
- Average Traditional Cap Rate: 2.1%
- Walk Score: 79
Jamaica is ranked as #4 among the top NYC neighborhoods for traditional investment properties. This is one of the cheapest real estate in NYC, which is the main reason for the above-average rate of return on a rental property. The Jamaica neighborhood is an urban area with relatively good public schools as well as numerous parks, restaurants, coffee shops, and bars and where the majority of the local population rents rather than owns a home. Investing in a long term rental property in Jamaica offers a money-making opportunity for New York real estate investors.
5. South Bronx
- Median Property Price: $591,200
- Average Price per Square Foot: $263
- Average Monthly Traditional Rental Income: $2,130
- Average Traditional Cap Rate: 2.1%
- Walk Score: 93
The New York real estate market report positions South Bronx as the 5th best area for traditional rental investments in the Big Apple. The combined effect of relatively affordable prices of NYC homes for sale and good rental income for long term rentals properties leads to above-average return on investment. Furthermore, some areas of the South Bronx neighborhood are experiencing the highest rises in rent in all of the New York City real estate market, which means that the rate of return on investment properties here will increase in the coming months and years. All in all, buying a traditional rental property in South Bronx in 2019 promises to be a profitable real estate investment decision if done with the help of the best real estate investment tools such as a Property Finder and a rental property calculator.
- Median Property Price: $672,100
- Average Price per Square Foot: $421
- Average Monthly Traditional Rental Income: $1,850
- Average Traditional Cap Rate: 2.0%
- Walk Score: 97
The last area on the NYC neighborhoods map for traditional rental properties is Concourse in the Bronx borough. This is a dense urban neighborhood where the majority of residents rent rather than own a home. The strong rental demand is one of the most important factors driving profitability in the Concourse neighborhood, together with below-average New York City real estate prices. Concourse also ranks among the most walkable areas in the entire NYC housing market. Investing in a long term rental in Concourse can yield a very good cap rate and cash on cash return.
New York Real Estate Market: Airbnb Rentals
- Average Monthly Airbnb Rental Income: $3,830
- Average Airbnb Cap Rate: 1.3%
- Average Airbnb Occupancy Rate: 65.6%
- Optimal Property Type: Townhouse or single family home
- Optimal Number of Bedrooms: 0 (studio) and 4
- Airbnb Rental Listings: 12,191
- 3 Best Neighborhoods in NYC for for Airbnb Rental Properties: Eastchester, Wakefield, and Parkchester
- 3 Worst Neighborhoods in NYC for Airbnb Rental Properties: Flatbush, Flushing Meadows Corona Park, and Ozone Park
- Airbnb NYC Legal Status: Only rooms and parts of homes can operate as NYC short term rentals, and the Airbnb host has to be present on site during stays of less than 30 days. Moreover, New York City Airbnb guests need to have unobstructed access to all rooms and exits at all times.
- Annual Events in New York City with the Highest Airbnb Occupancy Rate:
- NYC Restaurant Week: January and July
NYC is one of the best places for foodies year-round, but the annual NYC Restaurant Weeks in January and July are of particular importance. Hundreds of restaurants feature special two-course meals for lunch and three-course meals for dinner. Meanwhile, the city’s top chefs prepare culinary masterpieces.
- New York Fashion Week: February and September
There are two New York Fashion Weeks held annually to debut the newest styles for Fall/Winter and Spring/Summer. The fashion shows feature the top world fashion designers, models, and other professionals from the fashion industry in addition to numerous viewers.
- Tribeca Film Festival: April
This is one of the key events on the New York City entertainment scene, featuring film, music, and culture. Every year the festival shows screenings of hundreds of films from around the world and gives awards to independent films, shorts, and documentaries.
- Museum Mile Festival: June
During one day in June the ten museums from 82nd to 105th street on 5th Avenue open their doors to the public for free. Meanwhile, the closed for cars Upper East Side features live music, street performers, and kids activities.
- Nathan’s Famous Fourth of July Hot Dog Eating Contest: 4th of July
One of the most popular ways to celebrate the 4th of July in NYC is by attending this event during which skilled eaters eat as many hot dogs as possible in the span of 10 minutes. The competition is watched on TV all across the country.
- U.S. Open: August-September
The final Grand Slam tournament of the year takes place in New York. This is one of the most important sports events not only nationally but also internationally.
- New York International Fringe Festival: September-October
Celebrating arts and culture, this annual festival features hundreds of shows in theaters in all five boroughs. More than 200 hundred international theatrical companies participate in musicals, comedies, and other performance art shows.
- Macy’s Thanksgiving Day Parade: Thanksgiving Day Morning
This is one of the most renowned alternatives to a Thanksgiving celebration at home. The event features huge balloons and marching bands and is attended by over 3 million people.
- Rockefeller Center Christmas Tree Lighting: first Wednesday after Thanksgiving
Since the 1930s, the lighting of the huge Christmas Tree at the Rockefeller Center has marked the beginning of the holiday season in New York City.
- New Year’s Eve at Times Square: 31 December-1 January
Watching the crystal ball drop in Times Square is one of the most famous ways of celebrating the New Year worldwide. Each year about one million New York citizens and guests come to meet the New Year on Times Square.
Given its fame and status as one of the most visited cities globally, the New York real estate market quickly turned into one of the most popular Airbnb locations. Airbnb NYC guests started making millions of dollars in revenue per year. The exponential growth in the Airbnb New York City business caused a disturbance among the local population and authorities as Airbnb investment properties – often purchased by out of state real estate investors – put even further upward pressure on the already skyrocketing NYC real estate prices. Moreover, the move towards NYC short term rentals took away from the supply of long term rental properties in the NYC housing market, where the vast majority of people rent rather than own a home.
As a result of this negative effect on the growth of the NYC vacation rentals industry on the housing market, the New York City and New York State authorities imposed a strict Airbnb NYC Law. According to New York Airbnb regulation, only rooms and parts of homes can be rented out on short term basis for less than 30 days. Renting out entire NYC real estate properties is illegal. In addition, the Airbnb NYC host has to be present on the property during the entire stay of guests for less than 30 days. Airbnb New York guests have to be provided with access to all rooms and all exits in the vacation home at all times.
What this New York Airbnb law means is that buying an investment property for the sole purpose of renting out on Airbnb or another homesharing platform in the New York City housing market is not possible. How you can make money on Airbnb instead is by house hacking. New York residents who need a home can purchase one and rent out the extra rooms on short term basis. In this way, the Airbnb income which they make will help them with the monthly mortgage payments which is very important, considering the high New York real estate prices.
NYC real estate market analysis shows that currently The City That Never Sleeps is one of the most profitable locations for Airbnb rentals despite the tight Airbnb New York rules. The Airbnb income offered here cannot be found in many other places within the US housing market. Furthermore, New York has a very high Airbnb occupancy rate due to the constant influx of leisure tourists and business travelers throughout the year.
If you are considering buying a New York real estate property to serve as your home and vacation rental, you should keep in mind that townhouses and single family homes are the most profitable property types for this rental strategy. Properties with 4 bedrooms generate the highest return on investment when rented out on short term basis, according to the data collected for this New York real estate market report 2019.
NYC Airbnb Laws and Regulations
The status of New York as one of the most popular tourist destinations around the world determined its position as the biggest Airbnb city. Together with Tokyo and Paris, Airbnb New York emerged as one of the most popular Airbnb cities worldwide. New York City vacation rental investors have been making millions of dollars in Airbnb income.
However, the rapidly expanding short term rental industry caused worries among the population and the local authorities that the lack of affordability in the New York real estate market will further exacerbate. Moreover, residents were concerned about their safety, security, comfort, and lifestyle as entire buildings were virtually turned into Airbnb hotels. This forced the City of New York to enforce some very restrictive measures on the operation of Airbnb vacation rentals.
If you are considering becoming a New York City Airbnb host, here are the rules and regulations which you should keep in mind:
- Entire apartments, houses, and other real estate properties cannot be rented out for less than 30 days even if the Airbnb host lives in the building. Only rooms and parts of homes can be turned into NYC short term rentals.
- Only owner-occupied short term rentals are legal in NYC. The Airbnb host has to be present on site during the stay of Airbnb guests of less than 30 days.
- The maximum number of paying guests who can stay at the property for fewer than 30 days has been limited to 2.
- All New York Airbnb guests must have free and unobstructed access to all rooms and exits within a New York Airbnb apartment.
- According to New York State Multiple Dwelling Law, apartments in a Class A multiple dwelling, meaning a building with 3 or more permanent residential buildings, cannot be rented on out short term basis, for less than 30 days.
Moreover, the New York City Council requires Airbnb and other homesharing platforms to provide data and information on short term rentals hosts. Similar to other best places to invest in real estate, NYC Airbnb hosts are expected to pay various taxes.
After the introduction of the above-described NYC Airbnb rules and laws, buying an investment property for the sole purpose of renting it out on Airbnb or another short term rental platform became illegal in the New York housing market. This is similar to other most profitable locations for investing in vacation rentals such as Airbnb Los Angeles, Airbnb Chicago,Airbnb San Francisco, Airbnb Las Vegas, and Airbnb Santa Monica, where non-owner occupied short term rentals are not allowed.
Best NYC Neighborhoods for Investing in Airbnb Rentals
- Median Property Price: $581,300
- Average Price per Square Foot: $299
- Average Monthly Airbnb Rental Income: $4,590
- Average Airbnb Cap Rate: 6.5%
- Average Airbnb Occupancy Rate: 50.9%
- Walk Score: 80
Neighborhood analysis of the New York real estate market 2019 shows that Eastchester is the top area for investing in Airbnb NYC rental properties. The Eastchester neighborhood is a suburb in Westchester County which still offers an urban lifestyle to its residents and New York Airbnb guests. The location features numerous parks, coffee shops, restaurants, and bars. It is one of the best areas to live in the Big Apple, especially for families due to the above-average public schools, and prices of houses for sale in New York here are reasonable. This is excellent news for those considering buying a real estate property in Eastchester to live in as a primary residence while renting out a room or two on Airbnb.
- Median Property Price: $537,200
- Average Price per Square Foot: $294
- Average Monthly Airbnb Rental Income: $4,230
- Average Airbnb Cap Rate: 6.2%
- Average Airbnb Occupancy Rate: 58.0%
- Walk Score: 86
New York City real estate market data reveals that the Wakefield neighborhood is the 2nd most profitable location for listing a property on Airbnb or a similar homesharing platform. Wakefield is an area in the Bronx borough with relatively affordable home values, which makes it ideal for first-time real estate investors and homebuyers. The expected Airbnb New York City rental income exceeds the city average, and so does the expected return on investment for NYC short term rentals. Owning a vacation rental in Wakefield can be an excellent real estate investing strategy in 2019 and beyond as long as you conduct diligent investment property analysis.
- Median Property Price: $419,200
- Average Price per Square Foot: $307
- Average Monthly Airbnb Rental Income: $2,570
- Average Airbnb Cap Rate: 5.6%
- Average Airbnb Occupancy Rate: 53.7%
- Walk Score: 95
Parkchester ranks as #3 among the top NYC neighborhoods for Airbnb real estate investing. The Parkchester neighborhood is a planned community in the Bronx borough which offers a highly dense urban lifestyle and high walkability. The most important feature of homes for sale in New York here is the low prices, which makes buying a NYC investment property an affordable option even for beginner investors. While the Airbnb rental income is below the average for New York City vacation rentals, it is enough to bring a profitable rate of return. Investing in an Airbnb rental in Parkchester is a great way to make money in real estate in 2020.
4. Bronx Park
- Median Property Price: $430,800
- Average Price per Square Foot: $298
- Average Monthly Airbnb Rental Income: $2,660
- Average Airbnb Cap Rate: 4.3%
- Average Airbnb Occupancy Rate: 63.3%
- Walk Score: 26
Analysis of the NYC real estate market ranks the Bronx Park neighborhood as the 4th best place for renting out on Airbnb in the City That Never Sleeps. The two most significant indicators of profitability in Bronx Park are the low New York real estate prices and the high Airbnb occupancy rate, which result in good return on investment. Buying an investment property in Bronx Park to live in and rent out on short term basis can turn into a profitable real estate investment in one of the top tourist destinations around the globe.
5. Throggs Neck
- Median Property Price: $664,200
- Average Price per Square Foot: $415
- Average Monthly Airbnb Rental Income: $3,440
- Average Airbnb Cap Rate: 4.0%
- Average Airbnb Occupancy Rate: 61.7%
- Walk Score: 86
Number 5 among the best up and coming NYC neighborhoods for having a vacation rental home is Throggs Neck. This area in Bronx County features a mix of urban and suburban feel and is ranked as one of top best places to live in New York City for young professionals and families. Real estate data shows that the Throggs Neck neighborhood is also among the most profitable locations for Airbnb rentals based on cap rate. It is also among the cheaper neighborhoods in NYC for real estate investors and homebuyers. Buying an Airbnb rental in Throggs Neck can bring excellent rate of return in terms of both cash on cash return and cap rate.
- Median Property Price: $696,800
- Average Price per Square Foot: $262
- Average Monthly Airbnb Rental Income: $2,930
- Average Airbnb Cap Rate: 4.0%
- Average Airbnb Occupancy Rate: 64.2%
- Walk Score: 99
The last place on this list of the most profitable New York City neighborhoods for buying an Airbnb property is Fordham. This is an urban area which provides residents and Airbnb New York guests with excellent walkability and many coffee shops, bars, restaurants, and parks. The NYC Airbnb occupancy rate in the Fordham neighborhood is particularly high, which is one of the main reasons for the good return on investment on NYC short term rentals. Investing in a short term rental property in Fordham can bring high rate of return in the New York real estate market in 2019.
Investing in New York Real Estate Properties: Optimal Rental Strategy
This New York real estate market report shows that the Big Apple remains one of the best places to invest in real estate in 2019. Due to the large population, the high proportion of renters vs. homeowners, the strong economy, and the influx of tourists, both rental strategies – traditional rental properties in NYC and Airbnb New York investment properties – can bring a lot of profit to real estate investors.
Based on New York City real estate data, Airbnb NYC is the more profitable rental strategy in the local housing market. It brings a higher return on investment, mostly owing to the high Airbnb occupancy rate. However, investing in New York Airbnb rentals faces a major constraint, namely the fact that only rooms and parts of owner-occupied primary residences can be legally listed on Airbnb and other similar vacation rental platforms. This means that buying an investment property for the sole purpose of turning it into a short term rental is not an option in the New York housing market.
As a result, traditional rental properties are the only feasible real estate strategy for full-time and out of state investors in New York City. With proper New York real estate market analysis and detailed investment property analysis, investors can find good deals. In 2019 they should focus their property search in the City That Never Sleeps on townhouses and single family homes as well as on properties for sale with 0 and 4 bedrooms as they bring the highest rate of return on traditional rentals.
Why You Should Invest in Real Estate in New York City in 2019: The Pros
The reasons to invest in rental properties in the NYC real estate market are numerous. The most important one of them is the high rental demand for both types of investment properties. Long term rentals benefit from more than 6.5 million tenants who live in a strong, growing economy with a diverse labor market. Airbnb NYC enjoys high occupancy because of the 62 million visitors who come to New York City each and every year.
Rental demand for both traditional New York rental properties and NYC vacation rentals is one of the highest in the entire US housing market. This means that finding positive cash flow properties is feasible in the New York housing market despite the skyrocketing home values. Moreover, with professional property management, this can be turned into passive income for part-time as well as full-time real estate investors.
The return on investment in the New York real estate market is excellent. While a traditional cap rate of 0.8% and an Airbnb cap rate of 1.3% don’t sound like a lot, these are just city averages. The best NYC neighborhoods for real estate investments offer a significantly higher rate of return on rental properties. Finding lucrative investment properties is easier with the right real estate investment tools.
Another positive factor which investors should keep in mind is the fact that New York is currently a buyer’s market, unlike many other top locations for investing in real estate. Furthermore, New York real estate prices are expected to remain stable in the coming months. This means that investors will be able to buy properties without entering into budding wars with other property buyers, which is of particularly high value to beginners with no experience in buying real estate.
Finally, the positive NYC real estate market forecast for 2020 means that the Big Apple will retain its status as one of the best places to invest in real estate in the US housing market.
Why You May Not Want to Invest in Real Estate in New York City in 2019: The Cons
Investing in New York real estate properties comes with some drawbacks in 2019. The main reason why investors might not be able to take advantage of the lucrative opportunities in the New York City real estate market are the excessively high property prices. Average NYC properties sell for over a million dollars, which means that the New York housing market is generally reserved for wealthier investors. However, with the help of a Property Finder, real estate investors can find affordable investment properties for sale which meet their expectations in terms of price, rate of return, and other criteria.
The second major disadvantage of the NYC real estate market is the strict restrictions on short term rentals. Investing in NYC vacation rentals cannot be turned into an independent real estate investing strategy as only rooms and parts of owner-occupied primary residences can be rented out on short term basis. Nevertheless, buying a home and renting out a room or two on Airbnb is a feasible and very profitable option, especially in such an expensive market as NYC, where homeownership is a major challenge.
New York City Real Estate Forecast
Things are generally looking good for investors in the New York real estate market in 2020 and beyond. Property prices will increase at a slower pace, which will alleviate some of the affordability pressure. Meanwhile, rent is set to continue going up in the foreseeable future as a result of population growth. However, these NYC real estate market trends will not have a major negative effect on the price to rent ratio and on the share of renters. Airbnb New York is expected to continue bringing more profit as a rental strategy. Nevertheless, traditional rental properties are the only option for full-time and out of state real estate investors in the Big Apple.
Additional Resources for NYC Real Estate Investors
Best New York Investment Properties
As this New York real estate market report 2019 shows, property investors can make a lot of money with NYC vacation rentals as well as traditional New York City rental properties. With the help of an investment property calculator, experienced and new real estate investors can search through the 6,550 houses for sale in New York and filter the ones which meet their criteria including budget, neighborhood, property type, optimal rental strategy, traditional and Airbnb rental income, cap rate, and cash on cash return in a matter of minutes. A heatmap tool will provide property investors with a color-coded map of NYC neighborhoods which highlights the best New York City neighborhoods for investing in rental properties in addition to the worst NYC neighborhoods for buying residential real estate properties. A Property Finder will allow even beginner real estate investors investors to find the most profitable income properties corresponding to their preferred rental strategy and other criteria.
Top Real Estate Agents in NYC
Beginner real estate investors as well as those who invest in properties part time and/or out of state are better off working with top real estate agents in New York who can help them make profitable real estate investments passively. The best New York real estate agents specializing in rental properties will help investors find a profitable investment property for sale. Moreover, they will negotiate the best possible price, potentially below market value. Following are some of the best real estate agents in NYC:
NYC Real Estate Auctions
Investors in the New York real estate market can force their rate of return on a rental property up by buying a property at a NYC real estate auction. NYC foreclosures sell for a fraction of the price of regular properties for sale. If you think this might be the optimal investment decision for you, you can check out this New York State real estate auctions calendar.
Property Management of Traditional Rental Properties in NYC
Investing in long term New York rentals doesn’t have to mean becoming a landlord which can be a very time-consuming and overall unpleasant endeavor. This is particularly impractical for part-time real estate investors with a 9-to-5 job as well as for out of state property investors. However, they can easily hire a professional property manager to take care of the rental property management process, turning their NYC rental properties into passive real estate investments.
Property Management of New York City Short Term Rentals
If you are looking for ways to generate passive income from your NYC vacation rentals, you can hire a local property manager to deal with all the responsibilities associated with owning and renting out an Airbnb New York property.
Our Top Blog Posts for Investors in the New York Real Estate Market
- The New York City Real Estate Market Forecast for 2019
- What’s the Deal with Airbnb New York Regulations?
- New York Housing Market 2018 Forecast – What’s the Deal?
- What Are the Best Places to Buy a Vacation Home in New York State?
- 7 Best Places to Invest in the New York Real Estate Market 2019
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