“Find the perfect apartment in New York is like finding the perfect relationship, sometimes it can take years”.
Carrie Bradshaw, Sex In the City
According to one insider, it is all about having the right cash flow. You need to find a building with low common charges and no assessments. You need to make a profit on the price, otherwise, it is not going to matter.
Seven Suggestions To Help Investors Maximize Their Returns
1) Do you plan on doing a “fix and flip” scenario? You need to be aware of the timeframe. Do you wish to sell within a short period of time? You may wish to consider a place that is less than the current market value. Do you wish to wait a little bit before selling? You may wish to consider a place on the upswing. This strategy can be tweaked as needed, but this is a general rule of thumb.
2) You need to consider looking at sales versus the rentals. In Harlem, one property can rent for $4000 and sell for $900,000. In the eastern part of Lower Manhattan, a place may rent for $3,000 and sell for less than $500,000. You will get many great deals. You have to make a choice as to whether renting or buying makes more sense.
3) You will find more advantages to investing in a condo than you will a co-op. You can sell it to someone in the blink of an eye. You can rent it out to someone and make a profit. A co-op does not allow this flexibility. You need to go through an approval process and committee for every move you want to make. You get more accessibility with a condo.
4) You pay for every square foot when you buy a place. You may get charged more for the bigger rooms. You will be charged a premium when you rent your place. If you decide to buy a place, you need to pick a small bedroom.
5) You need to make sure the apartment you pick is in good condition. If your apartment is not in good condition, then you will need to pay for the repairs. The repairs may cost you more than what you initially paid. This disadvantage can add up over time. You may need to put out more money than what the place is worth. You are making a bad deal.
6) You need to speak with your lawyer first. Your lawyer can tell you whether the deal is good or not. Your lawyer will know what to look for. Your lawyer needs to have a copy of the documents proving your place is financially sound.
7) Are you considering a family home? Are you looking for a single apartment? You need to deal with more maintenance issues with a family home than you will with an apartment complex.
Two Examples Rolled Into One
Chad goes to buy a home in Harlem. He figures he will get a higher return than he will be buying a condo for the same amount. Chad will get a higher return rate, but the apartment will offer him less fuss.
His boiler might need repair at some point. His boiler is a similar make and model to the one in the apartment. Chad is going to spend less money on repairs for the apartment that he will for the house.