Hello, I was wondering what a typically decent yield is on 1BR investment is in NY, at least, at the beginning of one's mortgage term. I am considering an investment (in an already pretty gentrified and quickly rising outer-borrough neighborhood) property, 1BR condo, modern new construction (you can see a couple of my other posts). After carrying costs, mortgage payments and the like, what is the... [more]
Hello,
I was wondering what a typically decent yield is on 1BR investment is in NY, at least, at the beginning of one's mortgage term.
I am considering an investment (in an already pretty gentrified and quickly rising outer-borrough neighborhood) property, 1BR condo, modern new construction (you can see a couple of my other posts). After carrying costs, mortgage payments and the like, what is the typical return like in NYC for a single 1BR unit? Not talking about 10 years down the line, when market rental rates go up X%. Does it tend to be around 1 or 2 percent, or more like 10 or 12 percent (which, by my calculations, seems VERY hard to get, at least in this type of situation -- meaning, residential property, borrowing around 30%-50%).
Any real word experiences welcome, as well as any other input.
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Response by RealEstateNY
almost 11 years ago
Posts: 772
Member since: Aug 2009
Can't really answer your question but from my experience always factor in 1 or 2 months lost rent at the end of each lease. Also if you charge market rate tenants seem to leave every year or two. If you get a good tenant keep the rent below market so they stay on. Don't forget to factor in depreciation, it's your friend. I paid off the mortgage in 10 years with the profits from the apartment, but I'm talking back in the 1980's and 1990's. Good luck.
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Response by UE98
almost 11 years ago
Posts: 100
Member since: Jan 2013
Thanks for the reply, RealEstateNY. What kind of properties do you rent? And why do you say to factor 1 or 2 months lost rent? From repairs when a tenant leaves? Anything else?
And can anyone else weigh in on their returns for residential investment?
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Response by JMHunt
almost 11 years ago
Posts: 21
Member since: Apr 2013
Don't buy investment property in NYC for rental income. If you are borrowing 30-50% as you mentioned, I wouldn't expect any return. With an all cash purchase, I'd say 3% -4% is good. The reason to buy investment property in NYC is for appreciation. This is speculative of course. Your property could have appreciated 50% if you purchased in 2011-12. All indications point the market up this year but who can predict the future?
Can't really answer your question but from my experience always factor in 1 or 2 months lost rent at the end of each lease. Also if you charge market rate tenants seem to leave every year or two. If you get a good tenant keep the rent below market so they stay on. Don't forget to factor in depreciation, it's your friend. I paid off the mortgage in 10 years with the profits from the apartment, but I'm talking back in the 1980's and 1990's. Good luck.
Thanks for the reply, RealEstateNY. What kind of properties do you rent? And why do you say to factor 1 or 2 months lost rent? From repairs when a tenant leaves? Anything else?
And can anyone else weigh in on their returns for residential investment?
Don't buy investment property in NYC for rental income. If you are borrowing 30-50% as you mentioned, I wouldn't expect any return. With an all cash purchase, I'd say 3% -4% is good. The reason to buy investment property in NYC is for appreciation. This is speculative of course. Your property could have appreciated 50% if you purchased in 2011-12. All indications point the market up this year but who can predict the future?