New York City has a massive population. Because of the city's density and the high demand for rental units, many property investors find themselves interested in the opportunity to purchase their own bit of New York City real estate to rent out.
A rental property anywhere in New York City is a fairly solid bet, but there's the matter of affordability.
In Manhattan in particular, property prices are some of the highest in the world, and are relatively closed off to those who don't have massive wealth or institutional backing behind them.
Which leads us to the appeal of investing in Brooklyn, a more affordable option. Brooklyn's real estate prices have spiked heavily in the past decade, trending upwards year after year.
If you're considering a property investment in Brooklyn, you'll find useful information in the guide below.
How to Make Money from an Investment Property in Brooklyn
There are two main ways to earn a profit on an investment property. You can sell the property once the price appreciates, or you can derive income for an extended period by renting it out. Of course, a combination of the two is typically the most lucrative.
Some people want to cash in on their real estate sales. However, this can be a risky proposition because it depends on market trends. If you’re willing to wait for a seller’s market, you can earn a neat profit.
Strictly speaking, investment properties are those that provide returns through rentals or capital returns. In this aspect, purchasing a property for your own use does not generate income. Hence, it’s not counted as an investment property.
NYC is one of the Best Places to Invest
New York City is at the top of the list for many Americans who are considering a move. After all, New York has an unlimited amount of interesting things to do. It has diversity, job opportunities, and exciting energy.
The New York dream is instilled in many Americans from a young age through the media, and it's common to try to achieve your dreams in the Big Apple.
Knowing this, you can capitalize on the fact there will always be a large supply of prospective tenants who will want to live in Brooklyn.
Brooklyn's proximity to other boroughs is a major selling point, but it has become a cultural hub in its own right, which is great for property values.
Here are some aspects that make real estate investments in Brooklyn, NY so alluring:
Tax benefits: You can take advantage of some of the sizable tax benefits available to New York landlords if you own a real estate investment property. This means you can save a lot even if you spent a chunk of money on a property.
Strong job market: Since NYC is a city of opportunity with plenty of job openings, people are willing to pay a premium to live in proximity to so many job opportunities. This can lead to better earnings for your property investment.
Reliable rental market: Given the allure of living near the economic heartbeat of the country, it's no surprise that vacancy rates in Brooklyn are low. Deciding to convert your investment property into a rental can earn you good profits for the long term.
Solid increases in real estate prices: Reviewing the prices of NYC’s properties, you’ll find a steady growth over the years.
As an added bonus, properties in Brooklyn have been selling more quickly than in other boroughs. For example, recently properties in Brooklyn have sold twice as quickly as comparable ones in Manhattan.
Brooklyn investors who can afford it are always adding more to their real estate portfolios over time, knowing the value can be counted on to increase.
Investment Risks
For first-time real estate investors, it’s helpful to be aware that purchasing a property is not the end of your spending. There is typically a long list of related expenses you'll be responsible for.
For example, you need to have a budget for property upkeep and maintenance to ensure that your tenants have a safe comfortable place to live, and that your property retains its value.
It can be risky to borrow money to purchase your real-estate investment. It’s advisable to have additional cash on hand to dip into to pay for property taxes, utilities, and the expected property repairs and maintenance.
Property investors need to plan to spend on property upkeep regularly.
A good tip is hiring a property manager to reduce your stress in managing a rental property on your own. A great property management company will have proven experience in marketing, tenant screening, and property maintenance.
First-time landlords who are juggling careers and balancing family time will appreciate the help of effective property managers.
Engaging the services of a property management team has tons of advantages. They'll have the expertise and professional skills to help you achieve success for your Brooklyn, NYC rental. You'll need to pay a management fee, but there is a wide array of benefits to consider.
For example, when you work with a high-end property management company you’ll be provided with a good financial reporting system. This will let you assess the growth of your real estate investment in New York.
Condo or Co-op Tips
When searching for real estate properties, prices will mostly govern your decision. You might get excited to see co-ops within your range of budget. A word of caution however, co-ops tend to have restrictive policies. One of them is not allowing subletting.
There are more limitations that co-ops can enforce, and their boards usually have the last say. It's demanding enough to ensure you're familiar with all of New York's fair housing regulations. Co-op requirements are also numerous, with plenty of processes to navigate including interviews.
Opting for condos instead translates to more freedom in regard to renting out your property. It’s understood that most condo real-estate investors purchased the property to earn recurring income from rent.
If you’re not satisfied with the design of your condo, it’s also quicker to do so. You won't be subjected to many rules, unlike those posed by co-ops. If you decide to sell your condo later on, there’s also a bigger market, considering their ease of ownership.
The Bottom Line
When it comes to a rental property investment, there may not be a market in the country that's more exciting than Brooklyn. New developments are emerging all the time, shifting the landscape of the city and driving property values ever upwards.
If you're new to property investment or feeling burdened by the responsibilities of managing a rental property, consider working with local property management specialists.
Essential Property Management has been providing expert property management services in New York for more than two decades now, and have the tools and know-how to help your Brooklyn rental property thrive.