There’s no denying that real estate sales in New York City slowed down this summer, but that doesn’t mean opportunity was lacking.
Many investors jumped on deals during the slowdown because sellers were more willing to negotiate on price, and then that investor could charge high rental prices because of the state of the market.
Although we anticipate increased activity later in the year, there are still great opportunities for investors to jump on before the market gets more competitive again.
The biggest question now is, what neighborhoods are best for investors right now? The simple answer is: wherever renters want to be.
The Lower East Side, East Village, Bushwick, and Bed-Stuy are Downtown’s hot spots for renters. Sales prices in the Lower East Side took a major hit this summer, giving investors a nice return on their investment if they choose to buy and lease out properties there.
Although rents are still high, renters are more willing to pay $5,500 for rent here vs. $8,000+ for a similar property in SoHo.
Brooklyn neighborhoods like Bushwick and Bed-Stuy have experienced the same slowdown in the sales market, but a surge in rents.
Tribeca and the West Village
Investing in areas where inventory is limited could be a successful tactic for investors. Purchase prices may be higher, but rent is certainly more expensive in areas like Tribeca and the West Village. Buying in at the right price could give investors a competitive advantage. Investing in an area where there’s less inventory allows investors to charge strong prices and offer fewer concessions, meaning greater income.
For many New Yorkers, renting in a new development is a way to get nicer finishes and amenities that they could not otherwise afford if they were buying.
The recent slowdown has made developers more flexible on price, because they want to sell this inventory as quickly as possible to move on to their next project. New developments offer investors negotiability and the ability to achieve high rent. With new developments, there is often more flexibility to negotiate the transaction costs vs. the asking price. Developers are often more likely to agree to cover closing costs traditionally covered by a buyer versus significantly lowering the actual purchase price.
Investors may get lucky in areas like Downtown Brooklyn, Fort Greene, Dumbo, Williamsburg, and Clinton Hill – areas that are being highly developed right now. These areas attract high-earning young professionals who are putting off ownership because of the current state of the market.
There are even several condo buildings in Williamsburg and Greenpoint that still have a few years left on their tax abatements, presenting cost-saving opportunities for investors.
Renters have their reasons for wanting to live somewhere — investors need to think as renters do in order to get there first and capitalize on opportunities in the market.
If you’re an investor looking to start a portfolio or add to your current one, reach out to Platinum Properties today to connect with one of our agents whose expertise is in investment opportunities.