Why Buying a Multi Family Home in NYC Is a Bad Investment: https://www.hauseit.com/buying-a-multi-family-home-nyc/
Calculate Your Buyer Closing Costs: https://www.hauseit.com/closing-cost-calculator-for-buyer-nyc/
Buying a multi family home in NYC is a bad investment because rental yields are low, opportunity costs are high, dealing with bad tenants is mind-numbing, evictions are impossible, local rent laws are stifling and labor and maintenance costs are exorbitant.
Rental Yields Are Low
Rental yields are often under 3% in terms of cap rate. This is the case not just in Manhattan, but also in outer boroughs such as Brooklyn where investment properties have been bid up excessively over the past decade.
Buying the S&P 500 Is Easier
Buying a S&P 500 ETF and holding it indefinitely as Warren Buffet suggests is not only so much easier, but so much cheaper.
Not only is the dividend yield on the S&P 500 comparable to that of your typical multi-family investment’s cap rate, many S&P 500 ETFs have essentially unlimited liquidity with extremely low transaction costs.
Dealing with Difficult Tenants
While there certainly are unscrupulous slumlords out there, the media often ignores stories of nightmare tenants who take advantage of small time property investors who often don’t know the city’s myriad of rental regulations as well as they do.
Do you really want to deal with this scenario for a less than 3% rental yield? Even if you’re able to get the rent tax free because of depreciation tax benefits, what’s the point?
It’s Extremely Hard to Evict Tenants
It’s extremely difficult to evict tenants in New York and evictions must done through the courts, which can literally take months or even years. An owner can face fines or even jail time if he or she attempts to evict a tenant, either directly or indirectly. This includes trying to evict someone by cutting off utilities or otherwise making the residence uninhabitable or uncomfortable. And don’t even think about trying to force your way in to physically evict a tenant, that’s a serious offence!
Tough New York Rent Regulations
New York has some of the toughest tenant protection laws in the country. To start with, roughly half of the city’s private rental market is protected by rent stabilization or rent control, which translates to a whole slew of regulations not only on rent increases, but even the ability for tenants to pass down these preferential leases to heirs.
Security Deposits Are Regulated
Landlords can now take a maximum of one month’s rent as a security deposit, and new measures have been enacted to make it easier for tenants to get their security deposit back after exiting their lease.
Labor and Repair Costs Are Exorbitant
Even though revenue on half of the city’s apartment inventory is capped, there are no such caps on maintenance, labor and repair costs. As a result, costs to maintain buildings continue to surge in the country’s most expensive city while revenue is regulated and protections are minimized for landlords.
Interested in learning how you can sell your multi-family property without paying 6% in broker fees? Check us out at www.hauseit.com to learn how an Agent Assisted FSBO can help you! Or, are you interested in buying a condo or co-op apartment instead of a multi-family building? Learn how you can save $20,000 or more on your purchase with a Hauseit Buyer Closing Credit. Drop us a line to learn more!
Save Money with a Hauseit Buyer Closing Credit: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/