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It's expensive these days. I lived in one of these buildings for 11 years: https://www.bhsusa.com/brooklyn/brooklyn-heights/60--66-clark-street/townhouse/22398

It's expensive these days. I lived in one of these buildings for 11 years: https://www.bhsusa.com/brooklyn/brooklyn-heights/60--66-clark-street/townhouse/22398285 https://www.bhsusa.com/brooklyn/brooklyn-heights/60--66-clar... Now the set of 4 buildings is on the market for $25,000,000. If you click to the brochure, you can see the rent that each leased unit pays, about $100,000 per month across the set of buildings. Property taxes + other expenses are around $400,000 a year. So without a mortgage, you make about $800,000 a year. With a mortgage (0% down, 6.5% interest, perhaps not completely realistic but ballpark), you lose about a million dollars a year. That's about the average situation in NYC. Brooklyn Heights is obviously extra-expensive because it's nice and is a 20 minute to commute to pretty much anywhere in the city, but the math is about the same everywhere. Meanwhile, if you're just going to go for a single unit in a new building as an investment property, budget on about $1.2 million for a 1 bedroom that you could MAYBE rent at $5k/month or $900k for a studio that you could rent for $4k/month. 20% down on a $1MM apartment, you're looking at a mortgage of $5k/month. Add property taxes, $6k/month. Add insurance, $6100/month. So you need to come up with $1100/month as long as your tenant pays on time. That's not a monthly loss per se, you get to keep the principal and recover it when you sell. But how much money you make really depends on your access to capital. I recommend being rich in advance of your foray into becoming a landlord in NYC. If you are buying these units at 0%, and many people are, this is a very nice racket. Personally, I wouldn't do it. A lot of the more affordable units in NYC are in co-ops, which often prohibit renting (to keep prices lower). So the market has already priced in that "investment property" premium for condos, in the area of 20-30%.

mgaunard 3y ago
So you have a return of 3.2% on investment, which is in line with inflation. Not a particularly good investment I guess.
- MagnumOpus 3y ago
  3.2% yield which likely is real yield as it grows with inflation in the long term. And the underlying property price also growth with inflation (with incomes, really, so higher than inflation). So 3.2% real yield - which is not much lower than the earnings yield on stocks, but with the ability to go heavily leveraged without being exposed to the rapid margin calls in equities. (It's no surprise that many multi-millionaires got their start by developing/renting out property.)
  - mgaunard 3y ago
    S&P annual return is 8% on average. A good hedge fund would be able to offer higher than that still.

mgaunard 3y ago

So you have a return of 3.2% on investment, which is in line with inflation. Not a particularly good investment I guess.

MagnumOpus 3y ago
3.2% yield which likely is real yield as it grows with inflation in the long term. And the underlying property price also growth with inflation (with incomes, really, so higher than inflation). So 3.2% real yield - which is not much lower than the earnings yield on stocks, but with the ability to go heavily leveraged without being exposed to the rapid margin calls in equities. (It's no surprise that many multi-millionaires got their start by developing/renting out property.)
- mgaunard 3y ago
  S&P annual return is 8% on average. A good hedge fund would be able to offer higher than that still.