When it comes to investing in real estate, inner-city areas like New York can seem like prime pickings. When you take a closer look, you’ll come to see that locations like these are jammed full of rented apartments and properties. Most investors just can’t get enough of them, and it’s easy to see why.
There are some apparent benefits to investing in areas like these. New York especially has seen a steady increase in value over time. In fact, New York real estate hasn’t dropped in value since way back in the 1950s. That’s not a situation you’ll find in many areas. It means that an investment here brings a pretty safe chance of decent returns.
And, house prices aren’t the only thing which rise on a regular basis here. New York’s population has also been steadily creeping upwards for years by this point. What’s more, the varied cultures and lifestyles in areas like this mean that rental opportunities here have a pretty broad reach. You can bet there will be at least someone looking for what you’re offering, in the price range you’re asking for.
But, we aren’t here to sing the praises of New York investments. In fact, we’re here to tell you why this could be a bad idea. While inner-city investments make sense in many ways, this is a double-sided issue. On the one hand, you can experience all the benefits mentioned above and more. On the other, there are plenty of New York landlords who are struggling to so much as cover their mortgage costs. As if that weren’t warning enough, we’re going to look at a few of the reasons you might want to steer well clear of New York and invest in a more rural area.
The New York market is pretty saturated
There may be high rental demand in New York, but there are also a whole load of investors operating there. Too many people believe that popular cities win the real estate lottery. That means you’re going to be competing against competitors for each tenant. Sometimes, that battle just isn’t worth fighting. Bear in mind, too, that finding a niche is as crucial in real estate as it is in any business enterprise. And, a niche isn’t something you’ll be able to settle upon when you’re operating in the same New York suburbs as everyone else. So, you’ll be competing in a drowning market, trying to sell the same thing as all those people around you. When you look at it like that, it seems like an impossible task. It’s no wonder, then, that many people struggle to achieve it. To do away with that competition, you may find it better to look at investments in more rural areas. Not only does this give you the pick of the market, but it also provides a unique selling point for you. Potential tenants are far more liable to look your way if renting with you means living around Yellowstone National Park than a typical city setting. Even just being able to promise a decent amount of land could see you winning through over all those other property investors. And, these are benefits you would never be able to find if you were looking in those busy city areas.
Inner-city prices are through the roof
The reality of today’s housing market is harsh, and prices are high. While many cite this as a reason to invest in cities, it also works as a downside. Steady increases in value will undeniably come back to benefit you later down the line. But, you will need to have more cash in your pocket to buy a New York property in the first place. What’s more, your money may well only stretch to a small apartment. The moment you step outside of those city confines, though, you may come to find that you can afford four-bedroom ranches with acres of land to their name. And, with rural areas growing in popularity of late, you still stand to see a sizeable return from an investment like this down the line. Admittedly, rent in city areas does tend to be higher. But, the increased size of your rural rental could still see you charging the same amount each month. And, given how much less you paid in the first place, that could see you pulling a profit a whole load faster. Speaking of speed, you’ll be able to make an investment like this a lot sooner in your journey. Those saving up for New York real estate may need to work towards the goal for a few years. But, your willingness to look outside the city could see you with a property to your name in six months or less. By the time you would have been able to buy your New York apartment, you could already have earnt a hefty sum in rent.
New York offers little freedom for growth
While city house prices do tend to rise over time, properties here offer little room for growth. In fact, the majority of New York investment properties are based in someone else’s building. As such, you stand no chance to expand or extend your property. You may even find that there are restrictions on simple things, like your ability to renovate. That means you’re stuck with the general price increases, with little room for extras. By comparison, there are next to no restrictions on most rural properties. This means you would be free to extend properties up, down, and outwards. You could build outhouses on your land, or incorporate swimming pools into a property’s yard. You could even renovate the kitchen or bathroom spaces. If you get things like this right, you could stand to double the value of your property. Not only does that make up for slower rural increases, but it also leaves city prices in the dust. If you’re willing to put a little work in, then, New York definitely isn’t the place you should invest.