In 2021, more luxury properties were sold in New York City than in any prior year. The market for Upper West Side real estate and Upper East Side condos is strong — back in full force after a hiatus induced by the pandemic. If you don’t already own an investment property in Manhattan, now may be the right time to take the leap. The seller’s market is expected to continue to strengthen as more and more people are looking to buy homes in the city and more employers return their employees to the office. With this in mind, consider making a move on one of those Upper East Side condos you’ve been eyeing while mortgage rates are still low.
Choose the right market
A seller’s market is technically also a landlord’s market, as home prices are high and properties are swept off the market quickly. This can leave would-be buyers in a position to rent until they are able to secure a home. That said, Manhattan neighborhoods like the Upper West and East Side are desirable and people will gladly rent there until they can buy. Because demand for Upper East Side condos is so high, you’re bound to find tenants eager to rent and live in your investment property.
Take advantage of tax benefits
Improvement costs are not considered maintenance costs according to the IRS, so keeping separate records of repairs versus improvements will help you when it comes time to file.
Please note that while these are simply suggestions of ways to approach tax benefits, you should always consult with a certified tax professional when making decisions regarding your Upper West Side property.
Rent out to reliable tenants
Before renting out your Manhattan investment property, you’ll want to be sure that the potential tenant has a reliable source of income. Manhattan residents should be familiar with the 40X Rule, which states that a renter’s gross annual income should be equal to forty times your monthly rent. For example, if you’re planning to charge $2,000 per month in rent, your tenant should be making at least $80,000 per year. While this rule is not used by every Manhattan landlord, it’s generally considered the norm. Additionally, you’ll want to pay attention to a potential tenant’s credit history; this is a great indicator of whether they will be able to reliably make payments.
Allow pets for an extra fee
A simple way to increase the amount of money you can make from your investment property is to charge tenants “pet rent.” In exchange for allowing your tenants to have pets in the building, you can add a monthly fee to the rent. As more than 75% of Americans own at least one pet, chances are good that your next tenants will be pet owners.
Minimize your exposure to costs
Investing in a home built with high-quality, long-lasting materials may cost more up front, but you’ll spare yourself and your tenants the hassle and expense of surprise repairs later on. At a minimum, it’s wise to verify that the plumbing and electrical in your potential investment property are up to code and in good working order. You may even want to replace older appliances with reliable, energy-conversing ones before putting your property up for rent.
Upper West Side real estate and Upper East Side condos make great investment properties, as both are situated in appealing neighborhoods with rising home prices. While you wait for your investment property to appreciate in value so you can sell high later on, you can rent it out to make a profit along the way.
If you don’t yet own an investment property in Manhattan or you’d like to add another one to your roster, a trusted local agent like Stanton Hoch can walk you through your options.