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.
Once you own an investment property in Manhattan, it’s up to you to extract the most value from your place. Whether you intend to rent it out for a steady cash flow or plan to sell it down the line, there are ways you can make sure you’re getting the most of your investment. From tax breaks and write-offs to renting your property out to pet owners, here are some ways to maximize the profitability of your New York City investment property.
Choose the right market
If you’re interested in Upper West Side real estate or Upper East Side condos as investment properties, it pays to become familiar with the market. In New York City, sales are up, home prices are up, and the Upper East and West Side continue to be highly sought-after neighborhoods to live in.
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.
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
Take it from the IRS — when you rent out your piece of Upper West Side real estate, you are entitled to a number of deductions that reduce your taxable rental income. You can deduct expenses related to the interest on your mortgage, operating expenses incurred, property taxes, depreciation, and repairs. You can even write off necessary maintenance costs as well as any expenses you incur while advertising or marketing your property as a rental.
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.
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.
People are more than willing to pay additional fees to live with their furry friends, and they will comb through Upper West Side real estate listings to find a pet-friendly home to rent. Only 55% of landlords list their properties as pet-friendly, so tenants with animals have an even smaller pool of properties to choose from. Pet owners will be glad that you offer the option to bring their pets to their new home.
Minimize your exposure to costs
When you’re selecting an investment property from a sea of Upper East Side condos, condition and quality play important roles in minimizing cost. You don’t want to get stuck with a property that’s in constant need of repairs or maintenance. Even though those expenses can be written off, it’s best not to have to pay them at all.
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.
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.
