Where to Buy an Auction Property in New York State
Real estate investing is one of the best ways to start making money in the short run and to get on the way to the desired financial independence. An auction property in a top market in New York State makes for a profitable real estate because of the relatively low price and the high potential return. In this article we will help you identify the best places to buy a rental property at an auction in New York State in the spring of 2019.
Why Should You Invest in an Auction Property?
Regardless of what you might have heard, auction properties can make positive cash flow investment properties. The main reason for that is that they are usually foreclosed properties. Those on Auction.com’s website are either bank-owned or foreclosure sales. While buying a foreclosed property might come with certain restrictions and challenges, such as having to pay in full, the low purchase price compensates for all these inconveniences and makes foreclosures profitable rental properties. In most cases this type of properties sell for a fraction of the median property listing price in the area and definitely for less than the fair market value.
Return on investment in real estate is the result of the costs associated with buying the property and getting it in a rentable state, on the one hand, and the rental income you get from it, on the other hand. This means that the lower the property price, the higher your return will be, in terms of both cap rate and cash on cash return. This is why buying an action property is a smart investment decision.
How Is the New York State Real Estate Market Doing?
As everyone in the real estate business knows, location is key for the success of your endeavor. It is not enough to buy a cheap property; it has to be located in a top place in order to succeed. New York State has been and remains one of the best places for buying an investment property in the US housing market. The immediate proximity to NYC makes other cities and towns around the Big Apple profitable real estate markets with significantly more affordable median property prices. According to data from Mashvisor, a real estate data analytics company, the median property price in New York State at the beginning of 2019 was $542,000. However, don’t forget that foreclosed and bank-owned properties can sell for much less. This means that even beginner investors with little cash can afford a rental property there.
Based on Mashvisor data, the state-average cap rate is 2%. While this might not sound like a lot to seasoned real estate investors who are used to seeing cap rates above 8%, new investors should keep in mind that the rental business has become very competitive in recent years, so the baseline for good cap rate has been pushed down. Moreover, this is just the average cap rate in the New York State real estate market, while individual cities and towns offer considerably higher return on investment.
What Makes for the Best Place to Invest in Real Estate?
While we said that location is of key importance for making money in real estate, we didn’t define the best places for real estate investments. This is easy: The best locations for investing in rental properties are those which bring about the highest return on investment. In this article we use the capitalization rate, or cap rate for short, as the metric for return on investment as it allows to compare different areas in terms of their investment potential. The cap rate is simply the ratio between the net operating income and the property asset value. The city-level cap rates below have been provided by Mashvisor. Mashvisor takes its investment properties data from the MLS and other public sources; the traditional rental comps from Rent Jungle, Hotpads, MLS, and Zillow; and the short-term rental comps from Airbnb
What Are the Top Real Estate Markets for Traditional Rental Properties in New York State?
So, let’s have a look at the best places to buy an investment property this year. These are the locations which yield the highest cap rates for traditional rentals in New York State. The reason we focus on traditional is rentals and ignore Airbnb rentals that in 2016 New York State passed a bill which made it illegal to rent out a property for less than 30 days, virtually banning short-term rentals in the entire state. However, long-term rental properties remain a profitable investment option as the cap rates below show.
| Town | Average Long-Term Rental Cap Rate | Median Property Price* | Average Long-Term Rental Income |
| Potsdam | 18.8% | $165,800 | $3,620 |
| Savona | 14.6% | $91,300 | $2,690 |
| Chateaugay | 13.1% | $178,200 | $2,250 |
| Oriskany Falls | 11.0% | $51,000 | $1,050 |
| Waddington | 10.9% | $259,700 | $1,500 |
| Ilion | 10.6% | $106,400 | $1,420 |
| Altona | 9.2% | $89,700 | $1,500 |
| Mineville | 9.0% | $90,500 | $1,490 |
| Bellport | 9.0% | $234,300 | $3,400 |
| Freeville | 8.6% | $165,000 | $1,530 |
| Cohocton | 8.6% | $161,000 | $1,400 |
| Bath | 8.5% | $169,900 | $1,780 |
| West Stockholm | 8.5% | $67,000 | $1,200 |
| Rouses Point | 8.4% | $108,100 | $1,600 |
| Riverhead | 8.1% | $523,400 | $6,870 |
| Candor | 8.1% | $172,400 | $2,010 |
| Malden On Hudson | 8.0% | $99,900 | $1,420 |
Data Source: Mashvisor, March 2019
* For properties listed on MLS, not for auction propertys.
As you can see from the data above, buying a rental property in some New York State real estate markets can be a very profitable decision. Indeed, investment property analysis will show you that if you buy an auction property in any of these top locations for real estate investing, you can expect a much higher cap rate than the ones listed above as foreclosed and bank-owned properties can sell for significantly less.
Daniela Andreevska is Marketing Director at Mashvisor, a real estate analytics tool which helps real estate investors quickly find traditional and Airbnb investment properties. A research process that usually takes 3 months can now take 15 minutes. We provide all the real estate information in easy to understand visualizations.
The information in this blog post is being provided for informational purposes only and not for the purpose of providing legal or real estate investment advice, and no liability is assumed by Auction.com LLC with respect to such information.
Sources:
What’s a Good Cap Rate for Investment Properties:?
https://www.mashvisor.com/blog/good-cap-rate-investment-properties/
7 Best Places to Invest in the New York Real Estate Market 2019:
https://www.mashvisor.com/blog/new-york-real-estate-market/
