If you’re looking to buy an investment property, is buying a home in NYC a good idea? While there are many factors that can affect the cost of your house and expected returns from it, it is generally a good idea to invest into a home. If you’re already planning on purchasing your first home or starter home, it’s a good idea to look at it as an investment that can benefit you in the future. Regardless if you buy it with a mortgage or “all cash,” you still want a return on your investment.
For instance, if you invest into a good property for your first home, when you decide to upgrade to a larger space, you can turn this property into a rental so it can continue to help you make money. Even if you don’t want to turn your property into a rental, if you choose properly, your home can be worth more in the future when you’re ready to sell.
Investing in real estate: pro vs. newbie
Now the biggest question is how to find the best investment property to buy and what are pro investors looking for in a property? As a starting point, it’s a good idea not just to research the average expected return on homeownership. It’s important to have knowledge on this as it can vary depending not just by state or city, but can be different depending on neighborhoods. For instance, homeownership can look different in Manhattan compared to Queens.
Another important thing to look at is the future opportunities of a property. For instance, if there’s a property that’s undervalued because it needs some fixing up and maintenance, it can be worth fixing in order to boost your return on investment. Future opportunities of a property pro investors look at are if the property has a high FAR value and if you’re able to expand on the current building. Lastly, it is a good idea to look at the properties surrounding the one you’re interested in and how they can potentially affect the price of your land.
What is FAR in real estate
If you’re looking into investing into property, you’ve probably run into the term “FAR.” So what is FAR real estate meaning and why is it so important in choosing which property to invest in? FAR stands for “floor area ratio” and is the relationship between the total usable floor area of a building and the total area of the lot the building is on. It essentially calculates the size of the usable floor area, not just the area currently in use, divided by the size of the lot it is on and doesn’t count areas like the basement, parking garage, stairs, and elevators.
FAR and land value
The floor area ratio value plays a large part in determining where real estate developers choose their new projects. This is because a higher FAR generally means there is more opportunity for new space as it can allow for larger buildings, which in turn increases the amount of sales and leases in the future.
A high FAR also allows real estate developers to meet a higher demand for new living spaces by allowing them to expand into usable floor areas that aren’t already currently in use. So a property with low FAR means there is less usable space to develop on and is worth less than those with higher FARs.
Additionally, sometimes the local government will set a maximum FAR on certain properties which means buildings on that lot can’t exceed that max. While these limits usually aren’t an issue in terms of residential areas, it’s still something to keep in mind. This is because properties that are far below the maximum FAR means there are plenty of future upgrades and expansion opportunities on the lot, making the space more attractive to developers and investors.
While the concept of FAR may seem straightforward, where the higher it is, the better it is for land values, it’s a bit more complicated than that. This is because it can both raise and lower the value of land at the same time. For instance, if a property is valuable due to its high Far value, it can reduce the value of land next to it because its future building construction can block the view of the neighboring land. So it is important to keep in mind not just the property you’re interested in, but also the land around it and their FAR values.
High FAR properties New York City
If you’re looking to purchase an investment property in NYC, there are plenty of listings on the market with high FAR. Any of these properties currently on the market could be a great investment!
Building: three-family home
Space: 7 beds, 3 baths, 3,100 sqft
Neighborhood: Bushwick, Brooklyn
Potential sq feet: 2,700 sqft
This three-family home was built in 2002 and was recently renovated. According to Localize’s insights, this listing’s asking price is lower than both our price estimation of the property and lower than other similar listings. The building has no violations and no recent complaints. The neighborhood it is located in has slightly above average crime rate and the nearby school rates low. The building also sits on a truck route meaning there may be higher volumes of big vehicles on the road.
Building: single-family home
Space: 4 beds, 5 baths
Neighborhood: Harlem, Manhattan
Potential sq feet: 4,473 sqft
This single-family home was built in 1899 and is fully renovated. It is three stories tall and is designed so that the lower two floors can be accessed separately from the upper floor. It also features central ac and new electric and plumbing systems. According to Localize’s insights, the building has no violations and no recent complaints. The neighborhood it is located in has slightly above average crime rate and there is a construction site within half a block that is estimated to end in 2024. However the nearby school rates high on citywide school quality measures.
Building: three-family home
Space: 5 beds, 4 baths, 3,260 sqft
Neighborhood: East Harlem, Manhattan
Potential sq feet: 3,676 sqft
This East Harlem home is a brownstone building on a tree-lined block. According to Localize’s insights, there are no building violations and no recent building complaints. The neighborhood it is located in has slightly above average crime rate and there is a new construction within half a block that is estimated to end in 2022. The building is also located within a flight path, but according to the Federal Aviation Administration, this area isn’t officially at risk for harmful airplane noise exposure.
Building: single-family home
Space: 3 beds, 3 baths
Neighborhood: Flatbush, Brooklyn
Potential sq feet: 3,782 sqft
This Brooklyn home was built in 1910 and is two stories tall with the second story featuring a skylight. It also has a full finish basement and updated kitchen. According to Localize’s insights, there are no building violations and no recent building complaints. The neighborhood it is located in has slightly above average crime rates and there are five construction sites nearby with three estimated to end in 2023 and two estimated to end in 2024.
Building: mixed-use building
Space: 6 beds, 4 baths
Neighborhood: West Harlem, Manhattan
Potential sq feet: 5,368 sqft
This mixed-use townhouse in West Harlem was built in 1910 and was recently renovated. It is one of the five row houses on the block and can be a good opportunity for an investor as the three stories are vacant and ready for rental. According to Localize’s insights, the building has no violations and no recent complaints. The neighborhood it is located in has slightly above average crime rates and sits along a truck route. The building is also located near City College along with restaurants and shopping opportunities.
Building: single-family home
Space: 2 beds, 1 bath, 1,620 sqft
Neighborhood: Far Rockaway, Queens
Potential sq feet: 5,456 sqft
This single-family home in Queens is being sold as it is before renovation. However, it is currently being renovated with 2-3 bedrooms, 1 bath, full basement, and a new sunroom in the backyard. According to Localize’s insights, the building has no violations and no recent complaints. The neighborhood it is located in has slightly above average crime rates and is in the hurricane evacuation zone.
Whether you’re searching for your starter home or wanting to invest in properties in New York City, we hope this article was helpful for your research. Properties included in this article is just a drop in the bucket and Localize has plenty of listings that have great investment potential. Our insights not only includes how much FAR a property has, but also has information about the building itself and its surrounding neighborhood to make home searching easy on you!