With all of the talk of buying apartments to hide money, to shelter money or guard against currency devaluation or being expelled from your country because the Olympic ski jump was not finished on time, does it make sense to invest some of your capital in a Manhattan apartment? I think it pretty much always does given some factors.

1- Manhattan real estate is generally a long term play and you need to be able to carry the investment through up and down markets. Yes, sometimes prices in NYC do go down.

2- Typical rate of return is around 2-3% not factoring in appreciation. So if you buy an apartment for $2mm, it will probably rent for around $7k and after paying the monthly condo charges and taxes you may end up with around $5-6k depending on the charges.

3- If you are buying for investment try to buy in a building with lower common charges and taxes if possible especially if you are relying on the income to support the investment.

4- You can buy in a new building or a building with higher monthlies if the rental income will help support the additional charges but your short term rate of return will be lower because of the demand of regular buyers.

5- If you are financing the property, you will need to put down a large down payment so that the rent will cover mortgage plus monthly costs. For an apartment, probably about 40-50%.

The upside of investing in a Manhattan apartment is that it’s low maintenance. Tenants if chosen correctly will usualy be low maintenance and if there is an issue with the apartment they can ask the super assuming there is one to address it and all you need to do is pay. Long term, the values in Manhattan will go up and your investment will appreciate and you may be able to trade  up to a more expensive property with more income.

Here’s an example of a possible purchase.

A condo on the Upper west side that you could buy for about $630k will rent for around $2300 per month and the mothllies will run around $600 in a building with low charges. Your monthly profit  is $1700 or $21,000  per year for a very safe 3% return. With the influx of people and investment flowing into the city of New York, who knows how much that property will be worth in 5-10 years? For example, I bought in 2004 an apartment for $400k and now 10 years later the neighbor is selling for $650k. It’s not as easy as that, you really need to have  skilled broker to help guide you in this process if you are new.

Also it pays to look beyond the obvious like Midtown and Central Park west. Currently, areas to watch are Harlem, parts of the Bronx as well as areas with good value like Murray Hill and Midtown west.