Rental property investing in New York: cash flow, taxes, and what to expect

The New York setup, at a glance

New York sits at roughly 1.4% effective property tax, which matters more than most new investors realize. On a $180k-$260k Buffalo property, that's about $2,520/year in taxes alone - call it $210/month before you've paid anything else. Run the rental cash flow calculator with that line item baked in or your projection will look better than reality.

Eviction stance here is tenant. Tenant-friendly. 14-day notice, hearings can stretch months especially in NYC. 90-180 days common for contested. That timeline directly affects your vacancy assumption: in tenant-friendly states like New York, you can underwrite 5-7% vacancy on B-class properties; in slower states you'd want 8-10%.

Where the math actually pencils

Buffalo - $180k-$260k for typical SFR, $1,200-$1,600/mo for 2-3BR rents. still cash-flow possible, tech spillover from Erie Canal corridor.

Rochester - $170k-$240k for typical SFR, $1,100-$1,500/mo for 2-3BR rents. Kodak's gone, healthcare + universities replaced it.

Albany - $220k-$310k for typical SFR, $1,350-$1,750/mo for 2-3BR rents. state government anchor, steady.

The 1% rule (monthly rent >= 1% of purchase) is a smoke test only, but it filters fast: a $180k-$260k property in Buffalo renting at the high end (1,600/mo) clears 0.8-0.9% in most cases, so you're already in the "needs the rest of the math to be tight" zone before vacancy + capex + management.

New York-specific things that bite

Upstate NY is a different market than NYC - much more landlord-traditional, cash-flow possible. NYC + Long Island are stabilized-rent + rent-controlled landmines.

A few cash-flow-killer line items that catch out-of-state buyers in New York:

• Property tax escrow. Lower than the national 1% average, but the homestead exemption you'd get as an owner-occupant doesn't apply to rentals.
• Insurance. Standard hazard policies are still reasonable here, but ask about wind/hail riders depending on the specific zip.
• PM costs. 8-10% of collected rent is typical. On a $1200/mo property that's $108-120/mo - works out to about a month of vacancy each year.

What "good enough" looks like in New York

For a stabilized buy-and-hold in New York, the rule-of-thumb deal targets most investors I see are:

• Cap rate: 6%+ on the actual NOI (not the broker's pro forma). Below 5% and you're paying for appreciation, which is fine if that's your thesis.
• Cash-on-cash: 8-10% minimum at year 1 with 20-25% down. 12%+ is solid for the work.
• DSCR: 1.25+ if you're using a DSCR loan. Lenders increasingly want 1.2 as a floor, 1.25 to clear comfortably.
• Reserves: 6 months of PITI. New York's slower eviction process means you may need 8-9 months of reserves in a worst-case turn.

The play that works here

New York still has cash-flow-friendly metros (Rochester) where the math pencils on traditional 20-25% down rentals. Buy in B-class neighborhoods, accept slightly higher turnover for the cash flow, manage tightly.

Run your specific deal through the rental calculator with the state's effective tax rate (1.4%), realistic New York insurance quotes, and 8-10% PM. If it still pencils after that, you've got a deal.