Why Out-of-State Investors Underestimate New York Real Estate Returns

Written by:

Rudi Davis

Date:

15 Feb 2026

Share

Share via Facebook

Share via Linkedin

Share via X

Copy to clipboard

Higher acquisition costs in New York often deter out-of-state investors. Still, these buyers may be overlooking the long-term returns that set New York’s outer-borough markets apart, according to Patrick Dominique, a realtor at One Stop Agency who works with investors across Queens, Nassau County, and Brooklyn.

Many investors compare New York’s entry prices to those in markets like Florida or Texas and decide the numbers don’t add up. “They say it’s too expensive,” Dominique says, describing the most common objection he hears. However, he argues that focusing solely on upfront purchase price is incomplete and fails to account for the core drivers of real estate investment returns.

Why New York’s Higher Prices Make Sense

Dominique’s case centers on two factors: long-term appreciation and sustained rental income. He points out that while it’s possible to buy a property in Florida or Texas for far less than a comparable one in Queens or Brooklyn, that lower price tag doesn’t guarantee a better investment outcome.

“If they buy the same property in New York and pay a few hundred thousand dollars more, the long-term income from that property can be greater,” Dominique says. He attributes this to both higher rental yields and stronger long-term appreciation.

New York’s population density and tight housing supply keep vacancy rates low and rental demand high. Dominique estimates vacancy rates of around 1.4% in the neighborhoods he covers, underscoring how limited supply supports higher rents. Over the long term, New York properties have also tended to appreciate faster than those in many lower-cost markets, resulting in a total return that can justify the initial premium.

Operational Complexity: The Real Obstacle

Despite these advantages, Dominique acknowledges that New York is a challenging market for landlords. “Some investors will try to go to a different state than New York due to the tenant-landlord restrictions,” he says. Eviction rules, tenant protections, and management requirements are more stringent than in states such as Florida and Texas, making property management more demanding.

Dominique is clear that these challenges are real and should not be underestimated. Navigating non-paying tenants or complying with local regulations can be time-consuming and costly. However, he maintains that for investors with a long-term perspective, these hurdles are outweighed by the potential for superior returns.

The key question, he says, is whether the higher financial upside compensates for the additional operational effort. For those who can manage the complexity, either directly or through a local partner, Dominique believes the answer is yes.

Building Buying Power Through Partnerships

For investors with limited capital, Dominique recommends teaming up with local partners rather than seeking cheaper properties elsewhere. “If they’re coming in at $500,000 as an investor, I would tell them, ‘Right away, get a JV, do a joint venture with someone, and get you a nice building,’” he says.

In his experience, $500,000 is rarely sufficient to purchase a significant asset outright in New York. But by pooling resources in a joint venture, investors can target distressed properties or buildings that need renovation, unlock value through improvements, and benefit from New York’s appreciation and rental demand.

“Collectively with $500,000 in New York, you can get some good deals, especially off-market deals,” Dominique explains. Off-market properties and those in need of upgrades often offer better returns for those willing to take on additional operational work and share control with a partner.

This approach does require accepting greater complexity, from partnership dynamics to renovation management. Still, Dominique sees these as manageable trade-offs for investors willing to prioritize long-term wealth over short-term simplicity.

How Investors Evaluate Markets—and What They Miss

Dominique’s experience highlights a common blind spot among investors: prioritizing acquisition cost over total return. By focusing primarily on market-entry costs, investors may overlook markets like New York, where higher incomes and appreciation offset higher prices.

“Investors want to see income,” he says, describing the mindset of many cash buyers. They often zero in on immediate rental yields and the potential to add value by converting units or maximizing square footage. While this focus on cash flow is logical, Dominique argues that it should be balanced with an understanding of long-term appreciation.

A property that generates modest cash flow but appreciates at 5–7% annually can outperform one with higher initial income but little price growth over a decade. As Dominique puts it, “Real estate is the only investment that always goes up. You never know how much it’s going to go up 10 years from now, but it’s a big investment, so always come in as an investment.”

What It Means for Today’s Investors

Whether out-of-state investors adapt their approach depends on how clearly long-term returns are explained. It also depends on their ability to partner with local experts who can manage New York’s regulatory demands. Dominique’s firm, One Stop Agency, positions itself as a resource for these partnerships in Queens and Brooklyn.

For those currently weighing New York opportunities, Dominique’s advice is direct: treat the higher purchase price as a built-in advantage, not a deterrent, if you have the structure in place to handle New York’s complexity. The combination of strong rental demand and sustained appreciation has long set New York apart, but only for investors willing to look beyond the surface numbers and focus on the whole investment picture.

In a market where operational difficulties are real but the upside remains substantial, the investors who succeed are those able—and willing—to play the long game.