Suffolk County is one of the best places in the metropolitan area to invest in a rental home, according to a recent analysis by HomeUnion, an online real estate investment management firm.
Suffolk — which had an average capitalization rate of 5.3 percent, the return rate from the income generated by the property, and a median investment sales price of $340,000 at the end of last year — came in third in the New York metropolitan area, behind Middlesex and Union counties in New Jersey.
Nassau County came in sixth place, with an average capitalization rate of 4.1 percent and a median investment home price of $439,000.
The capitalization rate is a measurement of risk, says Steve Hovland, manager of research services for HomeUnion. Investors pay more for homes in Nassau County, but they don’t see a much greater monthly return, as median rents were $2,821 in Nassau versus $2,625 in Suffolk.
“You’re going to get a lot more rent for your price in Suffolk than in Nassau County,” Hovland says. ”When investors are buying at lower cap rates, it’s going to be more of a cash flow.”
Manhattan was the worst place to invest, with a 1.9 percent capitalization rate. The median investment sales price there was $1.4 million with a median rent of $3,617.