New York is one of the toughest places to flip houses, and here are the reasons why:
- On Long Island specifically, nearly all the available land is used. There’s almost no place left for new construction, which means no new subdivisions or communities are being built. What this means is that you’re almost totally dependent on finding distressed properties if you’re looking for an off-market deal to start your next fix-and-flip.
- Competition here is fierce, the population density of people who have enough money to invest in real estate and the popularity of HGTV shows has encouraged a lot of entrepreneurs to try their hand at house flipping. Distressed properties don’t go unnoticed for long and it’s easy to get beaten to the punch if you don’t have a large, reliable network bringing you leads.
- Prices, especially on Long Island, are very high. In Nassau County, the median sale price is over $600,000, and in Suffolk County the median price is over $500,000. This means that even for distressed property prices are very high and as a result financing house flips is more difficult, requiring you to either have significant cash on hand or the ability to secure favorable financing from a bank.
- Labor shortages are a real issue here. It got worse during the COVID-19 pandemic, but even before that the availability of labor was a problem. The “fix” part of fix-and-flip is a lot more difficult when the contractors you work with don’t have the manpower to take on a job on short notice. This may result in you having to hang on to a distressed property for longer than is ideal while you wait for your job to get started.
- Property taxes which are some of the highest in the entire United States. Nassau and Suffolk County property taxes are a major sticking point for a lot of buyers, with typical “middle class” homes having property taxes ranging from $12k to $20k. This imposes additional expense while a property is on your hands and can potentially extend the amount of time it takes to sell. If your timing is right, be sure to file a property tax grievance to try to bring those property taxes down.
- NY has the strictest government regulations in the entire country. It can take over 11 months to complete permitting processes. As a result, you may wind up holding on to a property for a long time and incurring a lot of additional carrying costs. This greatly increases the risk of any investment you make.
As you can see, house flipping in NY (and on Long Island in particular) is not for the faint of heart. Patience, cash reserves, a strong team, and a shrewd sense of timing are all critical in order to ensure your success. But if you have the right people surrounding you and you educate yourself regarding the specific challenges of house flipping on Long Island, there is an opportunity to make money.