As you may know, well-to-do New Yorkers famously buy second homes in The Hamptons. For many, the contrast of life inside and outside New York City is too great to pass up. That’s also the reasoning behind “pieds-a-terre,” the local industry term for second homes within New York City. Buyers of second homes in NYC hail from anywhere worldwide; their second homes provide instant access to arguably the most energetic city on Earth.
Buying a second home in Manhattan requires careful consideration of factors like the cost of ownership, the local real estate market, and your intended use of the property. Before buying, you’ll want to consider what you hope to get from owning a second home. Keep the following points in mind as you search for second homes in New York City.
Purpose and functionality
New York City enables dynamic lifestyles where every day is an adventure. As you search for your second home, be clear on your motivations.
Second homes vs. investment properties
When buying a second home in Manhattan, ask yourself whether the property will be used more for personal use or rental income. The distinction between second homes and investment properties is crucial. Buyers of second homes in New York City are differently motivated than investors. Instead of profit or return on investment, buyers of pieds-a-terre focus on features they personally want.
Regarding second homes, some important variables are property style (single-family homes, townhomes, condos, co-ops), property features, location, and price point. Anything from location to a rooftop garden can be grounds for preference. If you plan to use the property, you'll want to ensure it has all the amenities you’re hoping for, from spa features in the bathrooms to balcony space or proximity to your favorite restaurants. Parking is a must if you intend to use a car.
Again, the main criterion for investment properties is that they are easy to rent out for a profit. By contrast, second homes suit various purposes. You might plan on hosting family vacations or gatherings. Spring in New York City is famously beautiful. You could also use your pied-a-terre as a crash pad for weekends or business trips. And many buyers purchase second homes with the intent of eventually retiring there. Consider also more specific activities such as brunch at hip cafes, Broadway shows,
Location, location, location
Location is one of the most significant factors when purchasing a pied-a-terre. You can afford to be somewhat picky on location — Manhattan has many beautiful neighborhoods. Do you want access to all the best designer shops and upscale restaurants on the Upper East Side? Or would you prefer a more artistic, laid-back vibe like that of Tribeca or Soho? If you love visiting museums, consider a location near the American Museum of Natural History, the Metropolitan Museum of Art, or a spot close to Central Park if you want to spend time outdoors.
Another critical factor to consider is accessibility. Ideally, you'd want a second home in Manhattan to be easily accessible from other parts of the city. This is especially important if you rent your home to other visitors. A location close to major highways, public transportation, and airports can make the property more attractive to renters.
The right budget
If you’re considering a second home in New York City, you’re looking at a high financial outlay. The purchase price of a second home in Manhattan can vary widely depending on the property's location, size, and condition. Still, setting a realistic budget is essential to avoid overextending your finances. Before you buy, reviewing your income, savings, and existing debt can help you determine a reasonable purchase price.
Then, you’ll want to consider maintenance costs, including repairs, landscaping, cleaning services, and general upkeep. Be sure to research the average maintenance costs for properties in the area you are considering to ensure you can afford these expenses over time. Similarly, property taxes are another cost to include in your budget. They can vary depending on the location and value of your property, so it’s important to glean insight from your realtor
to get a sense of what to expect once you invest.
Some prospective buyers are surprised to learn the tax implications of purchasing a second home. Make it a point to ask your agent whether your second home purchase could yield tax benefits. For example, if the purchase puts you over the $1 million debt threshold, you could write off the interest on your loan payments. Another instance would be if you rent out the property for fewer than 14 days per year (in which case that income would be tax-free).
Depending on your location and the property size, you may need to hire a professional property management company to handle maintenance and repairs. If you’re only using the property seasonally, this can be a helpful service to explore, especially if you decide to rent out the property.
Property managers can handle maintenance requests, ensure you’re following current laws and regulations, collect rent, and show the property when there’s a vacancy. When evaluating the cost of property management, consider the potential savings from working with a professional company. By outsourcing your management, you can save time and money on tasks that would otherwise require a significant investment.
Another consideration you’ll want to make is the resale value of your Manhattan property. While property values in Manhattan have been historically strong, it's important to understand market trends, competition from other properties, and the condition of your home when evaluating your potential returns on investment.
With lower appreciation rates than other parts of the country, Manhattan real estate makes for a more stable long-term investment than a lucrative short-term investment. To maximize resale value, you’ll want to invest in regular maintenance and upkeep, as well as strategic upgrades that can improve the appeal and functionality of the property.
Find the perfect pied-a-terre in Manhattan
Your second home, or pied-a-terre, in Manhattan, is a personal milestone. Besides its symbolic value, the property represents years of personal enjoyment and relaxation, not to mention rental income and long-term financial growth. However, the New York City real estate market is competitive and fast-moving. To achieve your goals, it’s vital that you work with a savvy local agent.
The Martin Eiden Team
understands the unique challenges and opportunities of owning a second home in Manhattan. Their team of experienced realtors and property management professionals can help you evaluate your options, identify the right investment opportunities, and navigate the complexities of the market to achieve your goals. If you're considering a pied-a-terre in Manhattan, contact Martin Eiden
today to schedule a consultation and identify your first step.
*Header photo courtesy of Shutterstock