Recently, there has been an increase in inquiries from investors looking to add two or three rental properties in Syracuse. Understanding the numbers makes it easier to see why this trend is occurring.

According to data compiled by Redfin, the recent average rent in Syracuse is around $1,706. Compared to other major cities in New York State, this is relatively low, which suggests that the rental yield compared to initial investment costs could be more favorable. However, this average includes both the city of Syracuse and surrounding towns in Onondaga County, so there can be significant variations based on unit size and location.

However, when considering property taxes, the story changes. Syracuse's effective property tax rate is 2.50%, meaning that for a home valued at $125,100, the median annual property tax is $3,129. This is quite high compared to New York State's median of 1.90% and the national median of 1.02%. Investors with multiple properties will find that this property tax burden accumulates and impacts the overall return on their portfolio.

Let's also revisit the loan conditions. For investment properties, a down payment of 15% to 25% is required, and a credit score of at least 620 is needed to qualify for a loan, although a score above 740 is necessary to secure favorable interest rates. Interest rates are typically set 0.5 to 0.75 percentage points higher than those for owner-occupied homes. Investors managing multiple properties need to calculate how these conditions vary for each property individually.

The way rental income is recognized is a variable that affects loan limits. Lenders typically recognize only about 75% of expected rental income as qualifying income, and documentation such as lease agreements or rent schedules from appraisals is required. In areas like Syracuse, where rental prices are lower, this 75% recognition can be relatively small, so a conservative approach is necessary when calculating additional purchasing power.

Applying the 1% rule to the average rent of $1,706 means it holds true when the purchase price is below $170,600. Syracuse has lower home prices compared to other major cities in New York State, so properties that meet this criterion do exist, but to get an accurate picture, both the cap rate and property tax burden must be considered. The cap rate is the ratio of net operating income to the purchase price, and in areas like Syracuse with high property tax rates, net operating income can be significantly reduced due to taxes, making it essential to consider this metric to avoid distorted judgments when comparing multiple properties.

From a tenant law perspective, it is important to note that the 2019 HSTPA amendment allows cities and towns across New York State to selectively adopt rent stabilization systems. It is necessary to verify whether Syracuse or Onondaga County has relevant ordinances before making a purchase. For investors with multiple properties, it is safer to keep track of the year built and the number of units for each property, so they can easily see which properties are affected whenever ordinances change.

In terms of management costs, owning multiple properties may make outsourcing management more efficient than direct management. When hiring a management company, 8% to 12% of the monthly rent goes to fees, and it is common to set aside about 1% of the asset value annually for maintenance. Landlord insurance also tends to be higher than standard homeowners insurance because it includes rental loss and liability coverage. As the number of properties increases, it is often easier from a management perspective to switch from individual contracts to a portfolio policy that covers multiple properties.

For investors looking to expand their portfolios, a 1031 exchange is worth considering. This allows for the deferral of capital gains tax when reinvesting in like-kind assets after a sale, with requirements outlined on irs.gov. This article does not constitute investment or legal advice, and it is advisable to consult real estate and tax professionals before entering into any contracts.