1) buying to let is even crazier, and requires major capital - cost to purchase is nowhere near actual current cashflow. Even in the Bay Area, when it was running up it was 3-5x rental cashflow to buy. In places like manhattan or the Bay Area, landlords are often only able to justify buying in based on speculative future property values (aka market only ever goes up, and in 20 years this will be all fine).

As to if they can actually ever make money on this? Good question. If it was clearly penciling out in a spreadsheet though, competition would ensure it wouldn’t for long in the most in demand markets.

Other markets are saner because there is less competition, usually. This started changing nationwide about 10 years ago, as competition nationwide got out of hand due to easy money.

2) renters do all sorts of crazy bullshit sometimes, and unless you’re really good at managing it as a landlord you’re screwed. Sometimes even then you’re still screwed. Markets like Manhattan especially so.

Landlords which know how to manage these kinds of tenants often turn these kinds of tricks against all tenants to increase returns, and the courts adapt to be even more tenant friendly in many areas or political pressure makes things like rent control inevitable. Which amps up the game.

Eventually market conditions shift (either due to changes in money supply, or because the well is ‘poisoned’ on the landlord or tenant side), and we see things like 70’s era NYC or SF which nukes most of the property values for so long, the speculative players are forced to give up - either because they are broke, or because they have ‘greener pastures’ they are pursing. In RE, usually the former due to market liquidity issues.

To clarify, you're asking why people don't buy apartment buildings in Manhattan?

Let them eat cake.

It's expensive these days. I lived in one of these buildings for 11 years: https://www.bhsusa.com/brooklyn/brooklyn-heights/60--66-clar... Now the set of 4 buildings is on the market for $25,000,000. If you click to the brochure, you can see the rent that each leased unit pays, about $100,000 per month across the set of buildings. Property taxes + other expenses are around $400,000 a year. So without a mortgage, you make about $800,000 a year. With a mortgage (0% down, 6.5% interest, perhaps not completely realistic but ballpark), you lose about a million dollars a year.

That's about the average situation in NYC. Brooklyn Heights is obviously extra-expensive because it's nice and is a 20 minute to commute to pretty much anywhere in the city, but the math is about the same everywhere.

Meanwhile, if you're just going to go for a single unit in a new building as an investment property, budget on about $1.2 million for a 1 bedroom that you could MAYBE rent at $5k/month or $900k for a studio that you could rent for $4k/month. 20% down on a $1MM apartment, you're looking at a mortgage of $5k/month. Add property taxes, $6k/month. Add insurance, $6100/month. So you need to come up with $1100/month as long as your tenant pays on time. That's not a monthly loss per se, you get to keep the principal and recover it when you sell. But how much money you make really depends on your access to capital. I recommend being rich in advance of your foray into becoming a landlord in NYC. If you are buying these units at 0%, and many people are, this is a very nice racket.

Personally, I wouldn't do it. A lot of the more affordable units in NYC are in co-ops, which often prohibit renting (to keep prices lower). So the market has already priced in that "investment property" premium for condos, in the area of 20-30%.

How many people have millions on hand to buy an apartment building?

Just to have a place to live?

Because people can’t or don’t want to pay the huge down payment + broker fees especially if they are not sure how long they will live in the city