Manhattan Long-Term Rentals Yield 2.9%: A Premium Play

Manhattan (New York County) is one of the most regulated short-term rental markets in the country. NYC Local Law 18 took effect in 2023 and effectively eliminated investor short-term rental: hosts must be registered, must be physically present during the stay, and may host no more than two guests at a time. Entire-home rentals under 30 days are prohibited. For a non-owner-occupied investment property, that means zero legal short-term rental nights per year. The only viable strategy here is long-term rental, and the rest of this article focuses on whether the long-term yield justifies entering at Manhattan prices.

Estimates for a typical 3-bedroom house. Short-term rental is not available to investors in this market.

Annual gross rent is monthly rent × 12 × tenanted occupancy (95%), not the headline monthly figure × 12. The vacancy haircut reflects ACS county-level vacancy data and is what the Dashboard uses.

At roughly 2.9% gross, Manhattan delivers a fraction of the national median long-term yield of 5.3%. The investment case here is not cash flow; it is owning land in one of the world's deepest property markets and waiting for appreciation.

Manhattan's 59 ZIP Codes Show Yields Tightly Clustered Below 6%

Even within Manhattan, the highest-yielding ZIPs sit comfortably below 5% gross. The top five neighborhoods on a yield basis sit between 5.3% and 5.8%, well below the typical buy-and-hold threshold investors target in cheaper US metros. The reason is simple: prices are anchored to land scarcity and global capital flows, not to the rent the building can produce.

Top-yielding ZIP codes within Manhattan (3-bed house basis).

These are averages per neighborhood; your specific block or building can differ. For a bedroom-and-property-type breakdown, including 2-bed apartments at around $637,137 renting for roughly $2,968 a month, the dashboard shows the suburb-level data.

View Manhattan in the dashboard → Free preview · every bedroom count and property type

NYC Local Law 18 Closes the Door on Investor Short-Term Rental in Manhattan

Whole-home short-term rental for investors is functionally banned in Manhattan. Short-term rentals heavily restricted in New York. Investment properties generally not permitted; may require owner occupancy, specific zoning, or other conditions (permit required, $145). NYC Local Law 18 (2023) effectively bans most short-term rentals under 30 days. Hosts must register, be present during stays, and may host no more than 2 guests. Entire-home rentals under 30 days are prohibited. The practical effect for an investor buying a 3-bedroom house or 2-bed apartment with the intention of listing on Airbnb or similar platforms: the property cannot be legally rented for stays under 30 days unless the host is physically present and registered, which an absentee investor cannot satisfy.

The contrast within New York State is stark. Upstate ZIPs in counties like Niagara, Clinton, and St. Lawrence still allow investor short-term rental and produce gross yields above 30%. Lyon Mountain (12952), Star Lake (13690), and Niagara Falls (14301) all sit on sale prices under $115,000 with nightly rates between $157 and $200. Investors set on running a short-term rental in New York generally need to look outside New York City entirely.

Manhattan Operating Costs Eat Most of the Long-Term Rental Margin

Annual long-term rental costs run to approximately $30,703 on a 3-bedroom house, against gross rent of around $43,704. The line items at default settings (self-managed) include landlord insurance at roughly $6,124, maintenance estimated at $11,999, and property tax of approximately $12,580 (Manhattan's effective rate is around 0.8% of assessed value, well below most US metros, but the price base is so high the dollar amount still bites). Net operating income lands near $13,001, for a net yield of approximately 0.8%.

If you choose to hire a professional manager instead of self-managing, add a fee of typically around 8% of gross rent to annual costs, which would compress net yield further. Most Manhattan investors at this price point use a manager because the unit is rarely owner-adjacent.

Tax Implications for Manhattan Investors

Depreciation and mortgage interest are the two most significant offsets to Manhattan's thin cash yield. On a $1,531,115 3-bedroom house, the depreciable building basis is approximately $995,225 (around 65% of the purchase price after stripping out land value), producing an annual depreciation deduction of roughly $36,190 on a 27.5-year residential schedule. That alone can shelter most or all of the rental income from federal tax for the first decade or so of ownership, and any unused passive loss carries forward.

Mortgage interest is fully deductible on Schedule E with no SALT cap (the SALT cap applies to personal property tax and state income tax, not investment property). New York State imposes a graduated income tax that tops out near 10.9% for high earners, and New York City layers on its own local income tax of around 3.9% for top-bracket residents, so investors who are New York City residents face among the highest combined marginal rates in the country on net rental income. Out-of-state investors avoid the city tax but still owe New York State tax on income sourced from a Manhattan property. A 1031 exchange remains available if you eventually swap into another investment property.

Manhattan Yields Sit Far Below the National Median

Comparison of key investment metrics.

Manhattan's gross long-term yield of approximately 2.9% sits well below the national median of 5.3% (the New York State average is the same as the national median at this resolution). Sale prices are roughly six times the US median while rents are only about 3.6 times higher, which is why the yield gap is so wide. Investors accept this gap because Manhattan's land has historically appreciated faster than rents, particularly in scarcity-constrained submarkets, so total returns over a long hold period have tended to come predominantly from capital growth rather than cash flow.

Why Investors Still Buy Manhattan at These Yields

The Manhattan thesis is appreciation, currency hedging, and global liquidity, not cash flow. Investors who buy here typically have one or more of the following characteristics: significant existing equity, a long hold horizon (15+ years), a desire to diversify into a globally recognized store-of-value market, or use of the property for personal stays interspersed with long-term tenancy. The 6.9/10 long-term rental score reflects strong fundamentals (low vacancy, deep tenant pool, high-credit tenants) offset by very thin yield and high entry cost.

For investors whose primary goal is monthly cash flow, Manhattan is the wrong market and no amount of optimisation changes that. Outer borough Bronx ZIPs, Rochester, Syracuse, and select upstate locations produce gross yields between 14% and 17% on price points under $200,000, though they come with their own management and tenant-quality considerations.

Investment Bottom Line: Manhattan Is an Appreciation Play, Not a Yield Play

Manhattan rewards patient capital and punishes leveraged cash-flow strategies. With 2.9% gross and approximately 0.8% net, a highly leveraged buyer will run negative cash flow from day one and rely entirely on appreciation to make the deal work. The investor profile that fits Manhattan looks more like a wealth-preservation buyer with low loan-to-value and a long horizon than a yield-seeker. For the suburb-by-suburb view, including 2-bed apartments and 1-bed pricing, the dashboard is the next step. Note transaction costs (closing costs, transfer tax, mansion tax above $1M) add several percent to the entry price; verify current rates with your attorney before closing. Data reflects market conditions as of May 2026.

This information is for educational purposes only and should not be considered financial or legal advice. Regulations and market conditions change frequently. Verify current rules with local authorities before making investment decisions. For methodology details, see the market score methodology and data sources. State context: New York rental market insights. Related markets: Brooklyn House vs Apartment: Apartments Lead Before HOA Costs, Rego Park (11374) Leads Queens Rental Yields at 6.8%, Long Island Apartments Edge Out Houses on Yield, Before HOA, Manhattan Apartments Beat Houses on Long-Term Rental Yield.