NEW YORK (MainStreet) — Emir Bahadir, a native of Turkey, purchased two apartments in Manhattan for the purpose of renting them out. The 24-year-old paid a total of $9 million for the apartments in the West Village and Chelsea and earns some $40,000 a month in rental income.

”Entry into the real estate market in Manhattan by the foreign buyer has become easier because of technology,” Bahadir told MainStreet.

As a result, foreign buyers are increasingly coming into the Manhattan market and buying properties worth $2 to $5 million for the benefit of rental income. That can push rental prices higher for those on Main Street. 

“[Foreign buyers] are not keeping them empty but filling them with tenants,” said Tamir Shemesh, a Realtor at the Corcoran Group. “A $2 million apartment can be rented out for as much as $8,500 a month, while a $3 million apartment can go for $11,000 to $12,000 a month.”

The tenants who can afford to pay thousands a month in rent are largely foreign as well.

"The reason we invest in real estate in New York is because of the exorbitant amount of rent that people are willing to pay,” Bahadir said. “That doesn’t happen anywhere else except in the U.K., but because of complications in the Middle East, London is not so popular these days.”

The downside for Americans is that escalating prices impact the overall rental market.

“It lets landlords know what the ceiling is and may encourage them to reach for it,” said David Reiss, professor with Brooklyn Law School.

The influx of foreign buyers who are landlords can snowball: Bahadir also helps other wealthy buyers from the Middle East, Brazil, Russia, Ukraine and Turkey purchase property in Manhattan to rent.

“Foreign buyers invest in properties, because they get a better interest rate from rent than from keeping their money in the bank,” Bahadir said. Typically, their tenants are in the U.S. only temporarily. “They prefer renting rather than buying to avoid taxation,” said Bahadir.

Levies on luxury real estate include the 1% mansion tax on the price of homes selling for $1 million or more.

“They are here from virtually every nation and for a variety of reasons,” said Larry Link, president of Level Group, a New York City-based real estate brokerage firm. “Some are here because currency markets from time to time make the U.S. market cheap and others are here because of political instability at home in Venezuela, Russia and China. Still more use the U.S. as a hedge against the volatility of other markets.” 

—Written by Juliette Fairley for MainStreet