“Big city, big city nights
You keep me burning
Big city, big city nights
Always yearning.”
– Scorpions

Friday was the 19th anniversary of 9/11. As a native New Yorker, my heart broke on that awful day. But it was quickly filled with pride in how New Yorkers came together, rebuilt and made the city even better than it was before.

I LOVE New York. I always have. I grew up just outside the city. I’m a die-hard Yankees fan (and worked for the organization in college). But I’m also a long-suffering Knicks fan, so it evens out.

I lived in Manhattan right out of college when I was broke. I always dreamed of returning with a little change in my pocket to take advantage of all the things New York has to offer.

Last summer, I took my family there. It was fantastic. We ate delicious meals. A slice of NYC pizza is my favorite food in the world. We went to comedy shows, took long walks and soaked up the best (and less than best) of the city.

But today, my city seems to be coming apart at the seams. As the original hot spot in the U.S. for COVID-19, New York has been hit hard. Businesses don’t plan on returning soon.

According to a survey, only 54% of companies say they will move back into their city offices by July 2021. Currently, less than 10% of office workers have returned. That has an obviously devastating effect on New York’s economy.

And apartment vacancies in Manhattan are at a record high, while rents have declined nearly 8%.

Another one of my favorite cities is San Francisco. I lived there for more than a decade once I left New York City.

San Francisco, while not hit as hard by COVID-19, is seeing its own exodus. Sky-high housing costs, an overwhelming homelessness problem and wildfires that have made the air unbreathable have made the Bay Area less desirable than it was in the past.

The number of homes for sale in July is up 96% year over year.

Crisis Equals Opportunity

It pains me to see the cities I love crumbling. As I read more about New York’s downfall, including rising crime, it felt like the city was slipping back into the 1970s.

In 1975, New York was on the verge of bankruptcy. Crime and drugs were taking over the city. The place was a disaster.

And I learned a great investing lesson because of it.

About 11 or 12 years ago, I was at an Oxford Club conference and spoke with one of our Members. She lived on an estate in Connecticut. I asked her how she made her fortune.

She bought an apartment in Greenwich Village in 1975. I remarked that it took a lot of guts to do that at that time.

She said, “It’s the greatest city in the world. I had no doubt it would bounce back.”

After that initial purchase, she bought up as much real estate as she could – which wasn’t much to start. She was a single middle-class woman in her 20s. But she put every spare penny she had into New York real estate, and suffice it to say, it paid off well.

I applied that lesson after the financial crisis in 2008 and 2009. Prices in the San Francisco area had come down. Not as much as we would have liked, but they were lower.

My wife and I pounced on a condo in beautiful Marin County, just over the Golden Gate Bridge. We sold it a few years later for a hefty profit.

I believe a similar situation is arising in New York. I told my wife recently that it may take a few years, but this will be our opportunity to buy New York real estate.

You don’t need to buy a condo to make money in New York real estate. There are plenty of real estate investment trusts (REITs) that focus on Gotham.

Empire State Realty Trust (NYSE: ESRT), which owns the Empire State Building and other properties; SL Green Realty (NYSE: SLG), the largest office building owner in the city; and Vornado Realty Trust (NYSE: VNO) are just a few.

Keep them on your radar. I suspect you have plenty of time before you’ll want to buy them. But when New York starts to rebound, these stocks should rise very significantly.

I think big-city real estate could be one of the most profitable investing opportunities in generations – but things will probably get worse before they get better.

Opportunities Now

All those people fleeing big cities have to go somewhere. That’s why real estate in the suburbs is going crazy. New York’s suburbs saw a 44% year-over-year spike in home sales in July. The same suburban boom is happening all over the country.

There are ways to take advantage of the influx of city folk to the burbs. REITs like American Homes 4 Rent (NYSE: AMH) and Front Yard Residential (NYSE: RESI) focus on single-family homes.

There is an opportunity to make money in real estate now as city dwellers flee to the burbs. In a few years, there will be an incredible opportunity to make money in the cities when they return.