Is house hacking in Brooklyn a realistic starter location?

Question

I'm in the research/networking phase before pulling the trigger on a multifamily property in or around NYC (goal is to close by Q4 of 2022). My plan is to to get experience as a house-hacking landlord as I save to build a multifamily/BRRRR portfolio. I do not intend to invest solely in NYC, but it would be convenient as I continue my day job in Manhattan. Any advice, info, or anecdotes are appreciated.

-Can one find a solid duplex or triplex with ~$50K down in Brooklyn (Cobble Hill, Carroll Gardens, DUMBO, Brooklyn Heights area)?

-What are the most important indicators for a good deal in a Class B area of Brooklyn? What are the red flags?

-My goal is to house hack the first property in order to save more cash for a second property. Is NYC a realistic market for a newbie?

-Is house-hacking and offering the vacant units on Airbnb worthwhile in NYC?

Stay safe everyone.

Eric Hajdu · Answer

Will, unfortunately 50k won't be enough for even 10% down on a studio apartment in any of the Brooklyn neighborhoods you listed, you can't even find a parking spot in these areas for under 100k.

I agree with the other posters that you will have to look outside of NYC, most likely more than a hour away.  I don't know anything about your finances/work life, but something to keep in mind with financing is that people we hear about getting huge loans at 2.5% interest rates show tremendous income from their job.  My suggestion would be to look in a market where your 50k would be a meaningful downpayment, build your equity and come come back to NYC when you have more options.

In regards to your question on class B Brooklyn neighborhoods, you should look for areas that provide transportation options to Manhattan.  If you purchase in an isolated area with no trains, your upside will be limited.  Best of luck in your search!

Will Shaker · Answer

@Jason Lee I figured it would be too good to be true. Also exploring southern CT (Fairfield County) and class B areas north of Manhattan (Bronxville, Tarrytown, Hastings on Hudson, White Plains). Where would you look, assuming I have ~50K liquid for the investment? Would love to talk offline if youre willing.

Faruk Al-Hassan · Answer

While I agree with others the Brooklyn market will be tough. Since your house hacking, you should definitely look into using an FHA loan. Having to only put 3.5% down you should be approved in the low $1M in NYC with 50k down.  Finding a good multifamily in that range is another thing. Also note, FHA loans have way higher closing costs. Probably an addtional 15k in closing costs at that price level compared to conventional due to upfront premiums.

Mackenzie James King · Answer

Totally agree with both Jason's. I would look across the river into Jersey. As long as you're near a train, tenet's will always be easy to find.

Jason Bertoli · Answer

I agree with Jason. Brooklyn is still a very competitive market and having a small down payment could makes things very difficult given the purchase price. As a first step I would absolutely work with a few different lenders to see what purchase price you would qualify for. Once you have this information you can really hone in the search. Tip: use a mix of local and national lenders. you'd be surprised what some of the local guys can do. Good luck!

Jason Lee · Answer

You're going to need at least 300-400K liquid to get a 2 family in prime Brooklyn.

Is house hacking in Brooklyn a realistic starter location?

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