How to start to invest in New York City

Question

Hello everyone!

First of all I have to say I am so glad I found this site. It has been a great tool in my education on REI. I am still in that process of getting the basics in terms of education. I have read a couple of books, attended Rich Dad Poor Dad seminar (the first mistake I made),  I have a burning desire to start to invest in real estate, but have no clue on what to do first. I know I also need a mentor in New York City to guide me through the process, but I want to start buying my first property while I find the right mentor for me. Additionaly, I am also planning on moving to Dallas TX in 2 years from now after graduating from college. But  I really don't want to wait until moving to TX to start my ivesting career. That means that I would have to start investing in NYC and/or surrounding areas.   But New York City is extremely expensive. Houses are above $500k and I have an average credit score, a couple of thousands in a 401 k, another couple of thousands in a joint money market savings account with my boyfriend, and a salary of about $2k monthly. Has anybody started  in NYC?  what would be the best way to go with this?

Jon Klaus · Answer

If you are serious about Dallas (or anywhere else), you should consider visiting.  I'm not a huge fan of long distance investing, but it can be done with quality properties (quality tenants) and good property management.  There are turn key companies that will sell you a home, fix it if needed, lease it, and manage it.  You may not get the best deal on the property, but it could be a good way to get your feet wet in the market.

Jon Klaus · Answer

Welcome to BiggerPockets, Melaines. Why not start researching Dallas and look to buy there? Not necessarily before you move, though. Two years isn't a long time in real estate. In the mean time build your savings, credit, and knowledge.

We're glad you've joined us!

Melaines Gil · Answer

Thank you all for your great advice. Steve Wilcox, my goal in real estate is to buy residential or multi-family properties and rent them out. Even though my boyfriend is more interested in flipping houses. We understand that flipping would be better after we have some liquid asset to fund the projects. Our short-medium goal is to move and raise our family in TX and buy residential properties there.  Meanwhile, as you suggested,  we are  working on our credit scores, as well as our savings. However, we are currently saving with the purpose of moving to TX in 2016. We predict we will have $12K by then which will pay us 6 months of expenses: rent and utilities while I find a job, moving expenses, an emergency fund, and some money left to buy basic furniture. My boyfriend works for a company that could transfer him there. He is not making good money and is desperate to find a better job, but is willing to hold on to that job  so at least we could have that single income source when we move to TX. According to this plan, we won't have enough savings to invest in a house, but we believe we will in a few more years. That's where my indecision comes from, I want to be able to start investing as soon as I am working with a mentor. That's why I have thought about starting to invest in my own backyard before moving to TX, but houses are too expensive here. The other option we have thought about is to use our savings to invest in TX while  still living and working in NYC. We have set our goals, but we definitely need some REI orientation when it comes to the plan, to help us find our best option. As an experience REI in the area, what would you suggest we do now that you have a better understanding of our goals.

Thank you.

Steve Wilcox · Answer

I invest in NJ, and am actually looking to start buying in TX soon. I personally like to be able to see my investment, and feel I have a much better knowledge of neighborhoods ect locally which is what has kept me close to home.

If you have less then 25k liquid and less then 700 credit score I suggest you focus on building both of those up.

What are your goals- fix and flips or buy and hold?

I would suggest you build a plan- set some medium term goals and work back from those goals to help you figure out the steps along the way. Also set short term goals to help you be ready to invest when the time comes for you of building your nest egg up to a certain amount. That am mount is determined by your goals i.e. if you want to flip houses in X area then you need money to put down, fund rehab, carrying costs, ect. You need knowledge of the market you plan to flip in (arv's, neighborhood norms for rehab finish level ect.

For a flip I think you actually need to have about 40% of the total project costs available in liquid capital, and you should be able to secure hard money for a good portion of construction and renovation but you need to fund the reno before rehab draws, pay carrying costs and closing costs including points to your lender, and have some extra cash for surprises which are inevitable.

SET SOME GOALS FOR YOURSELF- then start preparing yourself to achieve those goals- If a deal fell in your lap for a property in your target area could you actually close on it?

Melaines Gil · Answer

Thank you so much for your helpful advices. In my case, I designed a three-month self study plan about real estate, that I would like to complete before looking for a mentor. Because I do want to be able to bring something to the table when that happens. Meanwhile, I have walked around my own backyard (I live in Queens) to look for properties on sell just to have an idea of the costs, all of them are listed in the MLS and the prices are above $700K. That discourages me a little about starting to invest in the city. Has anybody invested in NJ close to NYC, or PA, CT, where prices seems to make more sense? I have also started to research the market in Dallas TX since I am planning to move there in two years. In case I decide to start to invest in Dallas before the two year time, what should I do first? How is that experience of managing a property from across the country? By the way, starting a real estate business is something I am starting with my boyfriend, in the little time we have studying about real estate, we are interesting in concentrating in flipping houses, and rental properties.  Thank you all for your support, and I am sorry for being too broad in my questions.

Charmaine M. · Answer

@Melaines Gil...

First let me welcome you the site, I completely understand when you say NYC is super expensive but like @Darren Sager ...said  you just need to look harder. The City it self is expensive, but on the outskirt you can find some really good deals.

I myself am looking for my first deal so good luck to you!!!

Darren Sager · Answer

Hi @Melaines Gil , when you say investing in NYC do you mean the five boroughs or the NYC metropolitan area?    If it's the metropolitan area it can be done far more easily than the five boroughs.   You just need to look hard!

Melaines Gil · Answer

Thank you so much for those warm welcome words Jon.

I have thought about doing that. In fact, I have started researching the market there, and I have learned there is plenty of opportunities for rental investments especially in the Fort-Worth area (correct me if I'm wrong). I even thought about buying there while still living in NYC, but I don't know if that would make sense, since I would have to travel more to over look the property. If I decide to buy a property there before moving, what would be your suggestion?

Thank you.

How to start to invest in New York City

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