New York New Investor

28 Replies

I have been really interested in real estate for several years now. Only recently have I decided that rental properties is the way for me to go. With a lot of passion and ambition, I am ready to move forward on a purchase. However, I live on Long Island where the average price of a home is 350k and the yearly property taxes are 8-10k.

Does anyone else invest in Long Island/ queens/ Brooklyn ? It seems impossible to turn a profit with such high prices. Is there money to make in this market?

Thanks in advance,

Pete

I would suggest looking for schedule A pricing on upcoming developments, so that for one you get top dollar on rent because of new property, and two, you don't have to worry about plumbing or structural issues. Yes, pricing will be a little high but after sales continue to rise and demand is there, you would have gotten schedule A and everyone else coming in later would be paying 3-6% more than you which therefore raises your comps.

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I am in Queens and my next property will be a house hack on a duplex with a finished basement.
I would suggest doing some research on house hacking. BP has great info on it and Brandon Turner frequently mentions this on the Podcasts.
I know what your market is like and its not an easy one to start off in but house hacking can help reduce your living expenses, create some cash flow and build up your savings.
Best of luck to you!

I have about 20k ( not much). As for schedule A , how does that work?

I have thought about house hacking but at the moment I would rather not combine my business and home life. However, I may venture into this at some point. Don't want to count any good options out.

New York and the surrounding areas are very difficult to find cash-flowing rental properties for a number of reasons. The two main reasons are 1) there are too many guys out there doing this full-time, focused and very entrenched in each local neighborhood-getting an edge to find below market deals is difficult; 2) way too much capital chasing very few deals which lowers yields to the point where break-even is even considered a deal.

It is one of the reasons I moved on from investing locally. Now just recently when I saved up $20k, my partner and I pooled our $40k and bought a $130k duplex down south, rehabbed it for another $30k and rent out each unit for $1300/month. I still live in NYC and probably always will, but my attitude is "get in where you fit in." NYC investing (for rentals) is for the real big dogs with lots of capital, and long time horizons to wait for appreciation (and gentrification).

But if you're determined then you just need to be creative. Someone mentioned house hacking, great idea.

Amit , thanks for the advice. I thought about investing out of state. Like you , I can never move away from New York. How do you manage your rentals from out of state? How do you find a good spot to invest without ever really knowing the location?

Thanks

@Pete Jannello , NY while it may be a bit overpriced , there are always deals to be had if you put the work in, remember you just have to be creative , be innovative enough to find motivated sellers, people always sell and offload properties for a whole host of reasons, retirement , job transfer, relocation, estate sales, divorce, off market,even those with criminal ramifications are fair game and a viable source of deals. You just have to learn how to work these, and source deals for yourself. Remember the big money guys that Amit mentioned themseves are depending on some one to bring them deals. NY demands that you put the time and effort in to reap the rewards, it's not for the faint or armchair investor. Myself, not a big money guy but managed to stay relevant by staying on top of my game ,constantly educating myself as to what the bigger players are doing. My current deals include a SFR in Westbury that would net me 80K, a 6 and 4 units multi that I am taking over from the owner who is retiring with seller financing. So Pete don't be discouraged. Yes ,it's always good to leverage your equity.

Goodluck.

You can try the foreclosed auctions at courthouses to see if you can get a deal. 

This one is for Brooklyn.  http://www.nycourts.gov/courts/2jd/kings/civil/foreclosuresales.shtml

http://www.hud.gov is for all over

I have seen 43000 for LI homes that were hit by Sandy.  {I do not remember the link though.} I do not know what has been done to fortify the land in case another storm comes along either.  I would not look at popular neighborhoods to invest and instead go with those that are up and coming like Ridgewood and Jamaica.  I would also look at the Bronx because more metro north stations are going there.  You can also get advice, financial assistance and find out what the current housing opportunities are at HPD.  They do not seem to have a lot right now but you have to keep looking periodically.  They may have a mailing list too. 

http://www1.nyc.gov/nyc-resources/categories/housi...

Personally I do not want NY anymore.  It is the most unfriendly place towards landlords in the US next to CA and MN.  LI and Westchester taxes are just ridiculous.  Orange county went up a bit too.  This is why I went out of state.  I got screwed but I still can eat and I am going to make a profit.  Down south is way better and more landlord and tax friendly.  The learning experience has helped me lay down better systems for my next deal. 

If you do not want to go too far then consider PA or CT.  They are 1.5-2hr far from NYC, you can access them by train or bus, and the prices of homes are lower.  PA taxes are a lot less all around as well.  You can hire a boots on the ground person, go to http://www.wegolook.com, hire a freelance photographer, or college student to take pictures of the houses that you are interested in inside and out.  Do not trust what some of these realtors put up because they photoshop them.   Have them video the neighborhood and block too.  Biggerpockets, hubzu, and angieslist can give you recommendations on who to hire if you need a handyman or contractor.  If you do a gut rehab you may want to use a local project manager to oversea the general contractor and his subs at least 3 days a week.  Plus being that PA and CT are so close you can visit once a week.

If you decide to stay in NY you can get a multifamily with a basement or attic, you can decide to live there while you rent out the rest of the house.  If not, you could also do an AirBnb, daycare, or rent for photoshoots and or studios if you pick a place that does not have a nosey home owners association.  I even heard some people renting out their backyards for camping and weddings.  Those ads that you see on certain buildings those landlords get rent for that too.  Some fiber optic companies pay too but they normally want you to be in rural areas. Some people put homes in their parents name or have them cosign to pay less taxes.

@Hem Kumar thanks for the advice. That's very motivating to hear. Where do you research multi family properties ? I don't see those on Zillow, realtor, etc. How do you feel about Brooklyn to invest? The taxes seem to be much cheaper and the market is thriving because of NYC.

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Hi @Pete Jannello Im glad to see you are ready to pull the trigger. Rentals, is a great way to go. Have you considered Connecticut in Fairfield or New Haven Counties. Prices here are a lot more reasonable. Im a realtor @Century 21 and also invest in Fairfield County. 

You can't be serious. I live in Fairfield county and it's simply not a owner favorable market. I'm looking to invest myself but started looking outside of CT for reasons that follow. Most MFs here are in not so desirable parts of towns that you will have a nightmare managing when things are not hunky-dory. There's also a substantial increase in new apartment building. CT job market is bad and this part of the state feeds off  NY. Any softening of the economy won't be pretty. There are a few pockets like New Haven, around college campuses that could work. But you have to know these streets well - as I said, MFs by far tend to be in less desirable parts of town. 

I own 1 condo right here - the return is not great but it basically pays for itself. I am looking out of state - still exploring. I'm very new myself to this business but I do know my area quite well - hence my comment.

@Pete Jannello you can find good deals in pockets of Bridgeport  preferably the Black Rock and the North End areas. Some investors stay away from Bridgeport because parts of it is a war zone but there is still good opportunity in the right location that cash flow very well. Of course it's all about how you see the cup, half full or half empty. 

I am a Broker in the Bronx and Westchester. From experience I'd have to say that the best deals require cash and knowledge. With 20k, in NYC, you're looking at some type of conventional or FHA loan that would require you to pay PMI. To use those type of loans with that amount you'd have to live there. I myself househack my 2 family in the Bronx right over the Throggs Neck Bridge. My income unit covers about 65% of my PITI + PMI. If you're looking for a cash flowing investments in NYC you need to have at least 25% Down, or have access to someone else's cash. You would have to look at deals that require work or have tenant issues that you'd be able to resolve within a year so you can get deals. Also courthouse steps may work, but the competition with cash buyers is intense.

Besides my 2 family in the Bronx, I've decided to go out to Pa, a 90 minute drive, to purchase a couple buy and holds. One for 32k, another for 60k. And I'm currently in contract for my 1st flip at 25k. All that to say sometimes you need to broaden your areas. NYC is expensive, and I think it would always be a great market to invest in, but it requires a lot more capital than 20k. Good luck, and feel free to reach out to me. I'm in the area. 

Great info being shared on here, I presently live in Queens and am in the similar situation as @Pete Jannello. I'm looking for a duplex to house hack in Queens or LI , I'm currently pre approved for a FHA loan but I'm finding it difficult to find properties that are in my price range and in good enough condition to qualify as FHA approved, it seems like it's a difficult process but its NOT impossible (@Hem Kumar ). So I'm up for the challenge. I definitely think my chances are better with finding something off the market. Here to help anyone else on here to get a deal as well. 

@Larry L.

Good luck on your search. If you're not finding properties that are in good enough condition, you should ask your lender about FHA 203k. While you will not get the same deal as a cash buyer, It is a way to get into a house that needs renovations to potentially find a deal. Feel free to contact me for any questions you may have.