I just got bit by the rental real estate bug!

13 Replies

I just got bit by the rental real estate bug! I’m here to ask the experts which route I should take, if any.

Basic details about me:

  • I’m 34, recently married and no kids but planning to within the next 2 years(this detail is just for you to know that I don’t have much restrictions on moving aside from commuting)
  • I currently own a coop in Yonkers, NY with roughly 50k in equity
  • I am willing to invest in the tristate area but if I have to live in the property I have to limit my distance to Bronx, Westchester and Connecticut.
  • I also have enough saved to buy a 275k property with 20% down or the max allowed with an FHA loan (this is without having to sell my coop)
  • I have excellent credit which will qualify me for loan without an issue

The way I see it I have 3 options in order to get started:

  • Sell my current coop, buy a triplex in a worst neighborhood with more TLC needed, and move to into the property for at least 2 years to qualify for an FHA loan. Use the extra cash for renos. This will kick start my rental property income or at least let me live almost rent free so I can invest elsewhere and buy my second property faster. This comes a high personal sacrifice in terms of living conditions.
  • Stay in my coop, buy a duplex with less TLC needed but give the recommended 20% down payment. More cash out of pocket, more eggs in one basket scenario and slower process to buy a second property, eventually (this includes moving out of my coop with which I have a love/hate relationship)
  • Sell my current coop, buy a duplex with less TLC needed in my preferred neighborhood, move into the property for an unlimited amount of years, qualify for an FHA loan and use the extra cash to continue saving to purchase a second property in 1 year or 2? More long term in terms of rental property income but less sacrifice in moving to a place I don't like or having to move more often.

Sorry if this if a long, looooong post but I am excited AND freaking out on this new venture that I am about to start. Any guidance will be much appreciated!! 

I would be in for option #1 or #3. Your coop is a liability that I would off load and concentrate on investing as your #1 priority.

Your plans to have children is going to be a major constraint on your plans going forward. Wife/family very often derail good intentioned  investment plans.

"I don’t have much restrictions"

You may want to reconsider that statement in light of your resent marriage. So much to learn and so little time.

House hacking would be an awesome strategy but many underestimate how much of a headache and strain on a marriage it can be to constantly be dealing with remodeling and tenants. If you go this route, wait to have kids!

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It’s not too late but it won’t be easy..
I have a Coop in Riverdale next to Yonkers, and did a cash out refinance on my home.
It took a little longer than expected but I was able to do it, everything is a little harder with Coops but all boards are different.
It will be hard to find what you are looking for at your price range in Tri state area, have you consider looking out of state?
There are challenges being an Out Of state Investor but I prefer being a novice in a landlord friendly state, our local market is not Landlord Friendly, laws are more in favor to tenants.

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A little clarification.... I'm a girl, lol! Also, the 275k is if I keep my coop which I am not opposed to selling and 2 of the options include being able to afford something much more expensive with an FHA loan. Also, in terms of out of state that's a little trickier for me since being inexperience that would just add tons stress by not being local to solve issues.

But I guess from what you guys are telling me this is not a buyers market and I should just wait?

How about none of those options? How about find a hard money lender and get a loan for the ARV, buy the rental out with cash then apply the BRRR strategy? BUY, REHAB, REFI & RE-INVEST AKA Cash out refi. This way you have the house rehabbed, occupied with a tenant, HML paid back and walk away with money in your pockets to re invest into another deal. All while staying in your coop.

If you go this route just make sure you check some local banks out first who gives a good LTV on the refi and have No Seasoning restrictions so you can Cash out refi immediately once the units are occupied.

Yes, for the most part it’s not a buyers market. Your question comes up a lot, should We wait for next recession or until market starts to turn to start buying?
These are my thoughts. Many people say they will wait and never end up doing anything.
I was in your shoes 2 years ago, couldn’t find what I was looking for in Tri State area so I decided to go to the market as a novice not knowing anything about Charlotte just the research that I’ve done and planted my roots.

What I do is I buy for Positive cash flow now not for the future, I don’t even consider appreciation that’s the icing in the cake a bonus.
If I can get the positive cash flow/ return I’m looking for now I pull the trigger.
The way I see it when the market turns and becomes a buyer market I will be a more season investor and will be ready to bounce on great deals.
So far all my properties I found have been thru MLS, but you’ll be amaze once you start growing and you earn credibility deals start coming to you..

Originally posted by @Carolaine S. :

A little clarification.... I'm a girl, lol! Also, the 275k is if I keep my coop which I am not opposed to selling and 2 of the options include being able to afford something much more expensive with an FHA loan. Also, in terms of out of state that's a little trickier for me since being inexperience that would just add tons stress by not being local to solve issues.

But I guess from what you guys are telling me this is not a buyers market and I should just wait?

"But I guess from what you guys are telling me this is not a buyers market and I should just wait?" 

It' not a buyers market if your only source of purchasing is by fishing in the same pond everyone else is fishing in, THE MLS.

Off Market Deals will rectify that notion in any market and because you use HML and PML your CASH OFFER Negotiaions swings the market to sway in your favor.

There are so many strategies for acquiring off market deals. Network with a few wholesalers from here other cash buyers etc and join local real estate networks in your city, social media and build relations. It will make a significant difference in Time, Money and your overall perception of investing. Which will in turn contribute a significant ROI.

I think your name gave away the girl part :-)

I think the BRRR strategy is seemingly appropriate.

I’m personally looking at Albany.

Do you work in city or further north?

@ Caroliane S Option # 3 definitely sounds more like it!

Lots of Good Luck on investing!

@Carolaine S.

I would definitely consider selling the coop and look for a multifamily in a decent part of the Bronx or lower Westchester that would work for an FHA loan. Especially if your long term goal is to continue to buy properties for buy and hold. I purchased my 2 family in December 2013, great area in the Bronx, and although I waited a bit longer then I may had to, I am in the process of refinancing, dropping my overall payment by $500 and will be able to use FHA again if I choose to. I think the more money down the better, but 275k is not going to get you much in our markets. PM me if you have any questions.

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