Advice on House Hacking in NYC ?
Main Questions: What does it mean to "breakeven" when renting out a room in your property? Is it worth it to invest in your own property in an expensive city like NYC? Or do you think one should focus on "real investing"? Is investing out of state a wise decision for someone only making 50K (before taxes) in an expensive city ?
Is it possible to actually have your roommate paying most of your mortgage in an expensive city like NYC, via house hacking?
Background:
I'm in the process of saving up so that I could possibly get some property in NYC in about 2 years. I've heard a lot of people talking about House Hacking. This seems like a win-win to securing property in NYC, given costs of rent are likely to increase and there's some sense of security. (Although, condos and coops often have maintenance fees). I've also considered investing in property outside of NYC, but it's more intimidating and I'm not even sure I should be one doing that, as I'm relatively young (28), not wealthy at all, not married, and am just beginning to build up my savings. The downside is that I give up the freedom to live in whatever neighborhood I want to - I could only afford a handful of neighborhoods further out in the boroughs. I dont mind the longer commute and I suppose I could always rent both rooms in the property out and start renting again.
Sorry for all the thoughts/questions. I'm trying to work through what my plan will be. Thanks!
Originally posted by @Angelica Rose:
Main Questions: What does it mean to "breakeven" when renting out a room in your property? Is it worth it to invest in your own property in an expensive city like NYC? Or do you think one should focus on "real investing"? Is investing out of state a wise decision for someone only making 50K (before taxes) in an expensive city ?
Is it possible to actually have your roommate paying most of your mortgage in an expensive city like NYC, via house hacking?
Background:
I'm in the process of saving up so that I could possibly get some property in NYC in about 2 years. I've heard a lot of people talking about House Hacking. This seems like a win-win to securing property in NYC, given costs of rent are likely to increase and there's some sense of security. (Although, condos and coops often have maintenance fees). I've also considered investing in property outside of NYC, but it's more intimidating and I'm not even sure I should be one doing that, as I'm relatively young (28), not wealthy at all, not married, and am just beginning to build up my savings. The downside is that I give up the freedom to live in whatever neighborhood I want to - I could only afford a handful of neighborhoods further out in the boroughs. I dont mind the longer commute and I suppose I could always rent both rooms in the property out and start renting again.
Sorry for all the thoughts/questions. I'm trying to work through what my plan will be. Thanks!
I have not house-hacked, so take this with a grain of salt, but I am thinking about it from the financial perspective, and it's analogous to owning a two- or three-family house, where you live in one of the units and rent out the others. The idea is that the rents on the other units cover the cost of the whole property.
The way this would work is that you need an apartment with three or four bedrooms. You rent the apartment and then look for roommates for the other three bedrooms. You rent them out at a cost that overall pays for the entire apartment, or even makes a profit for you.
In New York, the opportunity and the problem are the same. Rents are super-high, so the chance to rent a private room for less than what your tenant would pay for their own studio or 1BR apartment would be attractive to potential tenants.
However, you must figure out a way to qualify to rent the apartment yourself. In New York, you typically need to show an annual income of 80 times the monthly rent to qualify for an apartment. This may be prohibitive for an apartment big enough to make money with house-hacking here, unless you go to the way-outer boros. (Just be sure you are near public transportation or this will be very tough to pull off.)
The thing to be careful about in New York is that the law here is very, very pro-tenant. If you are subletting the apartment to others, then you become their landlord. And this means that, if they don't pay the rent, you will have to sue them for eviction, and this is very difficult to achieve in New York. Courts are extremely friendly to tenants, give them numerous extensions, and bend over backwards to help them, so it's not uncommon to hear stories of tenants living for 6-12 months in an apartment without paying rent. You would still have to come up with the rent to pay your landlord.
So, if you were to do this here, you would need to be very strategic. You would need to find an apartment in an area attractive to young people, where the combined rent for 2 bedrooms individually could cover the rent for an entire 3 BR apartment. You would also have to be very strict about who you rent to, and make sure that they have sufficient income or resources to pay the rent, so you don't get stuck with a bad tenant situation.
It's absolutely possible to break-even with your mortgage while renting out a part of the property. My advice would be to look at Multi-Family properties, since you can obviously rent whole units out for more than a spare room. However, just like the rest of REI that is going to depend largely on the are you are looking to purchase in.
But if you do the numbers right, in most areas, it's absolutely a realistic goal to find a property cheap enough to have the supplemental rental income cover most, if not all, your mortgage costs.
Hope that's helpful!
Can one use a guarantor in the same way that you would to rent apartments with less than sufficient income? I could use both my parents as guarantors and the total of us combined would be enough. If that is possible, would I still be the owner?
Originally posted by @Jonathan Twombly:
Originally posted by @Angelica Rose:Main Questions: What does it mean to "breakeven" when renting out a room in your property? Is it worth it to invest in your own property in an expensive city like NYC? Or do you think one should focus on "real investing"? Is investing out of state a wise decision for someone only making 50K (before taxes) in an expensive city ?
Is it possible to actually have your roommate paying most of your mortgage in an expensive city like NYC, via house hacking?
Background:
I'm in the process of saving up so that I could possibly get some property in NYC in about 2 years. I've heard a lot of people talking about House Hacking. This seems like a win-win to securing property in NYC, given costs of rent are likely to increase and there's some sense of security. (Although, condos and coops often have maintenance fees). I've also considered investing in property outside of NYC, but it's more intimidating and I'm not even sure I should be one doing that, as I'm relatively young (28), not wealthy at all, not married, and am just beginning to build up my savings. The downside is that I give up the freedom to live in whatever neighborhood I want to - I could only afford a handful of neighborhoods further out in the boroughs. I dont mind the longer commute and I suppose I could always rent both rooms in the property out and start renting again.
Sorry for all the thoughts/questions. I'm trying to work through what my plan will be. Thanks!
I have not house-hacked, so take this with a grain of salt, but I am thinking about it from the financial perspective, and it's analogous to owning a two- or three-family house, where you live in one of the units and rent out the others. The idea is that the rents on the other units cover the cost of the whole property.
The way this would work is that you need an apartment with three or four bedrooms. You rent the apartment and then look for roommates for the other three bedrooms. You rent them out at a cost that overall pays for the entire apartment, or even makes a profit for you.
In New York, the opportunity and the problem are the same. Rents are super-high, so the chance to rent a private room for less than what your tenant would pay for their own studio or 1BR apartment would be attractive to potential tenants.
However, you must figure out a way to qualify to rent the apartment yourself. In New York, you typically need to show an annual income of 80 times the monthly rent to qualify for an apartment. This may be prohibitive for an apartment big enough to make money with house-hacking here, unless you go to the way-outer boros. (Just be sure you are near public transportation or this will be very tough to pull off.)
The thing to be careful about in New York is that the law here is very, very pro-tenant. If you are subletting the apartment to others, then you become their landlord. And this means that, if they don't pay the rent, you will have to sue them for eviction, and this is very difficult to achieve in New York. Courts are extremely friendly to tenants, give them numerous extensions, and bend over backwards to help them, so it's not uncommon to hear stories of tenants living for 6-12 months in an apartment without paying rent. You would still have to come up with the rent to pay your landlord.
So, if you were to do this here, you would need to be very strategic. You would need to find an apartment in an area attractive to young people, where the combined rent for 2 bedrooms individually could cover the rent for an entire 3 BR apartment. You would also have to be very strict about who you rent to, and make sure that they have sufficient income or resources to pay the rent, so you don't get stuck with a bad tenant situation.
Originally posted by @Angelica Rose:
Can one use a guarantor in the same way that you would to rent apartments with less than sufficient income? I could use both my parents as guarantors and the total of us combined would be enough. If that is possible, would I still be the owner?
Originally posted by @Jonathan Twombly:Originally posted by @Angelica Rose:
Main Questions: What does it mean to "breakeven" when renting out a room in your property? Is it worth it to invest in your own property in an expensive city like NYC? Or do you think one should focus on "real investing"? Is investing out of state a wise decision for someone only making 50K (before taxes) in an expensive city ?
Is it possible to actually have your roommate paying most of your mortgage in an expensive city like NYC, via house hacking?
Background:
I'm in the process of saving up so that I could possibly get some property in NYC in about 2 years. I've heard a lot of people talking about House Hacking. This seems like a win-win to securing property in NYC, given costs of rent are likely to increase and there's some sense of security. (Although, condos and coops often have maintenance fees). I've also considered investing in property outside of NYC, but it's more intimidating and I'm not even sure I should be one doing that, as I'm relatively young (28), not wealthy at all, not married, and am just beginning to build up my savings. The downside is that I give up the freedom to live in whatever neighborhood I want to - I could only afford a handful of neighborhoods further out in the boroughs. I dont mind the longer commute and I suppose I could always rent both rooms in the property out and start renting again.
Sorry for all the thoughts/questions. I'm trying to work through what my plan will be. Thanks!
I have not house-hacked, so take this with a grain of salt, but I am thinking about it from the financial perspective, and it's analogous to owning a two- or three-family house, where you live in one of the units and rent out the others. The idea is that the rents on the other units cover the cost of the whole property.
The way this would work is that you need an apartment with three or four bedrooms. You rent the apartment and then look for roommates for the other three bedrooms. You rent them out at a cost that overall pays for the entire apartment, or even makes a profit for you.
In New York, the opportunity and the problem are the same. Rents are super-high, so the chance to rent a private room for less than what your tenant would pay for their own studio or 1BR apartment would be attractive to potential tenants.
However, you must figure out a way to qualify to rent the apartment yourself. In New York, you typically need to show an annual income of 80 times the monthly rent to qualify for an apartment. This may be prohibitive for an apartment big enough to make money with house-hacking here, unless you go to the way-outer boros. (Just be sure you are near public transportation or this will be very tough to pull off.)
The thing to be careful about in New York is that the law here is very, very pro-tenant. If you are subletting the apartment to others, then you become their landlord. And this means that, if they don't pay the rent, you will have to sue them for eviction, and this is very difficult to achieve in New York. Courts are extremely friendly to tenants, give them numerous extensions, and bend over backwards to help them, so it's not uncommon to hear stories of tenants living for 6-12 months in an apartment without paying rent. You would still have to come up with the rent to pay your landlord.
So, if you were to do this here, you would need to be very strategic. You would need to find an apartment in an area attractive to young people, where the combined rent for 2 bedrooms individually could cover the rent for an entire 3 BR apartment. You would also have to be very strict about who you rent to, and make sure that they have sufficient income or resources to pay the rent, so you don't get stuck with a bad tenant situation.
You should be able to use a guarantor.
@Angelica Rose - you can definitely break even or better househacking. On my current duplex I'm house hacking I was actually getting $100 more than PITI until insurance renewal and a tax increase. I'm now breaking even.
I have something for you to think about though - could you get a job doing what you’re doing in another state making the same amount of $$ or more where the cost of entry into real estate would be lower for you?
Thanks for your advice, however, I moved to NYC from a less expensive area. Staying here is the priority for me.
As I mentioned in my original post, I did consider investing in a cheaper market - Baltimore, where I'm originally from. However, I do want to invest in some property here for myself. House Hacking seemed to be a good fit for that.
Originally posted by @Tim Puffer:
@Angelica Rose - you can definitely break even or better househacking. On my current duplex I'm house hacking I was actually getting $100 more than PITI until insurance renewal and a tax increase. I'm now breaking even.
I have something for you to think about though - could you get a job doing what you’re doing in another state making the same amount of $$ or more where the cost of entry into real estate would be lower for you?
Realistically I do not know how attainable it is to go that route here in NY. As a fellow New Yorker myself I can tell you that prices will not make house-hacking easy or even worth the time and money your going to burn through.
I highly recommend attending various networking events and deciding what kind of investing you want to ultimately do (I'm assuming this house hack method was designed to help you achieve something long term). If you have specific questions feel free to let me know.
Consider an HDFC with multiple bedrooms or Jersey City. The Greenville section is appreciating and you can use a smaller downpayment. Coops in NYC will require 2 years maintenance and mortgage payments to be available post-closing. That is on top of the 20% down payment requirement.
In NYC area is it possible make sure you buy near the subway trains and make sure the tenants have enough money or income to pay the rent sometimes the tenant can bother you and stay rent free for 6 months to 1 year in your property until you get them evicted ,so you need to be careful while house hacking in NYC area the other advantage is you can split the basement into 2 parts with 2 entrances then you can collect more rent making it easier to pay the mortgage