Hi. My name is Ezekiel (Zeke for short). I am new to real estate investing, and I have been interested in real estate for several years now, but have been apprehensive due to New York City's high prices in real estate. I am wondering if anyone here has any experience or insights to share on getting started with with little or no money down in high demand areas for real estate. Most if not all of the great success stories I have read or heard on BP involve deals where people are buying properties for $30,000 to $150,000. The problem is that the homes (mostly multi families in NYC) being listed for sale in my area range from $700,000 to $1,000,000+, and even if I could find private money or hard money lenders to finance 70% to 80% of the deal that would leave me with having to put between $140,000 to $200,000+ from my end (money I obviously don't have). Are there any viable solutions for overcoming such problems, or should the more viable and realistic approach be to set my eyes on markets outside of New York City such as New Jersey, Connecticut, and Pennsylvania?
@Ezekiel Cruz - Unfortunately, buying in NYC is out of the question for most people starting out. Even if you could come up with $140k-$200k down, you would have a loan of ~$600k-$800k. This would result in mortgage payments of around $5k. I'm not sure if rents would even cover your mortgage, nevermind budgeting for vacancies, repairs, and capex.
If you're looking to get into real estate investing and looking to stay in NYC here are a few recommendations:
- Invest out of state. David Greene wrote a book for BiggerPockets called "Long Distance Real Estate Investing."
- Find partners who are willing to put more than 20% down. You will likely have to do some sort of value add here so you can refinance them out and give them their money back with a return.
- AirBnb? I'm not sure of what the AirBnb laws are in NYC. However, if it is allowed, I would suggest trying to rent out various apartments in the City and then renting them out on AirBnb. The landlord gets his rent every month and you keep the difference. Be sure to let the landlord know that this is what you are planning to do.
Hope this helps!
@Ezekiel Cruz . I'm sure you can, if you partner with high net worth investors. If your aren't capable of finding those, then your best bet would be to start looking outside of your local market.
Thanks for the advice! I really appreciate it.
Yes everyone can invest where they live, and as a matter of fact should invest where they live. Read through all the threads of people losing money investing out of state because they think the grass is greener some place else.
In theory you should make more money living in NYC than you do elsewhere. Median family income is a $55k nationally. You probably make a good deal more than that as a single person than the 2 incone household that produces that nationally.
@Craig Curelop gave great advice. I would not recommend you start out with little to no money down wherever you do it. Way too risky and sets yourself up to fail financially way too easy especially for somewhere starting out.
I would advise you focus on becoming debt free if you’re not already, starting a monthly budget and stacking as much money as you can as fast as possible. Then revisit the question when you have a hefty stack. Good luck!
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