Brooklyn, NY · Member since 2015 · 20 posts · 8 votes
Hi everyone,
I am going to be moving to New York with my family next year for grad school, targeting to live in Brooklyn/Queens, and hopefully within a reasonable commute distance (30-45 mins public transit) to Manhattan.
My goal is to find a 2-4 unit multifamily to house hack, preferably one that needs quite a bit of work so I can build in some sweat equity and get rents to cover at least my living expenses. If can eek out some positive cash flow while I'm there that would be amazing but I think a bit unreasonable.
Any thoughts on:
which neighborhoods here present a good value for house-hacking?
considering I'm planning on living there with kids, which are areas to avoid regardless of whether there is a good deal?
any area-specific information I should be aware of when running calculations (inclusion/exclusion of certain utilities in rent, special tax considerations, rent control issues, etc?
Lastly, any real estate agents, wholesalers, or bird dogs who'd be interested in connecting on this I'd love to chat with you. I know it's a ways off but I have a feeling it'll take me some time to try and find a good deal in the area, so any help/connections I can find would be HUGELY appreciated. Thanks in advance!
As I understand it, this property closed for $1.55M. While the overall annual rent roll right now is low $58k, I would imagine you could easily increase NOI by 50% or more over a period of 3-5 years if you were diligent about turning over the units. Getting tenants out in NYC is NO SMALL task, since the building is rent regulated. BUT, making deals with tenants to turnover units is the REAL sweat equity here in NYC. The purchase strategy would need to include those costs (i.e. $50k per unit to buy-out and rehab each unit).
In 2011 I purchased a 6 family building in a slightly better location for $850k, the annual rent roll was $82k. Now, the annual rent roll is $108k, a 30% increase and one of the units is occupied by my mom who pays NO rent.
Rental Property Investor · MD (maryland) · Member since 2015 · 25 posts · 23 votes
8y
PS I don't think the L train closing is going to move the needle , I hope it does, id buy in ny second ,but investors are to smart and will just wait it out,just my 2 cents.
Lender · Berkeley, CA · Member since 2017 · 1k+ posts · 549 votes
8y
Finding something in greater Grove Street (PATH) area might be tough, but that's a great place to be. Grove St, Hamilton Park, Van Vorst Park, and immediate surrounding areas a bit further West, all great, but not easy to find places. Pushing further up the hill on Newark Ave, area isn't as great, but it's changing. I know someone flipping a 2-family right now in that area. The Heights, near Central Avenue, also good, and Journal Square (PATH), also good.
You'll want to be near a PATH train, or right on a Light Rail line. Otherwise, things can kind of get dicey, like Hunter's Point dicey. Shoot me an email, and if you're looking at places I'll give you my thoughts. I personally think it's important to be near the light-rail/PATH for daily commuters.
Real Estate Agent · New York City, NY · Member since 2018 · 6 posts · 1 vote
8y
Hi Chad,
Based on your initial post and your budget, I would strongly suggest you to look into Sunnyside, Queens. It's still quite affordable for multifamily investors, the commute is easy, and the area has been appreciating over time, besides being very family-oriented.
I'm a data-driven kind of broker, and I find this graphic from Bloomberg to be extremely helpful:
You can also see crime rates on Trulia and will soon realize that many listings for sale are on "hot spots" on those maps, so be mindful of that.
I would also strongly advise you to find a good broker in order to assist you in the transaction: it may give you a clear advantage over other investors as they will know how to put you in the best position when presenting an offer and may be also aware of off-market deals.
I'd be happy to hear more about your criteria and goals, offer you more insights and share any opportunities I'm aware of that could fit into your parameters. I'm also into house hacking myself, and have spent a long time researching and coming up with cosmetic solutions to my own apartment, from painting, adding custom cabinetry, decorative molding to removable tile decals and wallpapers on Etsy.
Investor · Brooklyn, NY · Member since 2015 · 127 posts · 57 votes
8y
@Chad Eatinger There's a lot to unpack in this thread, and I'd be happy to have a more in-depth conversation, but a few quick thoughts. I live and invest in Brooklyn, so what I say is only applicable to here though I imagine it probably applies in the more desirable areas of Queens (Astoria, LIC, Woodside, Sunnyside, Ridgewood, etc) as well.
Basically, at your budget, what you're looking for (living rent-free within 30-45 minutes of Manhattan) is not going to happen -- at least not in Brooklyn. Jersey might be a better bet, though I have no experience there.
If your budget is $1MM, I'm assuming you have around 250K in capital to work with? I'm also assuming you'll be living in 1 unit entirely with at least 2, if not 3 bedrooms. There's literally going to be nothing you can afford on that budget with 3-4 units that's within 30-45 minutes of NYU. Not going to happen.
Best case, you'd probably be able to pay a bit less monthly by buying than you would by renting a similar unit, but you'd have to decide whether that's worth the frictional costs and capital deployment for a place you're only going to live for 2 years (my guess --- it won't be). You'll also be more like 45 mins-1 hour away from NYU, if not more.
Anything on the West side of Prospect Park north of Sunset Park is going to be unaffordable.
There are 2 units in the low $1MM range in Flatbush or Bed Stuy or Bushwick (which are probably 45 mins-1 hr away from NYU on a good day) -- your monthly expense would be in the $5K range and you'd maybe get $2500 from the other unit. You can probably buy something cheaper -- 850K-900K but it would require 50-100K of work and probably be out of your budget. And ultimately you're paying more cash and still getting the same rents. It's just not really financially feasible to house-hack a duplex with a family and break even.
You can get a 3 (or maybe a 4) unit place for $1.2-$1.4MM, maybe cheaper if it's a fixer upper but again, doesn't seem to be in your price range. In those cases you can probably get to a point where you end up negatively cash flowing $1000-1500, which is not a bad "rent" for a 2 or 3 bedroom.
Other thoughts:
1. Assuming you're not an all-cash buyer, off-market, foreclosure/REO is a pipe dream, at least in Brooklyn. So forget about that. You're not going to find a way to "get in on the cheap", not here.
2. Looking for something that "needs quite a bit of work" to build sweat equity obviously requires more capital and will lower the purchase price you can get unless you're planning on going the hard money route which if you're inexperienced is a bad idea. For example, if you have 250K but you're going to need $100K to rehab the place, all of a sudden you can only really afford a $600K property.
3. L line shutdown isn't going to make properties along that line any more affordable. Owners aren't dumb, they aren't going to panic over a temporary shut down.
4. Some answers to questions --- anything 4 units and below won't be rent-stabilized unless the building has a tax abatement on it. Heat and hot water is often paid by the owner, especially in older buildings, but some newer construction will have separate boilers/water heaters. Water and common electric (hallways, etc) are paid by the owner.
Not trying to be a Debbie Downer, just trying to give you the realistic view.