My partner and I are in the beginning phases of purchasing our first multi-family investment property in Brooklyn, NY. Since this will be our first investment property, we are seeking a turnkey investment that we can quickly generate immediate cash-flow. However, with the barrier to entry being around $1.1M in the up and coming neighborhoods including Flatbush, Bed-Stuy, Bushwick, Sunset Park, etc., we are having a difficult time obtaining a portion of the funds needed to purchase.
The multi-family route is our first preference, but we have also looked into starting with a short-sale or condo since those require a lower barrier to entry. However, with a short-sale, we understand that could end up costing us more money in the long run. With a condo, we would not be generating cash-flow as we would only have one door. Our goal is to secure 2-3 multi-family investment properties by the end of this year throughout Brooklyn and the Midwest.
We are seeking guidance and advice from experts in the New York market as well as any recommendations you may have for investors looking for partnership opportunities in this fast growing market.
Shane & Gabriela
Welcome to the site @Shane V Charles
Tons of investors in the same boat as you guys here on BP. Barrier to entry at home is super high so they go to the Midwest for more cash flow & a lower barrier to entry.
When you are looking out of state remember that things may be different than they are in your hometown. Some best practices are as follows.
- Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
- Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
- Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
- Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
- Make sure your property manager is a licensed real estate brokerage.
- Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.
@jameswise Thank you for providing us with such useful information.