I've been looking for deals in brooklyn and queens to use an FHA loan and house hack to get started as a first property. I am feeling intimidated by the housing laws in NYC and the fact that a wrong move or bad tenant could put me in a bad position considering the fact I'm just starting out. Anyone have experience buying small multifamilies in NYC that could share any tips or words of warning?

I want to make the most of my savings (hence the FHA), plus I live in NYC and would like to for a while so I'd prefer to invest locally. My intention would be to hold the property for a very long time. That said, these areas are expensive so it seems unlikely I'd be making a profit at least the first couple years especially while paying mortgage insurance.

Why are you buying in NYC then?

It depends on what you are looking to do. If you find a great deal and you're in it for the long haul appreciation, I'd say go for it if you can weather some losing months and aren't looking for cashflow. The margins are razor thin in NYC but that being said I have a friend who bought a few 1 bedrooms on the UWS with his family and they were doing well before the virus. Personally, I wouldn't touch NYC with a ten foot pole with the laws there but I get wanting to use an FHA loan and it definitely will come back.

Originally posted by @Gianni Mancinelli :

I've been looking for deals in brooklyn and queens to use an FHA loan and house hack to get started as a first property. I am feeling intimidated by the housing laws in NYC and the fact that a wrong move or bad tenant could put me in a bad position considering the fact I'm just starting out. Anyone have experience buying small multifamilies in NYC that could share any tips or words of warning?

I want to make the most of my savings (hence the FHA), plus I live in NYC and would like to for a while so I'd prefer to invest locally. My intention would be to hold the property for a very long time. That said, these areas are expensive so it seems unlikely I'd be making a profit at least the first couple years especially while paying mortgage insurance.

Hello Gianni,

I totally agree with the fact that NYC is a competitive market and margins are slim in the first couple of years if you're using FHA.

That being said, house-hacking is the best avenue for new investors in NYC for the fact that you can get in with a low down payment and take advantage of the low interest rates in one of our nation's highest appreciating markets. To minimize your risk with potential tenant issues, price your rental unit correctly so that you can get a lot of interest in the apartment and have more applicants to choose from. In addition to that, take your time with the tenant screening process. 

In addition to that, folks choose this strategy for NY investing because:

- They can significantly lower their current living expenses - People currently paying ~$2K/month in rent can pay as little as half of that for their portion of the mortgage (after collecting rental income).

- They gain acquisition, project management AND property management experience - all which will help tremendously when its time to scale and grow the portfolio.

-When they move out (to the next house hack OR forever home), the income of their currently occupied unit will oftentimes allow them to cash flow.

Best of luck to you moving forward!

Abel