Classic Row House, Bronx Co.

6 Replies

My wife and I are thinking about making a low ball offer on a row house in the Bronx.

Ask: $400,000 (not worth this, no question)
Been on the market for a year

The house has got character! And it also has a load of problems. While it is a legal 2 unit, it needs at least 15-20k of work to get it there.

Are we making a mistake putting our aesthetic and character desires in the way? We already know we can make quicker, lower-risk money investing turnkey in the midwest (Memphis, Indianapolis, Kansas City). That being said, we love old row houses in the Northeast, and all things considered, we can turn the second unit into a $1800 / mo rental, it's just a matter of the interim (vacancy, rehab, etc.).

We are struggling with the fact that our desire for a unique living space conflicts with the investor fundamentals. Furthermore, any property that has been passed on for a year, has got to have problems galore.

@Trevor Ewen

You are thinking of living in the place, right? Treat it like any other investment property. The advantage of looking at your own home is that your new found revenue might be a dramatic decrease in the amount of money you pay in rent.

How much are you paying right now to own/rent?

At $375k (I made this up, but it includes a fully renovated house :) ) with 5% down, your monthly payment is going to be about $2400/month. That assumes $4500 in taxes and a $2000 insurance payment. If you can rent the other half for $1800, you are down to $600/month plus utilities to live there. If that is significantly less than you pay now, you have a good investment PLUS you get the unique living experience you are looking for.

That's been our logic.

We pay $1650 / mo for rent right now (which is notoriously low for our area, Long Island City). One reason we are hesitant is because we have the best transportation we ever will in the city.

Realistically, if I was to think like an investor, I would pass on this house... it just needs too much. However, because we will be living on the first floor, it starts to wander into this 'What if' territory, which is a bit dangerous. How much of this attachment should I allow in my process?

How low-ball? And are the units similar? You're planning on living in one?

Say you get it low enough to purchase it and rehab it for $400k. P&I will be what, $2100 a month? Plus taxes and insurance, which I doubt are low. If each unit is worth the same $1800 a month, it is obviously cash-flow negative.

But you need to live somewhere, and if having the second unit helps keep you own living costs down...

In balance, seems high to me.

That said...

"Investor fundamentals" IMO, are not really at play with your personal residence. If you like and can afford your unique living space, and if the property works for your lives, so be it. I know many here will disagree, but every real estate transaction doesn't need to be a screaming deal. Especially for the place where you live yourself.

@Trevor Ewen

I don't know the economic fundamentals of this deal, but ANYTIME you are putting your personal preferences and e motions over basic financial fundamentals you are making a mistake. That's where mistakes start. Don't fall in love with a property unless you're living in it.

This is definitely live-in.

I wouldn't even consider NYC if we weren't here. Cap rates are low. The government is huge, tenants have more rights than than a pedestrian on a school crosswalk.

Unfortunately, it's hard to hand money to our landlords for their nonsense when we know we can do a better job. It's the conflict of buying nice single family homes for our renters in the midwest. As much as we would enjoy that environment, it is not 'go' for me professionally.

My profession thrives in areas where population is high and the government takes everything it can.

That being said, we are erring on the 'no go' side. As we do not plan to raise our kids in NYC, so it would be hard to hold onto a low ceiling high tax investment for the duration.

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