im looking to house hack my 1st property (a double) and was wondering a few things, with the market leveling off and soon taking a down swing, from what ive been told. what are some of the things i should consider in possible investments, such as the cashflow if any but i'd like to at least have the tenant rent pay the mortgage in full. should i look to purchase 20% under the assessed value to cover any decline? should i wait to purchase till the decline happens?
ill be doing an FHA 3.5-4% down +closings.
id also like a turnkey property so i can get top rents.
Im also interested in any recommendations on mortgage lenders in the buffalo ny area. i spoke to a couple at banks in the area and they did not seem investor friendly. so any help there would be great.
any advise would be appreciated and welcome
p.s. please dont mind my punctuation as im not a typist at all lol
@Thomas Poloncarz Jr First, who told you the market will soon take a down swing and what crystal ball do they use to tell that?
Your returns will vary greatly depending on what type of neighborhood you choose, so that is difficult to comment on. I would just say, find the best deal that you can. And the way you do that is to look at dozens or even hundreds of them. Then you'll start to develop an idea of what a good deal is.
@Thomas Poloncarz Jr What area in Buffalo are you looking to invest/live in?
Check out Five Star bank in Buffalo. A few friends have recently used them and have been pleasantly surprised by 3% down, no closings costs and they've been doubles in the city. I spoke with the regional manager and he said that their niche are these smaller multi families.
It's unlikely that you will cashflow in a house hack situation, even in Buffalo, unless you buy a triplex or fourplex. To house hack and have the other persons rent cover most of your expenses you're going to have to purchase a duplex in the lower income range that would still have decent rents. But if done properly, househacking puts you way ahead than renting, it saves you monthly expenses and you're building equity in the property.
Keep in mind there is a PMI fee each month with FHA loans until you reach 22% equity, although it looks like it's currently only about 40 bucks a month on a 100k loan, but I remember mine being much more...
Finding a deal under market value is always nice but you will likely have to do some marketing of your own to find a motivated seller with a deal that's not on the MLS. You don't need to do everything perfectly for this to work to your benefit, as househacking beats renting anyday. Feel free to PM me with any potential houses you are looking at and I will help you analyze.
If you're going to go the traditional route of buying a double and living in the lower unit and renting the upper I'd have to agree with @John W. that you won't cash flow. The one way around it would be to live near UB south campus or Buff State and to rent to students in the upper on a per person basis. A 3 bed will traditionally only bring you in around $1k, likely less. If you were to do per room @ $400 you see another $200 per unit (minus built in utilities). If you were to go further and rent out the other 2 rooms in YOUR unit, now you're in the money. It depends on how uncomfortable you're willing to be. Team this with mixing and matching in Airbnb in your unit would also be an option, but your unit would need to be nicely furnished. My 2 cents.
I do short term rentals in units in Buffalo, I have properties in South and North Buffalo as well as downtown. Obviously if you were to go this route to generate some cash flow with your upper unit a downtown property would be ideal but isn’t for the price you would pay. Each duplex generates well over more than 2.5-4 times what your traditional rental can do depending on the season. Just food for thought supporting one of the options from @Raylan Willis
@Account Closed I'm curious how Buffalo is doing in the short term market place. I've only experienced managing an Airbnb rental in San Francisco with of course great success. I'm wondering what neighborhoods your'e able to do well in and if you think Buffalo has a chance at owners doing well with short term rentals with the new medical campus up and running.
@Raylan Willis the short term rental market in Buffalo is VERY seasonal producing healthy returns from April to October and then the holidays of course. This in partly due to weather as well as a major draw of tourists from around the world to Niagara Falls which plays a huge role into the tourism of the area.
I have properties located in North Buffalo both far from UB that do well during the summer but die off during slower months. Southern Buffalo properties do well year round because of the proximity to New Era Field and Key Bank Arena. Football, professional and amateur hockey keep those properties busy during the weekends. Downtown is fairly steady year round with the centralized locations its much less effected by the swings but it still has an obvious seasonal slowdown.
There’s also just getting properties in the falls which typically are cheap but for good reason. Ideally you want to utilize something as close as possible to the state park but if you aren’t familiar with the real Niagara Falls I would suggest just sticking to Buffalo as it can get pretty dicey up there comparatively from block to block.
This article also covers a lot of helpful information showing the hot areas in the market that long or short term you could receive decent returns for long term rentals as well.
@Account Closed thanks for the great insight on short terms in the buffalo area. I look forward to discussing my property in Allentown with you tomorrow
@John W. Thanks for the post very good info. I'm curious how I make adjustments on the BP rental Calculator for potential house hacks. Or do I just use the same numbers?
@Raylan Willis Hi great to see some info on Buffalo!! Is renting rooms to students legal in the buffalo? Just wondering because in NYC it isn’t.
@Johann Batista its very much a possibility here. We have a few dozen universities here, UB being the largest. I know a few investors who solely focus on that market in a particular neighborhood and do more than double what they can get renting as a single family home. We don't fall under rent control like NYC.
@Raylan Willis thanks so much for your response! I am also looking in the UB area for student rentals. My son goes to UB and that’s how the idea sparked since we pay for his housing, might as well make it an investment 👍🏻
Where do you currently invest in?
If you can recommend some great people to connect with it would be great!!!
I’ve got a 4 unit by the UB south campus as well a double in Amherst by UB north.
Im spread out around the suburbs and am now focusing on the city of buffalo itself. Taxes are a killer of good profits outside of the city. I’m trying fix and holds “brrrr” around the med campus on the east side now. I can refer you to a friend who’s on bp and is an investor and agent focusing on investment properties @Michael Calabrese
@Johann Batista I assume your son lives or will be living off campus by UB south at some point? If so he’ll get to know the areas that’ll work as will you. House prices have gone up but there’s still opportunities to cash flow especially if renting out by the room.
@Raylan Willis yes that is correct, my son lives off campus very close to south campus. During my searches today I saw tons of pending sales and prices are definitely going up from when I started looking a year ago. Wish I had started a year ago, but glad that I am now determined to make it happen this year! Thanks for the recommendation I will be in communication with @michael Calabrese