Brooklyn: 1st Investment Property

[Brian P.]

Hi Everyone,

I'm just about ready to take the plunge into my first investment property! I'm looking for some help in analyzing. I'm looking for a stable cash-flowing rental property. I plugged the numbers in the "Buy and Hold Analysis" tool  and it's giving me a -5% Cash on Cash return. Here's a little backdrop on the first property I'm considering:

-I'm a first time home buyer

-It's located in Bergan Beach in Brooklyn, NY

-Seller will let go of the property for 800k (OK price, nothing special)

-Will take a 30 year mortgage with 10% down

-3 family house, collecting 4700 a month (average between 3 units)

-There's not much room to improve the value of the home or raise rents

- House was built in the mid 1900's, is in good condition and made from brick

-I need some assistance making assumptions of vacancy rate (tenant laws in NY are incredibly not in favor of landlords) Capex and repairs in Brooklyn. Does the 50% rule loose validity in areas where rents are significantly higher then the national average?

I'd really appreciate if anyone can lend me a helping hand.

Thanks again!

[Nicholas Weckstein]

Don’t mean to be negative and I’m not sure of your goals in real estate. But while this property may appreciate in value. Just based off the possible purchase price and rental income. You’d be negative cash flow. Probably significantly. I crunched the numbers quickly using a mortgage calculator with average interest rates, and from PITI alone you are probably negative. Now add vacancy, cap ex, PM, maybe sewer bills, water bills....you could be under water pretty quickly. Doesn’t seem like a good buy to me, but then again I buy for cash flow not appreciation.

Also the only way I can see u putting 10% down from my experience would be if you house hacked which may be the only way this property could work, that or putting down much more or buying it for a whole lot less.

Just my 2 cents.

All the best