23 yr old looking to buy in NYC

Buying & Selling Real Estate
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23 yr old looking to buy in NYC

Phil Li
Member since 2020 · 10 posts · 5 votes

I’m planning to put a down payment on possibly a duplex or triplex within NYC, preferably Brooklyn or Queens. Many people have suggested looking into other neighboring states due to the lower price, but I’ve lived in NYC all my life and have no intentions of ever leaving so I think buying here is a sound decision. My gf and I have been together 7 years and we’re looking to put a down payment within the next two years.

We have a combined income of 160,000 with zero debt and both of us have a 750+ credit score planning to put 20% down with 30k currently saved. We both started working full time recently and we are both living with our parents to maximize our savings. Our plan is to “house hack” and live in one unit while renting out the rest. Ideally we would like to be able to have positive cash flow with the rental income but I wouldn’t be disappointed if it breaks even with the mortgage payments plus any possible repair costs and bills.

My only concern is that I’m not sure if this is even achievable in the area. Also with the new NYC tenant laws in place, is this still a good idea? I’ve been wanting some advice on this but not too many people I know have done this or plan on doing this, at least not within Brooklyn and Queens. Would love to hear some thoughts!

1Reply
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Abel CurielBusiness Member
Real Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
6y

Hello @Phil Li,

Welcome to the BP forums!

Cash-flowing with a Brooklyn or Queens NY house hack deal is achievable depending on the area and down payment. The best answer to finding out if/how this is achievable would come from a lender. 

That being said, its great that your current living situation is allowing you to save such a significant chunk of your respective incomes. Your projected downpayment amount will get you into a duplex in a wide range of areas in Brooklyn and Queens. A triplex in the $1-1.25M range will likely be found in South Brooklyn and Queens. 

The house hack strategy is a great way to get started in NY. Most people in this market do not anticipate cash flow on their first house hack deal. 

From my experience working with house hackers, here are the reasons folks have used the strategy when building/growing their NYC portfolio:

- They can get in with a low down payment - You can get into a multifamily property property in Queens, Brooklyn, the Bronx, and Long Island with less than $35K.

- 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.

- NYC properties appreciate higher than most parts of the country - of course, this should not be relied upon. Rather, it should be looked at as a bonus!

Best of luck to you on your journey!

Abel

REbuild Team - eXp Realty5234 Reviews
WebsiteView Page
3Reply
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22 Replies

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  • Account Closed
    Real Estate Broker · Columbus, OH · Member since 2019 · 119 posts · 151 votes
    6y

    Unfortunately $30K down will not buy a nice shed in NYC—even across the river in NJ is crazy. I’d encourage you to look out of state, even though you aren’t planning on leaving. With your income and plan, you are better suited for a Midwest-type market. Indianapolis, Columbus, OKC, etc. And you are right re: tenant laws in NYC—not a favorable market for someone looking to sniff any kind of cash flow. 

    2Reply
  • Phil Li
    OP
    Member since 2020 · 10 posts · 5 votes
    6y

    I should add that we are on a 2-3 year saving plan where 90-95% of a combined pre-tax income of $160,000 is being saved annually from living with parents and having a frugal lifestyle. The $30k is what's currently saved. So the goal within 2-3 years is to have about 20% down or in other words an additional $200k-$250k saved up after subtracting state and city taxes, social security, retirement contributions etc.

    The unwillingness to move out of NYC is mainly just due to the fact that after living here for our entire lives, we're still very confident that this is the place we want to stay in for a very long time. The only concern is that buying a single-family home may not be a good option given that we want to chip away at a good majority of the monthly mortgage payments through rental income, which is why we're considering a house hack. Although NYC doesn't have landlord-friendly tenant laws, I suppose putting in my due diligence in background checks could help avoid some costly mistakes?

    1Reply
  • Account Closed
    Investor · West Orange, NJ · Member since 2014 · 16 posts · 11 votes
    6y

    @Jeff Tyndall I live in NJ and 100% agree with Jeff here. I invest in the Indianapolis market and have been doing fine, with the money you have saved, plus a little more, you could buy 2 properties in Indianapolis and cash flow decently.

    3Reply
  • Phil Li
    OP
    Member since 2020 · 10 posts · 5 votes
    6y

    @Account Closed As a first time home-buyer, probably one of my biggest concerns with investing out of state especially in a place like Indianapolis is simply just managing property that is so far away from home. Any advice on making that work with a full time job?

    0Reply
  • Account Closed
    Investor · West Orange, NJ · Member since 2014 · 16 posts · 11 votes
    6y

    @Phil Li Yes sir, i also work a full time job, so we are in the same boat. You need to vet your property management company, call a few of them and interview the owners. Ask them every question you can Google about hiring a property management company and call all their references to verify they are as good as they claim.

    1Reply
  • Sami Gren
    Rental Property Investor · NJ · Member since 2019 · 442 posts · 40 votes
    6y
    Originally posted by @Account Closed:

    @Phil Li Yes sir, i also work a full time job, so we are in the same boat. You need to vet your property management company, call a few of them and interview the owners. Ask them every question you can Google about hiring a property management company and call all their references to verify they are as good as they claim.

    Why don't you buy in nj, you can get good deals

    0Reply
  • Account Closed
    Investor · West Orange, NJ · Member since 2014 · 16 posts · 11 votes
    6y

    @Sami Gren The deals in NJ are harder to find bc SFR are priced much higher than similar quality priorities in the mid West. Also in NJ the taxes are pretty high, so that would cut into ones cash flow significantly. He has 30k ready to go, so at 20% down he'd be looking at 150k property in NJ. Rent would be to be minimum 2k to make any sense after taxes and insurance. In Indy he could b buy a similar priced property and have no problems finding rents where it because to be. But please correct me if I'm wrong here, I'm not claiming to be an expert. I've looked in NJ for properties but they're much harder to come by. Your profile says you are an invested in NJ, id be glad to see what kind of numbers you work with.

    0Reply
  • Sami Gren
    Rental Property Investor · NJ · Member since 2019 · 442 posts · 40 votes
    6y
    Originally posted by @Account Closed:

    @Sami Gren The deals in NJ are harder to find bc SFR are priced much higher than similar quality priorities in the mid West. Also in NJ the taxes are pretty high, so that would cut into ones cash flow significantly. He has 30k ready to go, so at 20% down he'd be looking at 150k property in NJ. Rent would be to be minimum 2k to make any sense after taxes and insurance. In Indy he could b buy a similar priced property and have no problems finding rents where it because to be. But please correct me if I'm wrong here, I'm not claiming to be an expert. I've looked in NJ for properties but they're much harder to come by. Your profile says you are an invested in NJ, id be glad to see what kind of numbers you work with.

    What numbers are you doing out of state?

    0Reply
  • Account Closed
    Investor · West Orange, NJ · Member since 2014 · 16 posts · 11 votes
    6y

    @Sami Gren DP: 20% PP: 69,500 CoC:20% Rent: 800

    1Reply
  • Abel CurielBusiness Member
    Real Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
    6y

    Hello @Phil Li,

    Welcome to the BP forums!

    Cash-flowing with a Brooklyn or Queens NY house hack deal is achievable depending on the area and down payment. The best answer to finding out if/how this is achievable would come from a lender. 

    That being said, its great that your current living situation is allowing you to save such a significant chunk of your respective incomes. Your projected downpayment amount will get you into a duplex in a wide range of areas in Brooklyn and Queens. A triplex in the $1-1.25M range will likely be found in South Brooklyn and Queens. 

    The house hack strategy is a great way to get started in NY. Most people in this market do not anticipate cash flow on their first house hack deal. 

    From my experience working with house hackers, here are the reasons folks have used the strategy when building/growing their NYC portfolio:

    - They can get in with a low down payment - You can get into a multifamily property property in Queens, Brooklyn, the Bronx, and Long Island with less than $35K.

    - 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.

    - NYC properties appreciate higher than most parts of the country - of course, this should not be relied upon. Rather, it should be looked at as a bonus!

    Best of luck to you on your journey!

    Abel

    REbuild Team - eXp Realty5234 Reviews
    WebsiteView Page
    3Reply
  • Phil Li
    OP
    Member since 2020 · 10 posts · 5 votes
    6y
    Originally posted by @Account Closed:

    @Phil Li Yes sir, i also work a full time job, so we are in the same boat. You need to vet your property management company, call a few of them and interview the owners. Ask them every question you can Google about hiring a property management company and call all their references to verify they are as good as they claim.

     This sounds more like a good option to consider for a second property. Reason being is that my intention is to also move into the first house I buy and my job requires me to be close to the city.

    0Reply
  • Phil Li
    OP
    Member since 2020 · 10 posts · 5 votes
    6y
    Originally posted by @Abel Curiel:

    Hello @Phil Li,

    Welcome to the BP forums!

    Cash-flowing with a Brooklyn or Queens NY house hack deal is achievable depending on the area and down payment. The best answer to finding out if/how this is achievable would come from a lender. 

    That being said, its great that your current living situation is allowing you to save such a significant chunk of your respective incomes. Your projected downpayment amount will get you into a duplex in a wide range of areas in Brooklyn and Queens. A triplex in the $1-1.25M range will likely be found in South Brooklyn and Queens. 

    The house hack strategy is a great way to get started in NY. Most people in this market do not anticipate cash flow on their first house hack deal. 

    From my experience working with house hackers, here are the reasons folks have used the strategy when building/growing their NYC portfolio:

    - They can get in with a low down payment - You can get into a multifamily property property in Queens, Brooklyn, the Bronx, and Long Island with less than $35K.

    - 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.

    - NYC properties appreciate higher than most parts of the country - of course, this should not be relied upon. Rather, it should be looked at as a bonus!

    Best of luck to you on your journey!

    Abel

    Thank you for the pointers! I will try to see if I can connect to some lenders to explore my options  

    0Reply
  • Account Closed
    Investor · West Orange, NJ · Member since 2014 · 16 posts · 11 votes
    6y
    Originally posted by @Phil Li:
    Originally posted by @Account Closed:

    @Phil Li Yes sir, i also work a full time job, so we are in the same boat. You need to vet your property management company, call a few of them and interview the owners. Ask them every question you can Google about hiring a property management company and call all their references to verify they are as good as they claim.

     This sounds more like a good option to consider for a second property. Reason being is that my intention is to also move into the first house I buy and my job requires me to be close to the city.

     Hey man, you're young. I would say continue living at your parents house for as long as you can and build up your rental portfolio to the point where your cash flow pays for your mortgage. In a few years, with your salary, you'd be in a good position. But that's just what I would do in your position. Your other option is to house hack. Good Luck!

    0Reply
  • Sami Gren
    Rental Property Investor · NJ · Member since 2019 · 442 posts · 40 votes
    6y
    Originally posted by @Account Closed:

    @Sami Gren DP: 20% PP: 69,500 CoC:20% Rent: 800

    You make 20% cash on cash? Good for you! 

    is that already after paying management,  maintenance etc.?

    0Reply
  • Account Closed
    Investor · West Orange, NJ · Member since 2014 · 16 posts · 11 votes
    6y
    Originally posted by @Sami Gren:
    Originally posted by @Account Closed:

    @Sami Gren DP: 20% PP: 69,500 CoC:20% Rent: 800

    You make 20% cash on cash? Good for you! 

    is that already after paying management,  maintenance etc.?

     Yes sir, as you know this fluctuates but in ideal scenario its about 20%. What about you, what kind of numbers are you working with in Essex County? 

    0Reply
  • Chris Grenzig
    Property Manager · Orlando, FL · Member since 2016 · 479 posts · 277 votes
    6y

    @Phil Li I'm born and raised on Long Island and I've lived in Brooklyn now for 2+ years. I would seriously suggest thinking about of state/area investing because landlord tenant laws are continuing to get worse and worse and I don't foresee it getting any better. You can also get much better cash flow/yields and invest in similar types of markets that are similarly recession proof if that is a concern. I'm 100% invested in the Southeast and Midwest US and I don't think I'm ever going to buy investment property in NY/NJ unless things drastically change.

    1Reply
  • Phil Li
    OP
    Member since 2020 · 10 posts · 5 votes
    6y
    Originally posted by @Account Closed:
    Originally posted by @Phil Li:
    Originally posted by @Account Closed:

    @Phil Li Yes sir, i also work a full time job, so we are in the same boat. You need to vet your property management company, call a few of them and interview the owners. Ask them every question you can Google about hiring a property management company and call all their references to verify they are as good as they claim.

     This sounds more like a good option to consider for a second property. Reason being is that my intention is to also move into the first house I buy and my job requires me to be close to the city.

     Hey man, you're young. I would say continue living at your parents house for as long as you can and build up your rental portfolio to the point where your cash flow pays for your mortgage. In a few years, with your salary, you'd be in a good position. But that's just what I would do in your position. Your other option is to house hack. Good Luck!

     Have you ever had to personally fly to Indiana during the process of buying the property? 

    0Reply
  • Account Closed
    Investor · West Orange, NJ · Member since 2014 · 16 posts · 11 votes
    6y

    @Phil Li I have not been to Indiana. I have my property manager/real estate agent check out the property, he sends me pictures/videos. I also have property inspection done on each property, so i've seen the properties virtually but have yet to see them in person. 

    1Reply
  • Nicole (Dunlap) Pendergrass
    Rental Property Investor · Bronx, NY · Member since 2011 · 193 posts · 322 votes
    6y

    @Phil Li

    I purchased a 3 family house hack in the Bronx in 2015. When I first bought, the other 2 units cover all expenses (PITI, common electric, water, etc -even paid someone to handle the trash) with about $400 left over. So I was living for free expect needing to cover repairs/maintenance. I just moved last summer, so I use the rent from the apt I was living in to subsidize the rent in the new place (wanted bigger place/better area). PP $505k, down payment with 3.5% fha was only like $18k and last year I refi'd with a good amount of appreciation/equity. So you could def still buy with what you have now unless you're set on putting 20% down. Bronx may actually still be a better place to buy cost-wise depending on where in BK/Queens you're looking.

    Also NYC laws suck for landlords but alot of regulations you don't have to deal with when you have under a certain size property (like only 2-3 units). unfortunately I did have to deal with evicting a tenant and it took almost a year and it's a lot of lost money so having three units definitely help cuz I still had one unit helping me cover expenses think about that. But all in all being a landlord in NYC is definitely a great learning experience (trials and all) and will help me in building my portfolio (not in NYC lol). But def feel free to PM me if you want to talk more 😊

    3Reply
  • Phil Li
    OP
    Member since 2020 · 10 posts · 5 votes
    6y
    Originally posted by @Chris Grenzig:

    @Phil Li I'm born and raised on Long Island and I've lived in Brooklyn now for 2+ years. I would seriously suggest thinking about of state/area investing because landlord tenant laws are continuing to get worse and worse and I don't foresee it getting any better. You can also get much better cash flow/yields and invest in similar types of markets that are similarly recession proof if that is a concern. I'm 100% invested in the Southeast and Midwest US and I don't think I'm ever going to buy investment property in NY/NJ unless things drastically change.

    I would look into the Midwest for investment property. As for my own personal living though, I definitely want to find a way to stay within Brooklyn, NY. 

    0Reply
  • Phil Li
    OP
    Member since 2020 · 10 posts · 5 votes
    6y
    Originally posted by @Nicole (Dunlap) Pendergrass:

    @Phil Li

    I purchased a 3 family house hack in the Bronx in 2015. When I first bought, the other 2 units cover all expenses (PITI, common electric, water, etc -even paid someone to handle the trash) with about $400 left over. So I was living for free expect needing to cover repairs/maintenance. I just moved last summer, so I use the rent from the apt I was living in to subsidize the rent in the new place (wanted bigger place/better area). PP $505k, down payment with 3.5% fha was only like $18k and last year I refi'd with a good amount of appreciation/equity. So you could def still buy with what you have now unless you're set on putting 20% down. Bronx may actually still be a better place to buy cost-wise depending on where in BK/Queens you're looking.

    Also NYC laws suck for landlords but alot of regulations you don't have to deal with when you have under a certain size property (like only 2-3 units). unfortunately I did have to deal with evicting a tenant and it took almost a year and it's a lot of lost money so having three units definitely help cuz I still had one unit helping me cover expenses think about that. But all in all being a landlord in NYC is definitely a great learning experience (trials and all) and will help me in building my portfolio (not in NYC lol). But def feel free to PM me if you want to talk more 😊

    I’ll PM you for more info on your experience with investing in Bronx!

    0Reply
  • Alyssa Dyer
    Rental Property Investor · Oklahoma City, OK · Member since 2017 · 1k+ posts · 694 votes
    6y
    Originally posted by @Account Closed:

    @Phil Li Yes sir, i also work a full time job, so we are in the same boat. You need to vet your property management company, call a few of them and interview the owners. Ask them every question you can Google about hiring a property management company and call all their references to verify they are as good as they claim.

    Exactly what I was going to say. A great PM is a game-changer.  

    0Reply
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