While in the start of my investment journey of trying to find out of state rentals, I am also looking for my primary residence.
I am looking to purchase a multifamily and rent out the other unit/s. My concern is that Long Island NY is very expensive so there is very good chance that the rent collected will not cover my mortgage and I will still need to put up towards the loan. So I began to wonder the below...
1) Is it still worth it to buy the multi family and "househack" even though I will still have to lay out cash for the monthly expenses
2) Is the headache of tenants not worth it in this case? or does it serve as great starting experience as a land lord
3) Should I just opt for a single family home, if so why?
4) Would I have to keep the current tenants? ( may be a month to month arrangement) if so what should I do to screen them?
5) I will need to move into one of the currently occupied units, so should I have the current owner inform the tenant that has to leave?
6) can the above be part of the purchase stipulations ?
7) What documents should I request from the current owner prior to a purchase (tenant estoppel, screenings, etc)
8) Will this purchase have any affect on my possible next out of state purchase
any and all other advice is appreciated! THiS WOULD BE A GREAT HELP
I will be sure to pay it forward!
All really good questions man! Congrats on taking the first step to make it happen. I actually have done 3 house hacks in the Albany area and secured a single family rental in Troy, NY which is right across the Hudson River. I believe the house hack Upstate compared to down state is very different because home prices and taxes here are very low in comparison to Long Island. I would suggest buying a rental in the college town of Albany as there are always tons for sale for a decent price. Almost all of the landlords for these places are absentee and live in Long Island. They rent out to the students of UAlbany, St Rose, Albany College of Pharmacy, Albany Law, Sage College, etc. I would look in what’s called the “Pine Hills” neighborhood of Albany for these. They rent like a beast to college students and should cost you around $175,000-$200,000 for a 2unit up&down with 3br/1ba in each unit. Solid move for someone looking to get the right experience. That’s just my opinion for someone looking to get in the game for a decent price that’s not out of state and only a 3-4 hour drive away from LI. I don’t think house hacking in LI while having to still pay half the mortgage is worth it.
As for pre existing tenants - I bought my first multi family with bad tenants in it. They were selling drugs inside of the property and had some questionable characters in and out. I asked my agent to put in the contract that I won’t buy it without the current tenants evicted. It was a buyers market at that point though, so that might not fly in today’s market. Especially now that NY tenant laws are super against landlords.
I believe that single family homes make the easiest rentals as well. My single family rental is easy to show, rent, manage, maintain and has low ownership costs.
I started all of this with an FHA loan on my first purchase using a broker, not a credit union. I saved up and kept the ball rolling. I am currently selling all of those properties to buy a 10 unit building with 2 store fronts and a laundromat inside. That's the "stacking method" that they talk about here and it works! Best of luck dude. PM me if you need any help in upstate.
@Michael DiNuzzo What are MFR going for on LI and what do rents look like? Long story short my guess is turnkey is a tough deal to make work and purchasing a distressed property that you add value and increase rents is the best way to go.