Affordable multi-family within commuting distance from NYC

9 Replies

I am eager to get started in multi family investing and am hoping to do so by buying and living in a multi family home (probably using an FHA loan). The challenge which has held me back for the past 2 years is that I live and work in manhattan and am recently out of college (24 years old).

Buying in manhattan isn't realistic for me nor does it provide me with a good enough cash on cash return for someone starting out (even if I did have the money to buy a multifamily here, I'd want to invest elsewhere). However, I am willing to move and make a commute to work each day in order to get started in real estate investing now.

I would like to be able to get to grand central terminal within ~45-60 minutes, and would be looking to purchase a 2-4 unit (hopefully 4) multifamily where I could live in one unit. I want it to be a safe and reasonably desirable place to live. It would be ideal to get 4 units for 500k or less (of course, I would be looking to maximize rent relative to purchase price) but I am really just looking to learn about what's out there.

I don't know the surrounding area very well and am wondering where you all would suggest looking. Much appreciate the help. Thanks,

Justin

@Justin C.

First of all, i would like to give you thumbs up on making this decision early of doing "house hacking". 

Finding a multi-family in suburbs of New York i.e. 45 to 60 minutes away from manhattan is very doable. Decent areas of queens and brooklyn are untouchable at this price. If you go further out east into Long Island or west into NJ, you may be able to get duplexes/triplexes which will fit this commute time limit.

I would suggest, get a good realtor (costs you nothing) for NY (queens and brooklyn) and NJ (jersey city, fort lee, etc) and have them do the work for you. You are a perfect retail costumer for them, so they should be able to give you 100%. This way you will get to know different areas and give u a feel of what you want to do. Hope this helps.

Originally posted by @Justin C. :

I am eager to get started in multi family investing and am hoping to do so by buying and living in a multi family home (probably using an FHA loan). The challenge which has held me back for the past 2 years is that I live and work in manhattan and am recently out of college (24 years old).

Buying in manhattan isn't realistic for me nor does it provide me with a good enough cash on cash return for someone starting out (even if I did have the money to buy a multifamily here, I'd want to invest elsewhere). However, I am willing to move and make a commute to work each day in order to get started in real estate investing now.

I would like to be able to get to grand central terminal within ~45-60 minutes, and would be looking to purchase a 2-4 unit (hopefully 4) multifamily where I could live in one unit. I want it to be a safe and reasonably desirable place to live. It would be ideal to get 4 units for 500k or less (of course, I would be looking to maximize rent relative to purchase price) but I am really just looking to learn about what's out there.

I don't know the surrounding area very well and am wondering where you all would suggest looking. Much appreciate the help. Thanks,

Justin

Hey Justin,

I'm in a pretty similar position in terms of finding an area where the numbers make sense without sacrificing the luxury of being close to the city.

If convenience to Grand Central is your primary concern, heading north along one of the Metro North lines might be your best option. Westchester can be pretty pricey -- and I don't claim to know it all that well -- but if you're willing to travel 45 minutes to an hour, I'd be surprised if you couldn't find something within your budget. Otherwise, certain areas of Queens may make sense if they're near the 7-train, which also goes to Grand Central (first stop over the East River coming from Queens).

Medium berrylanepartnersRyan Goldfarb, Berry Lane Partners | [email protected] | (973) 400‑9636 | http://www.berrylanepartners.com

@Justin C. I just posted a few examples over here:
http://www.biggerpockets.com/forums/311/topics/186...

But to summarize, East Brooklyn (which is not the best part of town, but there are areas that are fine) has opportunities, so does the Bronx and far parts of Queens. But your best bet might be Jersey City, though I don't know much about it. Maybe Yonkers or New Rochelle? Westchester?

A 4 family in a safe, desirable (I see desirable for a 24 year old as a place with a nightlife / entertainment options) area for less than 500K is probably not too feasible within an hour of Midtown. There are definitely 2 families, maybe some 3 families out there in more "suburban" (boring) areas that aren't too likely to appreciate quickly.

In this market you have to sacrifice some cash on cash return or appreciation, tough to find both unless you spot a great deal or have a higher price point.

@Justin C.

NYC and the surrounding area is a hard nut to crack. This is a very popular owner occupant market. Families with middle+ means who don't decide to leave the area are necessarily your competition for great properties in this and the surrounding areas. Entrenched landlords can make great returns off multis, and they are tough competition for that market.

I would make it a simple goal to visit 2-3 new towns a month (give yourself a weekend off). Follow the train lines from Grand Central, North. Before you get there, send out a message on BP of where you are headed, see if someone will meet up and show you around. Ask where they are investing, how they are making their money, if they are making any money.

Just remember, if it exists, NY, NJ and CT will tax it. Good luck.

@Justin C.

I can give you some insight on most of Hudson County, NJ (Hoboken, Jersey City, Union City, North Bergen, Weehawken, West New York, Guttenberg...I don't know Bayonne, Secaucus or Kearny that well).  You may want to open up Google Maps to find the neighborhoods I mention here, and use it to map out your commute.

You will rarely/never find MF at less then $150K/unit in Hoboken, downtown JC or the waterfront (mostly high rise) so forget that...cash on cash returns there are crap at the moment anyway...pricing is based on a condo sales market since prices are now well over $600/sqft for newly renovated condos.  Journal Square area is doable but has become pretty popular because of all the glitzy headlines recently about Kushner's new high rise rental coming to the area.  JC Heights area is also doable.  I would generally avoid Greenville and West Bergen in JC, although some areas along the 22nd St Bayonne light rail are reasonable I've heard.  Bergen/Lafayette area closer to light rail is somewhat blighted but changing.  Could find good value there potentially.

Union City is mostly hispanic but has relatively inexpensive multi-unit buildings where cash on cash returns are still attractive, and it's relatively safe.  For a midtown commute, live somewhere near a bus to Port Authority.  If I had to pick a place, I would live in the Union City area close to Weehawken along Park Ave, but many other areas of UC are good commute to Port Authority.  I have tenants who commute to midtown from my rentals in UC.

Weehawken is pretty expensive and mostly above your target price per unit, and also relatively lower cash on cash returns.  West New York has good value still.  North Bergen is probably a bit more difficult commute except for the parts that are close to the Hudson River.  Guttenberg is such a small area so I rarely see deals there.

Another thing to keep in mind about the cities in Hudson County, all the cities have their own rent control laws so you have to know each (most are on the city websites).  The good thing is that most rent control laws have exemptions for owner occupied units up to a certain size (3 or 4-family usually) so you should be ok.  But if you move out, I think it falls into rent control so you should always ask to confirm if rents are registered and where the registered base rent currently is.  Rent control in these areas usually means that increases are capped to CPI (usually) or just a few percentage points, and you can usually get temporary or permanent increases in base rent by improving units (most are temporary but I think JC is permanent, some places like UC recently repealed their improvement laws so it can change, but I've heard it's coming back).

Good luck.

@Justin C

Great advice in this thread already. I'm an investor and an a realtor working in the Jersey City area. While there are lots of multi family's coming up for sale, they surely are being grabbed quickly by investors if the price & location is right.

Good Luck in your search!

You've gotten some great advise here but if this is a place you will live in the most important point is likely what community suits you as well as return.  I would recommend getting the train schedules, look about 45 minutes out on the schedule and see where you are. I would hazard a guess you don't want to drive. For Mass transit in this area you have the PATH to Hoboken and Jersey City then you basically have  NJ transit, Long Island Railroad,  and Metro north.  Also  there is the staten island and NYC train/subway.  If you look at the maps and schedules you will get a fair idea.   NJtransit:https://www.njtransit.com/sf/sf_servlet.srv?hdnPageAction=TrainSchedulesMapTo

LIRR: http://web.mta.info/lirr/Timetable/lirrmap.htm

Metronorth: 

http://web.mta.info/mnr/html/mnrmap.htm

It is a large area but the character varies considerably. You have walkable areas and true suburbs. High taxes and higher taxes. I know you can get pretty far south with 45 minutes. I don't know about north and west but assume the same is true.  I suggest you cross out where you don't want to live because you have seen it and don't like the lifestyle. (I am not saying you have to love the area just like it  because you don't want to hate your investment if you are living in it).  Then take the suggestion of trying to connect with investors in the areas you like.  Obviously you rule out completely unaffordable areas along the way.