Brooklyn PLG mixed use rental
Hi bigger pockets! First time posting after a couple of months lurking :)
My fiancé and I are in contract to buy a 3 story mixed use building in PLG Brooklyn NY which needs a bit of work to get into rentable shape. This is our first investment.
The property is from the 1920s with zoning for a commercial ground floor and a single apartment on each of the two floors above. We’re in the process of changing the zoning to be 4 one bedrooms, and have been quoted $15k for all the paperwork to do that.
I was initially quoted 250k to get the whole building in high end rentable order, but we don’t want to borrow so much extra money so now the quote is 150k for the whole building including full electrical and plumbing and new floors on the top two levels (the current floors are old cracked laminated tile on a plywood sub floor that is leaning into the center of the building). I haven’t got any other quotes.
We are spending 1.3 million on the building and hoping to get around 12k a month for the 4 apartments and the commercial space. The neighborhood is really popular and growing fast. Our cash flow will be positive but I’m nervous about spending extra money on the rental rehab.
My general contractor seems to think hardwood floors are my only good option, and insists that electrical and plumbing will have to be replaced. I haven’t had anyone else look at it, because the current owner is elderly and it’s hard to get access to the building.
I’ve been chronically unsure of everything because I’ve never done this before. The math seems to work out but I don’t know what to spend money on which can be recouped in rent. My contractor seems trust worthy but i don’t know whether he is being as thrifty as id like him to be, or if he understands my concerns.
There is a lot of work to be done to make the apartments look nice, and a lot of extra costs for replacing cabinets and bathroom fixtures etc that I don’t think can raise the rental income much if at all.
I wish I had a more specific question, but I guess I’m after advice for renting out mixed use buildings, what to splurge on and what to save on, whether I should insist on access to the building again for another general contractor quote, and anyone’s input on whether an old building like this will need as big of an overhaul as I’ve been told.
And any advice whatsoever that you think would help me. I love this forum and have learned a lot already. Thanks!