I'm excited to have just joined the BP forum. I've been researching investing in real estate for about a year now. I have been running into a few questions that I haven't been able to find answers to and are inhibiting me from figuring out what my target first property should be. I live in lower Westchester County, NY which is a pretty expensive market, so some of the advice that's applicable in other less competitive markets doesn't seem to work as well here. Would love to hear any and all answers and advice about the below questions (and any other advice you have for a newbie). Looking forward to hearing from you all. Thanks!
1. I have looked at a number of multifamily properties all over Westchester but can't seem to find one that will cash flow enough due to high housing prices and high taxes. Is there anyone here who invests in multi family homes in this area? In what areas specifically have you been able to find a property that cash flows? Are there more off-market opportunities here that I should be putting effort into finding instead of looking on MLS?
2. If you have run into the same issue I describe in #1 and have decided to invest somewhere else within driving distance but not in Westchester, where did you invest (NJ, CT, upstate NY, etc.)? Are you happy with the cash flow in that area?
3. I'm also considering investing out of the region (in the mid-west or south) but am hesitant to do so for my first property. Have you invested a plane ride away from where you live for your first property? How did/is it going? Would you recommend this route to a first time investor?
@Brittany Lischinsky, welcome to BP. I have 2 properties, both in New Rochelle. They were both house hacks. The first did not originally cashflow, however, the numbers halved my rent. So while it wasn't directly making me money, it was lowering my expenses.
The second was a pocket deal from someone I knew. This property cash-flowed about 6%. Not great, but doable. In order for me to get to a number that made sense, I had to move in for a year so that I could take advantage of a lower down payment and interest rate.
I routinely troll the MLS, but similar to you, there haven't been very many deals that make sense over the last 1+ years; I am only considering properties that don't require major surgery. I suspect that this was in large part due to the limit on SALT; as such, the multifamily market was overheated as non-investors were purchasing so at least 1/2 of their property taxes would be deductible.
In the last month, as the market has cooled a little; there have been some marginal deals. I suspect the volume of deals that numerically make sense will continue to grow, if the market continues to cool.
@Brittany Lischinsky, you're not going to find anything in Westchester that cash flows, unless you're willing to step up to commercial (5+ units). Even then, very low cap rates. Look North to Ossining, Newburgh, or Albany. Danbury, CT is also an option.
What's the max distance you'd like to be from home for an investment property?
@Joe Jor thank you for sharing your experience. Good to know there are some options maybe in New Rochelle. We aren’t ready to buy just yet (currently paying for our wedding) so I’ll keep an eye on the market in the next year or so and see if more options start to pop up.
@Jaysen Medhurst those are all areas we would be fine buying in. We’re not quite sure how close/far we should be to our rental properties. We would be automating everything and probably even getting a property manager depending on how far it is from where we live. But this is part of what we’re trying to figure out. How far are your rentals from where you live? How close/far would you recommend being?
@Brittany Lischinsky, I live in Greenwich, CT and focus on the New London area. It's about 90 minutes away. Considering that I work in the city and have 2 kids, I wouldn't push it any further at this point.
I think you can go out as far as 3 hours away, depending on your personal circumstances. You DEFINITELY want to have local property management. The idea of self-managing anything further than ~45 minutes away is crazy.
I'm also a fan of Western MA, the Berkshires. The prices are great up there.
What town do you live in? What's your price range? What's your strategy?
@Jaysen Medhurst thanks! That’s all really helpful info! I live in Eastchester, NY and my fiancé and I both work demanding jobs in the city so we can’t move any further away from the city either and also don’t have a ton of time to manage ourselves so we’re all about a management co. We’re still figuring out a strategy as we do research into different ideas. We would like to build a portfolio of multi family homes (2-3 families). We think we can start by buying 1, 2-3 family home in the next year/year and a half but we’re still doing research to figure out the best location to target and what type of financing we would want to use. There are so many options out there for financing and I’m a lawyer so I personally feel like I need to fully understand something before I make a decision or just jump in. Initially we were trying to find areas where the homes we buy would appreciate as well as cash flow but as we’ve learned more about this it seems appreciation is a nice bonus but not necessary to start buying properties that can still be beneficial for us.
Nj and pa are good places.
do it full time if you wanna succeed.
Hey @Brittany Lischinsky I’m a local agent who specializes in multi family and am happy to help let’s connect! There are properties in lower Westchester that cash flow but they don’t yield high returns - however you can consistently find high quality tenants in this market with strong incomes and steady employment that are looking to rent. Cash flow is better in upper Westchester and the surrounding counties. In my opinion, buying a property that cashflows (barely) in Westchester is still a nice investment - if you want to stay local you can have a nice product that will attract quality tenants although your rate of return will not be as high as other areas.