4 Family in Ridgewood/Queens, NY

8 Replies

Hi All,

I'm looking to help my cousins out. Their parents bought a 4 family house in Ridgewood in the early 90s and its value has increased tremendously. Its valued at 1.2 million dollars based on the recently sold comparisons and cash offers they've received. The house was built in the 1920s and needs some updating on the inside (its last been updated in the 80s). Rents are low due to close relationships with the tenants and are currently $1400, $1300, $1600 and the owner occupied (parents). The house has 20k left to be paid off and one of the cousins works in Times Square and is looking to occupy one of the apartments. A full renovation would cost easily $250k. Rents for three nearby homes are $2500-$2700 for a 2 bedroom, 1 bath apartment. In my opinion, they should leave the house as is and try to maximize its rent potential ($1800 each apartment?) with the existing condition or more cosmetic improvements. The surrounding apartments had major improvements that maximized the space (larger windows, removing hallways and changing entrance, decks, cameras etc)  and created a very nice space. In my opinion, they should take out a home equity loan and buy another house in the area that is a rental and let it bring some cashflow. All opinions and options are welcomed... I personally am in favor of leaving the building as is with some improvements (Kitchen/Bath/Floors), investing maybe $80k into the house and using the rest of the money to buy another property nearby. 

I've invested in NYC, and familiar with four families in Ridgewood and Glendale area. I agree that the best thing is not to spend $250K on a reno and try to collect $2600 or more in rent.

Years ago we decided not to live or do rentals in Ridgewood due to the lack of subway service to Manhattan. At the time, my wife and I both have good paying jobs in Manhattan and wind up in Rego Park, Queens due to subway and express bus options. And later, when we advertise rentals, people often ask if it's near a subway and how far is the subway. The answer was 5 minutes, and people couldn't wait to rent the place.

Ridgewood, like Jackson Heights for instance is very difficult to find parking, and difficult to get to work without a car. I currently rent out a 2BR/1ba unit for $1,700 in Bayside, a relatively small one, but we're 10 minutes walk to the LIRR which is only 30 minutes to Manhattan, and got a good reputation for schools which is one reason many people chose Bayside. I find apartments in the $1,600 to $1,700 a whole lot easier to rent. With rents running $2,600 people compare them to fancier Manhattan units. Four families in Ridgewood built in the 1920's, and the neighborhood is no comparison to that. 

I'm in Bayside and around here 2 families go for $1.3 million, and I could see the logic of going for $2,600/month rent. But I got the place in foreclosure for $200K during the market crash in 1993. The fact that the market has gone crazy doesn't mean you have to go crazy spending money on renovations.

This is a nice problem to have! I live in Bushwick not too far from Ridgewood. I also appraise real estate in Manhattan and Brooklyn. In my personal and professional opinion this is probably not the best time to buy a rental property in New York City. Inventory is super tight, the market is pretty flat, rents are falling and landlord concessions are high. Granted, this data is skewed towards the high-end A-class properties but even on the lower end of things at least for now rents seem to be pretty stagnant. There is still opportunity out here but a lot of it is going to be reserved for major developers and institutional investors. 

It's not a bad idea to take some of that equity out now while the market is still strong and do SOMETHING with it, just be aware that real estate is very cyclical here and we are most likely near the top. I would not buy something now with the expectation of the same amount of appreciation we saw in recent years nor would I expect a significant increase in market rents for any particular neighborhood. There's just too much oversupply in the apartment space that will take several years to absorb. 

And be aware that it's probably better to do some improvements now before they become serious deferred maintenance. If nothing has been done since the eighties it's probably not a bad idea to look at the roof, windows, foundation etc. 

I hope that helps. Best of luck! :)

What are you trying to help with out by doing?  Buying the house or helping with cash for renovations?  

What are they looking to do?  

With current market prices in Ridgewood, they should be able to get 1500-1600 for the two other Apts without any work.  Just raise the rent. 

Asking for 2600 in rent in Ridgewood is very aggressive and a big risk, imo.  There seems to be a high inventory of rentals in the area at the moment.  As someone else said, 250k spent elsewhere to buy another property is a better option. 

Originally posted by @Frank Chin :

I've invested in NYC, and familiar with four families in Ridgewood and Glendale area. I agree that the best thing is not to spend $250K on a reno and try to collect $2600 or more in rent.

Years ago we decided not to live or do rentals in Ridgewood due to the lack of subway service to Manhattan. At the time, my wife and I both have good paying jobs in Manhattan and wind up in Rego Park, Queens due to subway and express bus options. And later, when we advertise rentals, people often ask if it's near a subway and how far is the subway. The answer was 5 minutes, and people couldn't wait to rent the place.

Ridgewood, like Jackson Heights for instance is very difficult to find parking, and difficult to get to work without a car. I currently rent out a 2BR/1ba unit for $1,700 in Bayside, a relatively small one, but we're 10 minutes walk to the LIRR which is only 30 minutes to Manhattan, and got a good reputation for schools which is one reason many people chose Bayside. I find apartments in the $1,600 to $1,700 a whole lot easier to rent. With rents running $2,600 people compare them to fancier Manhattan units. Four families in Ridgewood built in the 1920's, and the neighborhood is no comparison to that. 

I'm in Bayside and around here 2 families go for $1.3 million, and I could see the logic of going for $2,600/month rent. But I got the place in foreclosure for $200K during the market crash in 1993. The fact that the market has gone crazy doesn't mean you have to go crazy spending money on renovations.

 Thanks for your input! I agree with you on many points

Originally posted by @Josane Cumandala :

This is a nice problem to have! I live in Bushwick not too far from Ridgewood. I also appraise real estate in Manhattan and Brooklyn. In my personal and professional opinion this is probably not the best time to buy a rental property in New York City. Inventory is super tight, the market is pretty flat, rents are falling and landlord concessions are high. Granted, this data is skewed towards the high-end A-class properties but even on the lower end of things at least for now rents seem to be pretty stagnant. There is still opportunity out here but a lot of it is going to be reserved for major developers and institutional investors. 

It's not a bad idea to take some of that equity out now while the market is still strong and do SOMETHING with it, just be aware that real estate is very cyclical here and we are most likely near the top. I would not buy something now with the expectation of the same amount of appreciation we saw in recent years nor would I expect a significant increase in market rents for any particular neighborhood. There's just too much oversupply in the apartment space that will take several years to absorb. 

I agree! I’d like for them to do something with it. Maybe its best to wait for a deal in a down market

Originally posted by @Chris Y. :

What are you trying to help with out by doing?  Buying the house or helping with cash for renovations?  

What are they looking to do?  

With current market prices in Ridgewood, they should be able to get 1500-1600 for the two other Apts without any work.  Just raise the rent. 

Asking for 2600 in rent in Ridgewood is very aggressive and a big risk, imo.  There seems to be a high inventory of rentals in the area at the moment.  As someone else said, 250k spent elsewhere to buy another property is a better option. 

I’m looking to help them out by increasing their cash flow if I can. Only in advising/helping them to figure out whats best based on their risk tolerance & needs. Their father is ill & is about to hand over control of the property & family finances. I have 0 incentive to help, this is all in an effort to pick the brains of those more experienced to aid in decision making

Originally posted by @Dick Stevens :

Are your cousins even looking for your help?  Why are you better equipped to help them than they could do on their own?

 Yes, they are going to take over the family’s finances & when the topic came up they asked for my opinion. I own a rental & i’m getting my realtors license in 2 months. By no way an impressive resume lol but they have 0 experience & i’m unfamiliar with their market, looking to see if some kind professionals can weigh in with their expertise. If you have anything of value to offer, i’m all ears. Thanks!