Househacking in Greater NYC v/s OOS SFR Investments

[Murtuza Bengali]

Hi BP Community,

We are a 30+ yr old couple with a one year old baby, renting in NYC for the past ten years. We recently purchased our first SFR property in Greensboro, NC. Now that we have set off on this journey and rents in NYC skyrocketing, we are contemplating whether to continue expanding on out-of-state SFR investments or explore the path of FHA approved house hacking in NYC/NJ metro area.

Our question is twofold:

1) Assuming we qualify for an FHA loan, are there decent multi-family deals sub $1MM available in the greater NYC area (we both work in midtown)? Are there certain pockets for multi-family housing better than the others?

2) How many units worth of multi-family (2, 3 or 4) is economically viable to limit the net outgoing to less than $3.5K a month. Considering the EMI on a $1MM multi-family @5% for 30Yr fixed is $5,400+property tax+insurance.

We are just looking for guidance from people who are debating on the same topic or folks who have already executed house hack and have a positive or negative point of view on this topic. I'm sure it is tricky going from being tenants to landlords! Looking forward to hearing from everyone

Thanks

Murtuza

[Mohammed Rahman]

Salaam @Murtuza Bengali! Congrats on your SFR in NC, househacking in NYC & NJ is one of the most popular ways a lot of resident investors get into the market. The main takeaway you'll find after analyzing a few deals is that NYC and surrounding metro is not a cashflow market.

I'm not saying you won't find properties that match your criteria, but it will be very difficult unless you're: lucky & open to investing in variety of neighborhood. To answer your questions: 

(1) I would focus on both South Brooklyn & Bronx. These are upcoming areas and are developing at a moderate pace (new apartment buildings being built next to older ones). Neighborhoods such as Ozone Park, Richmond Hill, etc. are good starting points. 

(2) I'd say the sweet spot is 2-3 units, to limit your net outgoing < $3.5k. I've seen a couple of 4 unit multifamily residences but they have usually needed some renovation to a couple of the units to get them to a rentable state in order to match the rest of their market. 

Shoot me a DM if you'd like to chat, I'm full time into real estate (both investor and agent) and love helping people achieve their real estate wealth goals. 

- 

Mohammed Mizanur Rahman

[Conner Olsen]

@Murtuza Bengali I would analyze your net worth return on investment (NWROI). Google it and you will find a breakdown of how to calculate it. You'll probably find you can make a much higher return on your investment on a house hack than on an OOS rental.

I bought a house hack duplex and furnished it and rented it for 30+ days and doubled my rental income. Not sure if that's legal in your area but getting creative like that can be an amazing way to increase your returns.