I've been hunting, but finding a good 3-4 unit investment property in the Bed-Stuy and Bushwick areas in Brooklyn has proven to be an extremely difficult task!
Why Bedford-Stuyvesant (BedStuy) and Bushwick: I prefer properties in these locations for ease of management. These neighborhoods are also very desirable; and still have room for very good appreciation (Bushwick more than Bed Stuy).
I don't want to rely solely on appreciation; so I'm searching for a property that cash flows. Although the rental market is very strong in these neighborhoods, the gross rents I've been seeing for some places can not cover PITI + all expenses - let alone cash flow.
In speaking with a rep from Quicken Loans (which has my existing loan), I was advised that the max loan I could obtain for a 3-unit property is only $967K for a $1.35m purchase (roughly - with 30% down). That loan amount is likely specific to my case (existing $425K mortage with QL, credit, etc). I have an existing investment property I purchased about 10 years ago in Bed-Stuy. But as most investors familiar with these areas or similarly expensive markets -- this may not always be enough for a 3 family in a good location (avoiding the L train line). My existing property is likely valued at $1.3m currently; so I am thinking of using an equity loan to help fund a new property.
I heard a few people in the forums suggest Cypress Hills and East New York around the areas where the proposed re-zoning is supposed to occur. I am starting to consider those areas as they offer better value and will have more appreciation upswing. However, they are a little far from up-and-coming and have safety issues.
I do not have the skills, a team, any experience, or time to take on a flip / total reno.
I will be joining 1 or 2 REI groups to gain more knowledge and network.
Let me know your thoughts about any of the above. Thank you.
@Daniel C. @daniel hard to find cashflow in any decent area in NYC. Real estate is so overpriced. The rents barely cover mortgage let alone expenses and cash flow. Where/how have you been searching? I live in Queens btw. I'm looking for a 2-3 family out here.
5 or more units is a better investment. Multi-family. 5 or more is commercial. You can force appreciation and easier to get bank loans because the bank looks at the property first and you second. 3-4 units is residential. Not as good as an investment because your appreciation is based on comps in neighborhood. You cannot force appreciation. Plus less tax breaks. With residential the banks look at you first and property second. With residential you have to do back flips to get a mortgage. Not worth it when you can make more money get more tax breaks and better return on your money with commercial. Good Luck.
Hi @Daniel C.
Your best bet is to ask neighbors and other people on your street as well as supers that look after buildings that hang around the area, they tend to know everyone on the block and who might sell who's looking to relocate, that's the best way to get a deal before the property goes on the market.
I've got properties in both bedstuy and crown heights and I'm looking, I invested in a 2 family in ENY and that's also working out well.
I would certainly keep an eye on ENY the Cypress hill areas as you're getting Bedstuy/Bushwick 2012/2013 home prices and 2012/2013 rents which is pretty good, before you know it those areas will end up being as desirable as bushwick, bedstuy within 5 years. If you drive around the subway stations around 6/7pm you will find that the neighborhood demographic is changing as you will see the people commuting back from work which is one of the reasons rents are going up as well as new buildings, mixed use buildings and many gut renovations which is reshaping the neighborhood every year. It's not the same area as it was in 2013 and you can find properties that cash flow
Note: Prices are increasing rapidly in ENY
@Bernard Frazier I completely agree that a 5-family would be ideal for the reasons that you've indicated; plus vacancy-offset, etc. But prices in NYC in general are pretty expensive especially for where I am targeting. Also, by budget is limited. I am considering South Bronx areas to a lesser degree (Mott Haven / Melrose). But primary choices would be in Brooklyn as several areas are in very high demand and appreciation is phenomenal.
@Remo F. Good point on checking out the neighborhood traffic around 6-7pm. Apparently, Cypress Hills and E. NY are starting to transition quickly as are the prices / rents, so I will definitely keep an eye for properties in these areas. What is your experience with the 2 family? I find it almost impossible to find a 2 family that can cash flow.
One thing to keep in mind is that 6+ unit places are often rent stabilized so I think 3-4 families are the best way to take advantage of rising rents.
Hi everyone I am new and live in Queens too. you can find a few two family investment properties in Queens ,but they go quick. I am a realtor and a new investor . please check my profile for my email and phone number. william leach
Hi @Daniel C. please, let me know if you need help with the HELOC for your existing property.
@Adam K. - I agree as well. 3-4 units are the better way to go on these areas.
@Bernard Frazier : what do you mean by being able to "force appreciation" in 5+ unit buildings but not in 3-4 multifamilies?
Hi Daniel, this is Tracy with Elite Connect Real Estate, are you interested in 6 units mixed use property in Bushwick? It has 4-residential unit plus 2-store. If you are interested it, I can email your more information.
Thanks Tracy. But it sounds like it is out of my price range. My max budget is $1.3M for a 3 family. New or renovated. Bed Stuy is too expensive, so I'm looking in Bushwick, Cypress Hills, East New York (near Cypress Hills), Ocean Hill, and Brownsville border close to CH. It's been tough. Brooklyn is getting insane! If anyone has any leads, please PM me. I'll be out there again tomorrow on the hunt. Thanks.
@ADAM k I definitely agree with the rent stabilization issue. I own one myself on the bushwick/ Ridgewood border. I still have tenants who are under 1000 due to rent stabilization. 3-4 fam definitely better.
I just wanted to post an update. After many months of searching for a 3 family property in BedStuy and Bushwick, I was able to find a nice building a few months ago - a pretty nice one at that for $1.2m in Bushwick. I was even able to get the Seller to come down on the price a bit. Appraisal came back fine with some minor issues. However, the property had a TON of violations! The Seller and his Atty assured me that all would be addressed before closing. Then, just before closing, my Attorney informs me that they still have not made any progress on getting rid of the violations; and we can not close. The Seller and his attorney became unresponsive. My attorney advises me to walk away from the deal because of their shadiness! To say that I'm upset would be putting is extremely mildly. More like heart broken. In the time that has passed to obtain this property, the prices on other nearby properties have continued to climb. There is now nothing (3 family) available in these areas at my price point.
So it's back to the drawing board and looking at other areas in Brooklyn like Cypress Hills and East NY (which I was kind of avoiding). If anyone knows of any off-market 3 Fams in these areas, please chime in, or PM me. Thanks you.
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