NYC House Hacking- Multifamily Townhouse

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NYC House Hacking- Multifamily Townhouse

Maxwell Frenkel
Member since 2019 · 2 posts · 5 votes

I am looking for advice on house hacking in NYC. My business partner and myself are young professionals in NYC looking for an alternative to the pricey rental market. We'd like to purchase real estate somewhere close enough to commute to Manhattan (considering Brooklyn but open to suggestions) using a low downpayment loan program such as FHA or SONYMA. We are interested in a townhouse style multifamily unit in need of some update... but rentable in its current state.

Would love to hear if any BP folks have insights on this plan

 - Any neighborhoods or developing areas we should be looking at, we'd like a house south of $1.5 million

- Beyond the mansion tax and typical closing costs, any other hidden costs we should be aware of (with regards to purchasing in NYC)

- As first time home buyers, anything to consider, especially when investing in an expensive market

- Have people had success with alternative search methods such as direct mailing in NYC 

- Any recommended RE meet ups in NYC

Thanks in advance for any insights, and looking forward to hearing your stories!

3Reply
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Jason LeePro Member
Real Estate Agent · New York, NY · Member since 2015 · 401 posts · 235 votes
6y

- With a budget up to 1.5M you’re not going to find anything in Harlem, LIC and most of Astoria. You’re going to have to go a little further out but there are a lot of options. I would look at Sunnyside and Woodside, Bushwick, Bed-Stuy. Stay near the trains. You can find something in good condition that’s set up as a legal 2 family with maybe a finished basement that’s set up as an in-law suite (which most would probably airbnb out, or occupy). You can also look at Jersey City (Heights or Downtown) and Hoboken where your budget can get you a little more like a 3 family with maybe parking or a garage.

- There are NYC and NYS mortgage recording taxes which is 1.8% on the mortgage amount under 500k and 1.925% on the mortgage amount above 500k.

- Get a pre-approval. Most first time buyers don’t have a good idea of what they can afford or what kind of mortgage they will be able to get. Get a referral for a banker or mortgage broker (I wouldn’t call an 800 number or walk into a local branch). A good banker will explain all your options.

I’d probably stay away from anything that needs too much work. Holding and construction costs are high and tuition for novices can be steep.

For a house hack be realistic about where you're willing to live and what you really need for amenities, commute times, etc. It'll help you focus your search and save you a lot time.

- Direct mail sounds like it would be a waste of time and money. Find an agent that has experience doing these types of deals. There might be neighborhood brokerages that have relationships with local landlords and have access to off market deals, or much larger brokerages that have a lot of off market deal flow due to sheer size. My firm has 2500 agents in NYC and there are a ton of off market deals, most of which are multi-family.

- @Basit Siddiqi has networking events in Midtown. I haven’t been yet but thinking of going to the one on the 7th (it’s literally down the street from me).

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  • Dirk S.
    New York City, NY · Member since 2016 · 53 posts · 12 votes
    6y

    I am not an expert, so dont take it without validation from others but at below $1.5m the only multifamily would probably be in the Bronx, which has 3fam going for 800 to 900k  or maybe other low end areas like East NY. And you still would have to pay in  in other words you wont live rent free. 

    Having said that I am myself interested what other people say.

    0Reply
  • Michael M.
    Investor · Bronx, NY · Member since 2016 · 78 posts · 40 votes
    6y

    I house hacked in the Bronx for 5 years. Lived in the finished walkout basement of a 2 family, which allowed me to live for free and save a huge chunk of money. The house almost doubled in value with the market, and I was able to pull out a huge chunk of cash to put towards my next investment (and move out of the basement). It is possible to live for free and make money if you get creative and don't mind sacrificing your own living arrangement for a couple of years. It is also possible to live for free but not make much cash on a 2 family in the Bronx, or get a 2 family with tons of rooms and get some roommates to offset costs. The Bronx has been good to me, and it is often overlooked in this crazy market. A large 2 family with a basement in a decent neighborhood can still be found for 550K. An FHA mortgage will call for a very low down payment (plus PMI).

    7Reply
  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 957 votes
    6y

    @Maxwell Frenkel, I agree with @Dirk S.'s premise that you may lower your rent compared to market, but probably will not cash-flow while living there. Also, as far as using the FHA or SONYMA, I believe only one of you will be able to apply for a loan like that (not jointly). Also, fun fact, if you buy a 4 family, there is no mansion tax.

    3Reply
  • Maxwell Frenkel
    OP
    Member since 2019 · 2 posts · 5 votes
    6y

    Thank you all for the quick responses. We are aware of the challenge of house hacking NYC and don’t expect to live for free! Taking that into account are there any neighborhoods which may be more developed, easier to commute from (Long Island City, Astoria, East Harlem, specific areas in Brooklyn, etc) that we should be looking at?

    2Reply
  • Dylan Lange
    Investor · Los Angeles · Member since 2019 · 2 posts · 3 votes
    6y

    Great thread, also seeking a good RE meetup in NYC.

    Due to the uniqueness of the NYC market, I wonder if a traditional strategy like direct mailing would actually work? 

    2Reply
  • Vincent Sottile
    NY · Member since 2019 · 25 posts · 6 votes
    6y

    If you're willing to look far enough I am hearing good things about Bay Ridge in Brooklyn or if you go north Yonkers, New Rochelle etc. I'm in a similar situation, looking to house hack in/around NYC, would love to get some real estate meetups going! We should all connect and form a group.

    3Reply
  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 957 votes
    6y
    Originally posted by @Maxwell Frenkel:

    Thank you all for the quick responses. We are aware of the challenge of house hacking NYC and don’t expect to live for free! Taking that into account are there any neighborhoods which may be more developed, easier to commute from (Long Island City, Astoria, East Harlem, specific areas in Brooklyn, etc) that we should be looking at?

    Any place that has a good train/subway line works.  The subway is obviously a better option due to a lower cost, and how many trains are run during high traffic times. 

    0Reply
  • Alex Horelick
    Real Estate Agent · Westchester County, NY · Member since 2017 · 73 posts · 48 votes
    6y

    Hey @Maxwell Frenkel,

    I'm an agent in the area who does FHA and SONYMA deals for clients - I've even done one myself here in Westchester. I like the deals in Westchester better than NYC for a few reasons. If you have any questions about the loans and some of the ins and outs send me a message. To answer the above question you can apply for one of these loans with multiple individuals on the loan however be aware that SONYMA is an income-based program.

    1Reply
  • Antonio CuccinielloPro Member
    Investor · Austin, TX · Member since 2016 · 531 posts · 310 votes
    6y

    Hey Maxwell!

    I am young professional who lives in manhattan and thought about these options recently before my first investment. I found a route that worked better for me and maybe better for you. Anything I could afford with an FHA in manhattan or surrounding areas seemed not worth the deal. I looked towards New Jersey. Now I am no longer house hacking but I decided to invest in Ewing, NJ. Home values there are way cheaper and provide good cashflow. I am still living in manhattan but now have a triplex under my belt for 195K. Maybe be a good option to look into if you are looking for something cheaper and less competitive than NYC where people got money to throw around it seems and keeps little guys like me out of the game. Feel free to dm me any questions or if you want to meet up in the city and discuss! Love connecting with younger people who think this way!




    Originally posted by @Maxwell Frenkel:

    I am looking for advice on house hacking in NYC. My business partner and myself are young professionals in NYC looking for an alternative to the pricey rental market. We'd like to purchase real estate somewhere close enough to commute to Manhattan (considering Brooklyn but open to suggestions) using a low downpayment loan program such as FHA or SONYMA. We are interested in a townhouse style multifamily unit in need of some update... but rentable in its current state.

    Would love to hear if any BP folks have insights on this plan

     - Any neighborhoods or developing areas we should be looking at, we'd like a house south of $1.5 million

    - Beyond the mansion tax and typical closing costs, any other hidden costs we should be aware of (with regards to purchasing in NYC)

    - As first time home buyers, anything to consider, especially when investing in an expensive market

    - Have people had success with alternative search methods such as direct mailing in NYC 

    - Any recommended RE meet ups in NYC

    Thanks in advance for any insights, and looking forward to hearing your stories!

    732-402-6988
    2Reply
  • Jason LeePro Member
    Real Estate Agent · New York, NY · Member since 2015 · 401 posts · 235 votes
    6y

    - With a budget up to 1.5M you’re not going to find anything in Harlem, LIC and most of Astoria. You’re going to have to go a little further out but there are a lot of options. I would look at Sunnyside and Woodside, Bushwick, Bed-Stuy. Stay near the trains. You can find something in good condition that’s set up as a legal 2 family with maybe a finished basement that’s set up as an in-law suite (which most would probably airbnb out, or occupy). You can also look at Jersey City (Heights or Downtown) and Hoboken where your budget can get you a little more like a 3 family with maybe parking or a garage.

    - There are NYC and NYS mortgage recording taxes which is 1.8% on the mortgage amount under 500k and 1.925% on the mortgage amount above 500k.

    - Get a pre-approval. Most first time buyers don’t have a good idea of what they can afford or what kind of mortgage they will be able to get. Get a referral for a banker or mortgage broker (I wouldn’t call an 800 number or walk into a local branch). A good banker will explain all your options.

    I’d probably stay away from anything that needs too much work. Holding and construction costs are high and tuition for novices can be steep.

    For a house hack be realistic about where you're willing to live and what you really need for amenities, commute times, etc. It'll help you focus your search and save you a lot time.

    - Direct mail sounds like it would be a waste of time and money. Find an agent that has experience doing these types of deals. There might be neighborhood brokerages that have relationships with local landlords and have access to off market deals, or much larger brokerages that have a lot of off market deal flow due to sheer size. My firm has 2500 agents in NYC and there are a ton of off market deals, most of which are multi-family.

    - @Basit Siddiqi has networking events in Midtown. I haven’t been yet but thinking of going to the one on the 7th (it’s literally down the street from me).

    7Reply
  • Dirk S.
    New York City, NY · Member since 2016 · 53 posts · 12 votes
    6y
    Originally posted by @Michael M.:

    I house hacked in the Bronx for 5 years. Lived in the finished walkout basement of a 2 family, which allowed me to live for free and save a huge chunk of money. The house almost doubled in value with the market, and I was able to pull out a huge chunk of cash to put towards my next investment (and move out of the basement). It is possible to live for free and make money if you get creative and don't mind sacrificing your own living arrangement for a couple of years. It is also possible to live for free but not make much cash on a 2 family in the Bronx, or get a 2 family with tons of rooms and get some roommates to offset costs. The Bronx has been good to me, and it is often overlooked in this crazy market. A large 2 family with a basement in a decent neighborhood can still be found for 550K. An FHA mortgage will call for a very low down payment (plus PMI).

    That is awesome! Where in the Bronx was this? 

    0Reply
  • Kyle Nigro
    Rental Property Investor · Wantagh, NY · Member since 2019 · 50 posts · 16 votes
    6y

    @Maxwell Frenkel if you are looking close to the city, I would consider areas on Long Island, Astoria and Long Island City. I feel renting is growing on the Island, simply because many young individuals cannot afford to buy a house. I plan to purchase a multiplex, that needs some work, and house hack as well.

    3Reply
  • Yanhua Sappin
    Flipper/Rehabber · Brooklyn, NY · Member since 2018 · 49 posts · 18 votes
    6y

    @Maxwell Frenkel I live in Williamsburg Brooklyn and I am very familiar with all the neighborhoods in here . You can certainly buy a 2 family with a walk out basement ( might need light rehab work buy it’s qualified for fha loan ) in bushwick, bed-stuy where they are very popular for young professionals to move in these neighborhoods nowadays. I can also recommend you a good mortgage broker who is specialized in doing fha loan in Brooklyn.

    3Reply
  • Nikko Q.
    New to Real Estate · NY · Member since 2019 · 5 posts · 4 votes
    6y

    @Yanhua Sappin hi Yanhua. Thanks for that! I'd love to speak with a broker

    To all nyc investors on this thread, should I organize a meet up? Would love to meet and connect with you all

    2Reply
  • Bill O'Donnell
    Rental Property Investor · Newburgh, NY · Member since 2018 · 160 posts · 117 votes
    6y

    @Vincent Sottile

    There is already a wcrei group meeting in Mamaroneck. Find them on Meetup.com

    0Reply
  • Abel CurielBusiness Member
    Real Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
    6y
    Originally posted by @Maxwell Frenkel:

    Thank you all for the quick responses. We are aware of the challenge of house hacking NYC and don’t expect to live for free! Taking that into account are there any neighborhoods which may be more developed, easier to commute from (Long Island City, Astoria, East Harlem, specific areas in Brooklyn, etc) that we should be looking at?

     Hey Maxwell,

    I'd check out Flatbush, East Flatbush, Cypress Hills, Woodhaven, Richmond Hill, Ozone Park for the best value deals. These areas have multi-family properties below the $1M mark and average $2K/month rent for 2-bedroom apartments.

    Aside from that you'll have quicker commutes to Manhattan from LIC, Astoria, Woodside, Elmhurst, Bushwick, Ridgewood. These areas are at higher price points $1.2-1.8M

    REbuild Team - eXp Realty5234 Reviews
    WebsiteView Page
    1Reply
  • Chad W.
    New York City, NY · Member since 2016 · 9 posts · 5 votes
    6y

    House hacking in the city or nearby is hard. If you're serious and want to be in the city, I think you should really take a close look at The Bronx. It's been overlooked for so long, but has so much going for it. Mott Haven, Highbridge, and a few other pockets in the South Bronx are served by a number of train lines and still have 2-3 family homes for less than a million. Competition is hot and prices are rising fast, but I see it as one of the few pockets of opportunity for investors that don't have deep pockets. NYC real estate is hard, but worth it!

    2Reply
  • Account Closed
    Investor · United States · Member since 2018 · 565 posts · 356 votes
    6y
    Originally posted by @Maxwell Frenkel:

    I am looking for advice on house hacking in NYC. My business partner and myself are young professionals in NYC looking for an alternative to the pricey rental market. We'd like to purchase real estate somewhere close enough to commute to Manhattan (considering Brooklyn but open to suggestions) using a low downpayment loan program such as FHA or SONYMA. We are interested in a townhouse style multifamily unit in need of some update... but rentable in its current state.

    Would love to hear if any BP folks have insights on this plan

     - Any neighborhoods or developing areas we should be looking at, we'd like a house south of $1.5 million

    - Beyond the mansion tax and typical closing costs, any other hidden costs we should be aware of (with regards to purchasing in NYC)

    - As first time home buyers, anything to consider, especially when investing in an expensive market

    - Have people had success with alternative search methods such as direct mailing in NYC 

    - Any recommended RE meet ups in NYC

    Thanks in advance for any insights, and looking forward to hearing your stories!

    Making REI work in NYC is going to be tough but it seems like some people can do it. Honestly I'd look into the future and ask yourself whether or not this is a viable investment strategy 10, 20 years down the road. I don't think NYC is going to get better in terms of taxes, expenses, cost of living, etc. At some point the bubble has to pop.

    1Reply
  • Evan Jaquias-Johnson
    Real Estate Agent · Los Angeles, CA · Member since 2019 · 5 posts · 6 votes
    6y

    @Maxwell Frenkel, I'm working with buyers in this exact budget right now. I just saw a renovated 2 family come to market in Gowanus for just under $1.6M, solid fundamentals, and I estimated the top floor 3br would rent for about $3500. Otherwise, you're in the 2, maybe 3family market. Astoria, and of course further east in Queens, Bushwick, Bed Stuy, but also Gowanus, Greenwood Heights, Windsor Terrace, Sunset Park** tons of inventory here, and if you're near 36th st that's express D/N/R. Further East and South will also have under $1.5M. Regarding financing, remember FHA caps at $726,525, but also talk to a mortgage broker /some banks who may be able to count the rental income toward your income for DTI if you need it.

    1Reply
  • Christian D.
    Real Estate Broker · New York, NY · Member since 2013 · 125 posts · 63 votes
    6y

    You can definitely find 2-3 families in Brooklyn for under $1MM. With the new HSTPA I have seen 6-unit RS buildings recently listed for under $1MM (i.e., Sunset Park, Ridgewood, Glendale). I believe if you can pick up one of these RS buildings for a significant discount it will pay off in the long run. I believe you are now eligible to only take back one RS apartment for yourself after acquisition.

    I purchased a triplex in Brooklyn with an FHA loan almost two years ago. I would advise purchasing with the intent to live in one of the units to help supplement your rent. Unless you are leveraging more than 65% on acquisition, it's unlikely the property is going to cash flow.

    1Reply
  • Qifeng Zhang
    Contractor · Flushing, NY · Member since 2015 · 6 posts · 0 votes
    6y
    Originally posted by @Maxwell Frenkel:

    I am looking for advice on house hacking in NYC. My business partner and myself are young professionals in NYC looking for an alternative to the pricey rental market. We'd like to purchase real estate somewhere close enough to commute to Manhattan (considering Brooklyn but open to suggestions) using a low downpayment loan program such as FHA or SONYMA. We are interested in a townhouse style multifamily unit in need of some update... but rentable in its current state.

    Would love to hear if any BP folks have insights on this plan

     - Any neighborhoods or developing areas we should be looking at, we'd like a house south of $1.5 million

    - Beyond the mansion tax and typical closing costs, any other hidden costs we should be aware of (with regards to purchasing in NYC)

    - As first time home buyers, anything to consider, especially when investing in an expensive market

    - Have people had success with alternative search methods such as direct mailing in NYC 

    - Any recommended RE meet ups in NYC

    Thanks in advance for any insights, and looking forward to hearing your stories!

    I known a direct mailing investor that had done pretty good!BUT need to be patient! I tried myself but had not calls calling in!so I guess it's just luck at the end and timing perhaps 

    0Reply
  • Aleksandra Serebrenik
    Rental Property Investor · Montreal · Member since 2020 · 26 posts · 0 votes
    2y
    Quote from @Christian D.:

    You can definitely find 2-3 families in Brooklyn for under $1MM. With the new HSTPA I have seen 6-unit RS buildings recently listed for under $1MM (i.e., Sunset Park, Ridgewood, Glendale). I believe if you can pick up one of these RS buildings for a significant discount it will pay off in the long run. I believe you are now eligible to only take back one RS apartment for yourself after acquisition.

    I purchased a triplex in Brooklyn with an FHA loan almost two years ago. I would advise purchasing with the intent to live in one of the units to help supplement your rent. Unless you are leveraging more than 65% on acquisition, it's unlikely the property is going to cash flow.


     What is RS? And do these areas still offer interesting opportunities in late 2023? Sunset Park, Ridgedale, Glendale...

    0Reply
  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    2y
    Quote from @Aleksandra Serebrenik:
    Quote from @Christian D.:

    You can definitely find 2-3 families in Brooklyn for under $1MM. With the new HSTPA I have seen 6-unit RS buildings recently listed for under $1MM (i.e., Sunset Park, Ridgewood, Glendale). I believe if you can pick up one of these RS buildings for a significant discount it will pay off in the long run. I believe you are now eligible to only take back one RS apartment for yourself after acquisition.

    I purchased a triplex in Brooklyn with an FHA loan almost two years ago. I would advise purchasing with the intent to live in one of the units to help supplement your rent. Unless you are leveraging more than 65% on acquisition, it's unlikely the property is going to cash flow.


     What is RS? And do these areas still offer interesting opportunities in late 2023? Sunset Park, Ridgedale, Glendale...


     Aleksandra:

    RS is for Rent Stabilization, where they regulate rent increases on rental units rendering RS properties unprofitable. 

    See: RS Rent Stabilization

    1Reply
  • Dirk S.
    New York City, NY · Member since 2016 · 53 posts · 12 votes
    2y
    Quote from @Frank Chin:
    Quote from @Aleksandra Serebrenik:
    Quote from @Christian D.:

    You can definitely find 2-3 families in Brooklyn for under $1MM. With the new HSTPA I have seen 6-unit RS buildings recently listed for under $1MM (i.e., Sunset Park, Ridgewood, Glendale). I believe if you can pick up one of these RS buildings for a significant discount it will pay off in the long run. I believe you are now eligible to only take back one RS apartment for yourself after acquisition.

    I purchased a triplex in Brooklyn with an FHA loan almost two years ago. I would advise purchasing with the intent to live in one of the units to help supplement your rent. Unless you are leveraging more than 65% on acquisition, it's unlikely the property is going to cash flow.


     What is RS? And do these areas still offer interesting opportunities in late 2023? Sunset Park, Ridgedale, Glendale...


     Aleksandra:

    RS is for Rent Stabilization, where they regulate rent increases on rental units rendering RS properties unprofitable. 

    See: RS Rent Stabilization


     I would not say that rent stabilized properties per se are unprofitable. It is a bit more complex. You can buy RS properties right now that are at least according to their listing profitable, because they are also priced lower. The main motivation for investors to buy those properties is the goal of eventually turning the rent stabilized apartments into free market apartments over time, increasing market value of the property that way. That has long worked successfully (and again, the property does not have to be cash flow negative at the beginning, but you will be expecting to invest into modernization). A word of caution though, investing in RS properties also is tied to the legal and political situation. Here in NYC a lot of RS property owners are now in trouble because the laws shifted unexpectedly and they cant make their apartments free market.

    0Reply
  • Frank Chin
    Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
    2y

    Dirk:

    I've done RE investing in NYC for nearly 40 years. I looked into rent controlled and rent stabilized properties and concluded it's too much uncertainty. I instead did foreclosures and pre-foreclosures where returns are more certain and requiring a lot less analysis and done very well, in fact much better. It takes a bit more work to find.

    I know a good friend of mine who bought a 16 unit rental, all rent stabilized, with a free unit to the super. He kicked the super out, moved into the unit himself, then rented units out to un-documented immigrants increasing the rents beyond what's allowed, and replaced about half of the tenants that way. Told the undocumented tenants if they complained, he would report them to the authorities and have them deported.  Apparently, the doctor who sold him the building was so impressed with what he did, bought the building back for several times what it was sold for. 

    I think my method of investment is less risk and more ethical. 

    0Reply
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