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!

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

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    0Reply
  • Dirk S.
    New York City, NY · Member since 2016 · 53 posts · 12 votes
    2y
    Quote from @Frank Chin:

    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. 


     Frank

    I dont have a problem with a disagreeing post, and you say you did well doing foreclosures, good for you. But if you are implying that all landlords who own rent stabilized units act like your friend, or that I was implying to use such methods, then I have a problem with that.

    Besides, you are saying your friend made out very well, so this kind of contradicts your original statement that RS is not profitable.

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

    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. 


     Frank

    I dont have a problem with a disagreeing post, and you say you did well doing foreclosures, good for you. But if you are implying that all landlords who own rent stabilized units act like your friend, or that I was implying to use such methods, then I have a problem with that.

    Besides, you are saying your friend made out very well, so this kind of contradicts your original statement that RS is not profitable.

     Dirk:

    My friend did well but I wouldn't want to threaten deportation on top of overcharging the legal rent by purposely renting to ignorant people. I rather be able to sleep well at night and not risk doing something illegal. From what I heard, he's not the only on doing that.

    Then back in the day, there's rent controlled tenants. I looked at a rental where a 95-year-old lady was renting it for $97/month whereas the market rent was several hundred. It was rent controlled as a result of WWII and this was the late 80's. Was told the landlord didn't bother to file paperwork to get 3% increases every few years since 3% of $97 is only about $3.00. The selling point of the property is the 95-year-old will drop dead shortly. But she's there for more than 50 years and still in good health. In other words, my cash flow would be great when she drops dead.

    I looked at a number of rent-controlled and rent stabilized units and figured its just safer to stay way,

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

    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. 


     Frank

    I dont have a problem with a disagreeing post, and you say you did well doing foreclosures, good for you. But if you are implying that all landlords who own rent stabilized units act like your friend, or that I was implying to use such methods, then I have a problem with that.

    Besides, you are saying your friend made out very well, so this kind of contradicts your original statement that RS is not profitable.

     Dirk:

    For your further information, I heard for a long time many rental units are held vacant by landlords in NYC since stabilized rents set by the city would cause them to lose money renting them out. See: Vacant rental units

    According to the article:

    "There’s a one-bedroom in Jackson Heights that looks like it’s absolutely falling apart. On TikTok, you can see the bathroom sink sitting uselessly in the tub, wires hanging crooked from the walls, and debris littering the floors. A place in Greenwich Village has torn-up boards and what appears to be the remains of a stand-up shower in the kitchen. In Harlem, closet doors lean off their hinges in a darkened one-bedroom. These sad little apartments are the victims of rent stabilization, according to the Community Housing Improvement Program (CHIP), which represents rent-stabilized landlords across New York City and the force behind the TikTok campaign. Too costly to renovate and too cheap to rent — a one-bedroom in Chinatown for $570? — owners say they have no choice but to leave them empty. No use to anyone.

    CHIP says there are at least 20,000 apartments like these all across the city — dramatically below market rate, basically disaster scenes — all “forced vacant” because they can’t reset rents after doing necessary repairs. (A problem they have asked the Supreme Court to solve for them.) But the city, specifically the Department of Housing Preservation and Development (HPD), says that number is closer to 2,500. This is kind of how it goes. There is dizzyingly little consensus on the matter of our rent-stabilized housing stock — nearly a million apartments, and 28 percent of our housing — and even the basics have been contentious: the condition of these apartments, the money required to make them habitable (even nice), or how many of them are actually empty in the first place. Try to figure it out and you’re sent down a rabbit hole that leads to only more questions. So are these landlords bluffing? And why is it so hard to tell?"

    I also don't have a problem disagreeing with a disagreeing post, but the evidence is out there that many landlords rather keep their rental unit vacant instead of losing money renting them out. That's been going on and reported for a number of years. 

    So yes, many landlords do the opposite of my friend, they keep the apartments vacant instead of renting them out illegally charging more rent than allowed. Twenty thousand vacant apartments are no joke. I'm glad I'm not one of those owners.

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