A Luxury Townhouse on Long Island in a sorta house hack.
Investment Info:
Single-family residence buy & hold investment.
Purchase price: $345,000
Cash invested: $69,000
Fiance & I are looking for a place to move into before the wedding, but didn't break the bank because we weren't sure where the future would take us.
Found this nice 1br, 1ba luxury townhouse on top of a garage & carport, and almost immediately put in an offer ~$4k below asking.
Went the traditional 20% down route with a 3.75% fixed 30-year mortgage.
COA/HOA dues are ~$250 but include all exterior maintenance (including snow) & water.
Purchased essentially move-in ready. Needed to just do a quick clean & replace a faceplate or two and some touch-up caulking in the bathroom (for my own piece of mind). Had the seller fix any major building code issues (self closing metal door to utility room, garage door sensors, etc.)
Was seeking to do a mid-term (11-mo) rental because my bride to be and I intend on moving in just before the wedding. This in mind - we set the rent ~$200 below market to attract a bigger applicant pool. Found a few potential tenants through the REA who actually helped us find and purchase the place (she was the sellers agent - so we didn't actually need to pay a dime), and after one or two backed out we went with the ones we have in there now that I am very happy with. A young couple in a similar place that we are in life. So it was very easy.
I know condos aren't typically looked upon as favorably, but in the ridiculous market that is Long Island, and going in with the intention to move in ourselves shortly thereafter. It felt like one of the only real viable options in a safe price range.
Being right near the train station with easy access to NYC for commuters, and really centrally located between 3 major highways on Long Island. It is great for a commuter or commuting couple that needs to go either/both directions. Hoping to do some minor (albeit completely unnecessary) work on the interior once we move in (replace carpet with wood in the living room and bedroom). Assumption is to keep this as a commuter condo rental investment property after we move out and start having kids.
Now, if I were just examining this as an investment property - I would probably have passed on this (aside from just being a condo), but noting that we're moving in anyway in <1 year, having someone else just pay the mortgage for the first year while we gained equity would have sufficed. Fortunately the small profit we're taking should cover the upgrades the Mrs requested before we move in (plus whatever home depot gift cards we get from the bridal shower of course haha)
What made you interested in investing in this type of deal?
Affordable housing on LI that isn't in a C or D neighborhood is very difficult to come by, so that was already limiting.
Comparing what I'd be paying in rent for something comparable - I could pay less and start gaining equity.
I had previously looked at other condos in this area as I commute into the city anyway. Easy transportation (LIRR a block or two away, and nearby to 3 highways with a central location made it ideal for any commuter either way - East or West).
How did you find this deal and how did you negotiate it?
Met with an agent that came recommended through a friend of my sister-in-law. Looked at a few things that were in our range, and came upon this one. The agent was selling several of the units in this particular development, and we wound up getting the pick of the litter. A beautiful south facing unit with a bunch of extra windows and loads of natural light.
How did you finance this deal?
My own cash reserve that I was saving for a downpayment & a small early wedding present from my father to make it to a full 20% so no PMI.
How did you add value to the deal?
I asked the seller to fix any major issues that I would need to address prior to renting it, and he agreed to 3 of the 4 the inspector and I noted.
I took care of the remaining one myself with aid from a family member who is an electrician (just replacing a cracked faceplate)
What was the outcome?
We were able to get it rented for a mid-term (11-months, per our own request), albeit at ~$200 below market rent - though we are still turning a profit, and have a great couple in there currently. I've begun depositing rent checks. Great feeling, and excited to have someone else paying the mortgage for us for the first year before we move in ourselves.
Lessons learned? Challenges?
My first foray into real estate. Did a lot of reading, listened to a lot of podcases and youtube (mostly BP of course, &a bit of Graham Allen). Being financially minded and working on my way to FIRE, this felt like the logical next step. It was surprisingly straight forward, the biggest hurdle being just getting all the cash (barrier to entry for sure), and dealing with the bank. Fortunately I'd refi'd my student loans a years back, and was familiar with what the banks were looking for/asking.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Any local people can PM me for info.