Long term BRRR in Bed Stuy Brooklyn, NYC John Hickey

Long term BRRR in Bed Stuy Brooklyn, NYC John Hickey

Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes

I left of the last R because even though it would like to repeat in Brooklyn I'm not sure my credit will stand it at this point.  

I bought this building in June of 2007 for 714k 2160sf bulking was vacant. I used and FHA with 3.5 down I got a 5 year interest only followed by a 30 year fixed at 6.375. The patent on the 30 year with taxes and insurance was 3900 or so. The building was partially renovated in poor taste. Nice wood floors but ugly kitchen and baths. I rented two floors and lived in the other for a few years. The rents for units 2,3 was 1400 and 1450. Shortly after the crash my tenants learned that condo developers were renting out luxury apartments in the area for around the same rents I was charging so I was forced to lower rents. 1200/apt 2 1050/apt3. In 2009 I renovated my own apartment and moved out. I rented the apartment for 1300. In 2013 I renovated the top floor the rent was 1050 before and 2700 after. Here are some photos during Reno and after. The Reno cost around 80k. It's a 3bed 2 bath with central heat/air. I also renovated hallway and replaced all staircases with a new oak staircase. Shortly after I was able to refinance the property to a 30 year @ 4.25. My payment after was 3461 rents 6350(with new tenants coming in I raised rents in apts 2 and 3 to 1800/1850 respectively.

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Rental Property Investor · Brooklyn, NY · Member since 2014 · 92 posts · 17 votes
10y
John Hickey Nice thanks for sharing.
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  • Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    10y

    Please excuse my typos.  I did a quick proofread before the kids woke up. I was pecking away on the iPhone but using the web browser so I could post photos. 

  • Rental Property Investor · Brooklyn, NY · Member since 2014 · 92 posts · 17 votes
    10y
    John Hickey Nice thanks for sharing.
  • Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    10y

    @Daniel Montes

    Thanks Daniel.  

  • Queens, NY · Member since 2014 · 153 posts · 64 votes
    10y
    John Hickey congrats on buying a cash cow. Sounds like there were some lean years but your persistence has paid off big time in terms of appreciation on both rents and home value. I'm trying to do something similar with FHA but the prices in BedStuy and bushwick have gotten away from me. Seems like the only neighborhoods where FHA is even a possibility is cypress hills / east New York or east Flatbush, among other further out areas I don't really want to live in. Any advice for me or lessons learned?
  • Real Estate Investor · New York , NY · Member since 2016 · 44 posts · 4 votes
    10y

    New Hero.

  • Investor · Brooklyn, NY · Member since 2016 · 38 posts · 6 votes
    10y
    John Hickey thanks for the post on this!!! And what a purchase! Eric A. My friend was telling me that along the j train you can still find deals around the 700's, I believe by Macon and Halsey in that area.
  • Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    10y

    A few months ago a tenant suddenly let me know they were leaving. I immediately knew I had to renovate. Tenants in Brooklyn tend to stay a minimum of 4-5 years in NYC due to high costs of moving.  His rent was 1800 with me paying the heat.  At some point long past a previous owner had converted a bedroom to a bathroom in this apartment. I was determined to restore that.  I started in mid February.  I decided I had learned from pay mistake and did not entirely gut the apt.  In some cases it's necessary but in this case I chops only a few walls to expose the brick and keep costs lower.  I ran a new electrical service up to the apartment and replaced all plumbing.  Here are some during and after photos.  I'll try to dig up some before also.  

  • Investor · Valley Stream, NY · Member since 2008 · 71 posts · 18 votes
    10y
    John Hickey renovations look great! It's amazing what you find covered up in these properties. Nice brick fireplace hiding behind some Sheetrock... I am about to start a full rehab on a 5 unit brownstone in Bed-Stuy... A lot of original details still remain but looking forward to uncovering some goodies.
  • Brooklyn, NY · Member since 2016 · 16 posts · 1 vote
    10y
    John Hickey Great renovations! I'll have to say people like it when some break are left exposed- it gives the apartment a character. I'm a new agent in Williamsburg, it will be great if I can meet you someday and learn somethings from you? Thanks
  • Investor · New York City, NY · Member since 2014 · 370 posts · 85 votes
    10y

    Is it worth it to put in central heat and air? I have a place on Ralph and am thinking of some upgrades. It is big but I am hearing now people want dishwashers and w/d in units. Also, how much did the electric and plumbing fixes costs? Looks great though.

  • Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    10y

    @Eric A. thank you. I was looking for appreciation when I bought. But as many have stated before you can't predict appreciation.  Looking for or counting on appreciation is speculation. But that is what I was trying to do. I was right eventually but I did get lucky. Money was tight I had just started a new job and taken a 50% paycut the year I bought the house.  It was a big risk and I nearly missed.  

    Advice wise  I would look for area on the fringe and be tough on your areas as you are on the house.  Don't take someone's word that the area is up and coming.  I don't want to be the first guy from outside the nieghborhood to buy but also not the last.  You have to walk home, and feel comfortable. I always felt kind of like I will not be scared out of this neighborhood but I am very different now that I have kids. I like  to be an optimist in general but be pessimistic of every area(until you've done your DD) . In every deal look for the flaws.  I missed a lot of flaws in that house and I had some painful years as a result.  It was my first house and the market kept getting away from me in the early 2000's.  I overpaid.  A huge mistake at the time but it's been cash flowing for so long that the sting is partly gone.  

    For choosing an area: back then I did it by looking for frontiersman in the bodegas.  I think  by the time there are cafes that cater to hipsters prices are going to reflect that.  So touchable to decide if you want to pay for some piece of mind or dive into the depths to save a few(or a lot!) bucks. When looking at a really rough area  I like a lot of vacant buildings.  I used to think when no one at all wants to live in a neighborhood it's more possible to appreciate rapidly. Kind of like williamsburgh in the early 90s.  Then again Bed Stuy was pretty tame by 2007. I had a friend who bought on Clifton and Bedford ten years before me. He paid 100k and recently sold for 5mil or so I heard.  

    Now I'm a little more impatient. So I look for area that have started to change. It's not much of a science but I'm trying to work on it.  I look at Yelp for yoga studios, vegan restaurants, cafes.  I compare that to the trulia crime map and stay away from the red areas.  Then I get out and walk/drive around.  I like to talk to people when I get out of the car and I think I can get a feel for things better in person. If I don't feel comfortable walking and talking then I keep moving.  

    I have scouted Peekskill, Poughkeepsie, Newburgh, New Haven, Hartford and Beidgeport in those 5 years.  And on a smaller scale Yonkers and mount Vernon.  

    I've been using this map to determine and area lately.  If you look at my area Lafayette and Bedford, it had gentrified in 19990-2000. So buying  seven years after gentrification was measured was late to the party but not too late.  

    I have looked to buy in 3 of the last 5 years but instead of buying I have been renovating and last year I did a flip.  

    http://www.governing.com/gov-data/new-york-gentrif...

  • Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    10y

    @Chavonne R.

    @Jared Delaney Thank you.

     @Ally Abubakar I stop by my Brooklyn project once a week during the day. I would be happy to meet you there or nearby for a coffee if daytime works for you. I could show you what we are doing although this is the last week...I am looking for a tenant if you have a good one.

    @Les Jean-Pierre Thank you also. For me it is worth it on several counts. I like to ask for a bit more then I probably should. I also want to keep the option open for converting to condo down the road and as long as I am in the apartment doing so much work I might as well.

    Hvac 7500 I could have done it a bit cheaper(6500) I used a high efficiency unit.

    Plumbing 4500-5000

    Electrical is in flux but I think around 6-7.

    I put a WD and a dishwasher in this unit.

    Again please forgive the typos, I usually update with an IPhone whilst feeding the baby....

  • Investor · New York City, NY · Member since 2014 · 370 posts · 85 votes
    10y

    John, I don't know how to do that @people thing but those prices are pretty reasonable. I don't know if I will do the a/c and heat but might do dishwasher and w/d soon.

    My dad bought the building in the 70's when I was a kid. Man, Bed-Stuy was rough then. Now, I am seeing people walking little dogs around. 

  • Real Estate Investor · New York , NY · Member since 2016 · 44 posts · 4 votes
    10y

    @Les Jean-Pierre, Just type '@' and then start typing the person's name. a box with their full @name will pop up. You can click that box and continue with your post. 

  • Investor · New York City, NY · Member since 2014 · 370 posts · 85 votes
    10y

    @Chavonne R. Thanks!

  • Brooklyn, NY · Member since 2016 · 16 posts · 1 vote
    10y

    @John Hickey Sure- Can you please message me your number when you get a chance. I can definitely take pictures of the unit and advertise it for you.  Thank you

  • Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    10y

    @Les Jean-Pierre that's great your dad was smarter than all of us! I was in the nieghborhood a lot in the early 90's and it was rough then also.  My friend grew up on Lewis and DeKalb and we were always talking about buying brownstones when they were 125-200k.  

  • Investor · New York City, NY · Member since 2014 · 370 posts · 85 votes
    10y

    Real long story but he used to work in the area. The building has some deferred maintenance that I have been dealing with. But, whatever you put in, you get it back fairly quickly. What also is interesting is that over the past few year I get yellow letters only once a quarter but from the same guys.

  • Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    10y
  • Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    10y

    @Les Jean-Pierre that's how I ended up with my place. Got a job on Myrtle Ave and started looking around.  Been there ten years now. 

    Do you live in or have a super? 

  • Investor · New York City, NY · Member since 2014 · 370 posts · 85 votes
    10y

    Super. It is a mixed use. So the ground floor is a store(currently vacant), then have two apartments above. I live in Harlem but work downtown so if I have to go to the building it is not too bad after work. Taking the subway is an hour. The distance has made me get smart about managing.

    But, I know the area since I have been going to the building a lot the last few years. 

  • Investor · New York City, NY · Member since 2014 · 370 posts · 85 votes
    10y

    The tile in the bathroom looks great.

  • Bronx, NY · Member since 2016 · 115 posts · 21 votes
    10y

    @John Hickey

    That is an amazing turn out. all looks great! Thank you for sharing. 

  • Rental Property Investor · Chappaqua, NY · Member since 2015 · 1k+ posts · 947 votes
    10y

    @Virgilio Garcia thanks I've read some of your posts.  You operate in the Bronx, how it going?

    @Les Jean-Pierre vacant commercial? Very nice.  I love vacancy I was dying to renovate that unit but the tenant kept renewing. What's your plan?

  • Lawrence L.Pro Member
    Rental Property Investor · Bronx, NY · Member since 2008 · 144 posts · 64 votes
    10y
    John Hickey Thank you for sharing your journey... GREAT JOB!!!!!! Looks awesome. What kind of work did the plumbers need to do.
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