Upstate NY Property Analysis.

5 Replies

I'm looking at acquiring my first property. I'm 24 and living with a friend currently for pretty cheap. I'm hoping to buy a multi family and house hack. I found this one property that is listed as a two unit house "with potential for a third studio above the garage." The main floor & upstairs are a 4 BR with 2 baths and the basement is a 2 BR with 1 bathroom. I took a look at the property, everything appears to be solid (I know it'll still need to pass inspection). The house itself is pretty awkward - lots of additions after it was built in 1991. There are odd rooms and unique construction. Upstairs, the doorways into the bedrooms have either no door (doorway is cut off by the slanted ceiling/ wall from an addition is too close) and use a shower rod, or a trimmed down door. It's in good condition, just outdated. Seemingly original carpeting and old bathroom & kitchen fixtures.  It is septic, had a boiler and two empty oil tanks, drilled well, but no separate meters in the house. 

Upon visiting the property, that "potential 3rd studio" is above a large 3 car garage. It was a fully functioning unit with a separate meter. I do not understand why it was listed as "potential." So I did some more digging. Originally when the house was listed in November of 2016 ( at $475,000), it said "legal 2 family" in MLS. The listing agency has changed. The price has fallen to $339,500 now. There were no building permits in county tax records nor was there any sign of any recent construction. It also appears this was a giant family complex. The owner of the property lost her husband a few years back, is very old, and had a lot of family living at the property so there is no rental history and the house is sitting empty. On the online tax records, it's zoned as Limited Commercial. Site Property Class: "210 - 1 Family Res." Which they listed it as a legal 2 family so logically should be "220 - 2 Family Res." But I can't figure out why that is still listed on here, what the ramifications are of this, why is that third unit listed as "potential," and most importantly - how to solve this problem.

The numbers look good. As house I am house hacking, I tried to make conservative estimates and I wouldn't mind living in the third unit paying a couple hundred bucks a month which the numbers below implies. Then save up and try to acquire another one. If I were to move out and rent the studio for $800/mo then it pumps out a good amount of cash each month.

Price: $340,000

Down Payment: $16,811

Loan Amount: $330,740 @ 3.875%

Potential Rental Income (for 2 units): $1800/mo for 4 BR & $1200/mo for 2 BR (conservative estimates) - $36000/ year

Vacancy: $4000

Gross Income: $32,000

Taxes: $6300

Insurance: $1000

PMI: $2000

Repairs & Maintenance: $4000

Other Misc. : ~$2000

Total Operating Expenses: $15,500

NOI: ~ $16,500

ADS: $18,832

Cash Flow before Taxes: -$2300

I'm thinking of putting this in the "too hard pile." The location is perfect, and there isn't much else on the market right now. It just seems a little unusual. Only in May did I pay off the last bit of debt I was in and I am nervous about taking on a large amount of debt like this because I enjoy not having any payments. I don't want to be talking myself out of this, nor rushing myself into this irrationally. I have a more precise excel spreadsheet set up with a much greater analysis but the numbers I provided were estimated from that to just give the basics (may not add up exactly due to rounding). 

Thank you for your time & thoughts,


Hey @Ryan Allen ,

Is this property in Saratoga Springs? If so, I can’t imagine your vacancy rate being so high. Especially because saratoga is a hot market right now and in high demand. I mentored with a couple of investors who are well-known veterans and they have no problems finding tenants. But then again, they’ve been doing it since the 90s.

Also, what kind of mortgage do you plan on using? Your down payment is approximately 5% of the asking price but the loan amount is around $330,000. Do you intend on tying the closing costs into the mortgage? 

I am a novice as well, so I wouldn’t be able to provide you with a detailed explanation based upon my previous experiences. However, I would consider how your taxes may change if you were to register it as a three unit versus leaving it the way it is. Also, try playing with the asking price until you can come up with a number that doesn’t keep your cash flow in the red. 

I’d be more than happy to bounce ideas back and forth with you. Ultimately, I think it comes down to your business model and the reasonable and realistic goals you expect to achieve from it. For example, having a goal of $200 cash flow each month with a 9% cash on cash return (just throwing numbers out there) makes it easier to ignore the deals that don’t give you those particular outcomes and focus on the ones that potentially do. That way you’re more confident moving forward with deals that fit your standards versus trying to make deals that otherwise would not.

Oh, and one more thing. You mentioned living in the third unit until you save enough to invest in your next property. I'm not sure which mortgage you intend to use, but the FHA 203k is a great option with a 3.5% down payment requirement for houses that need work done. And then you can refinance and use that money to invest in your next property (aka the BRRR method, my personal favorite.)



Been watching this property as I also own a home in Saratoga Springs and am looking for multi family units. I know exactly where this place is and it has quite a bit of traffic so the demand should always be there. Good luck!

@ryan Allen

I saw the House is now off the market. Keep us updated!

All, sorry - I'm new to this forum and somehow couldn't navigate my way back here until now. Thank you for your responses.

I was interested in purchasing it, the location is great, however what threw my off was that the third unit above the garage was not legal. The listing agent didn't make clear what I'd need to do to get that approved and then I was sent away for work for a month. It is now under contract with someone else. Thank you for your responses, sorry my lack of response. 

On to the next one!

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