Would it possible to rent or sell this property?

Question

I’m a first time home buyer trying to buy a home to live in that I could potentially rent or sell in the near future (<10 yrs).

I’m currently looking at a new development 400sqft studio in Brooklyn at 650k. It is an attractive price point when compared to similar apartments in the neighborhood. However, the space looks non-functional to me and I seem to have a hard time trying to make it work.

In your experience, has it been difficult to try to rent/sell such a property? If I was a renter I would not want to rent this property unless it’s cheaper than the expected rent for such a place but as an investor those numbers then wouldn’t work. I understand that I wouldn’t be renting out to myself and there could be people who could make this space their home and be happy. That’s why I’m reaching out here to see based on your experience do you think people would like such a property, and consider buying or renting it?

Hoping to learn from your experience and appreciate the help!

Abel Curiel · Answer

Hello @Shelly Thai

I have had challenges related to renting smaller units and units with uncommon layouts. One of the investors we are currently working with has had to reduce the rental asking price 2 times.

That said, for a unit like this I would recommend running very conservative numbers when considering this purchase. i.e. if rental comps  show avg/median rentals at $3,000/month, run #s with $2,500-2,750/mo as your projected rental income.

You can research rental comps for similarly-sized apartments in the area. Streeteasy.com is a good free resource to check out.For a more extensive search, our team would be happy to answer any questions you have!

Best,

Abel

Ecaterina Katerina Morosan · Answer

I agree with @Abel Curiel on using more conservative numbers in this case. Average studio square footage in NYC is 450sqft. Anything that is smaller requires a lower than average rental price.

Also, looking at the floorplan, the architects could've swapped the WIC and the bathroom and move the entrance slightly to the left. It would be more practical and convenient. Based on my experience from working at a development consulting company in NYC, this is one of the first things we would point out to the developer. Curious what building this is.