Looking to invest in multi-family in Brooklyn... any tips?

Question

Doing a 1031 and looking to purchase a 5-20 unit apartment building in the tri-state area. Am seeing some good deals on MLS in Brooklyn (Flatbush, Crown heights, etc.) but would love to hear from agents/experts in the area.

Mohammed Rahman · Answer

Sounds like you're on the right track. A 5-20 unit building in Brooklyn (especially Flatbush and Crown Heights) can definitely be a solid play if you buy right. Those neighborhoods have strong rental demand, a mix of long-term tenants and new arrivals, and you can still find properties with decent upside — especially if you're willing to do some value-add work (updating units, improving management, etc.).

A few things to keep in mind though if you're 1031 exchanging into Brooklyn:
Taxes and maintenance costs are no joke here, and a lot of the older buildings come with hidden repairs or rent-stabilized tenants that could cap your upside if you’re not careful. You’ll want to double check the DHCR rent roll if it’s a rent-stabilized property. Also, lending can get tricky for 5+ units — commercial loan terms vary a lot more than residential. Some local banks like Flushing Bank, Signature (before it went down), and smaller community lenders tend to be friendlier toward these types of deals compared to the big guys.

There are deals on MLS but honestly a lot of the better 5-20 unit stuff still trades off-market or through brokers that have direct relationships with owners. If you want, I can also give you a quick breakdown of what cap rates are generally looking like in Flatbush/Crown Heights right now so you have a reference point.

You planning to self-manage or hire a management company once you close?

Abel Curiel · Answer

Hello @Justin Garber,

Good luck on the 1031!

I'd also recommend looking into Bushwick and Ridgewood. Higher cap rates and slightly more inventory.

Are you mainly focusing on Brooklyn or are you open to other boroughs?

All the best!

Abel