House Hacking in New York City

[David Cianci]

Hello all,

If I were to consider house hacking in NYC, what type of cash flow do you believe I would be able to receive? 

Lets assume that I purchase a duplex for 300-400k in The Bronx or Brooklyn, make some cosmetic repairs between 25k-50k. 

I'm sure my cash flow could vary based on the loan I would receive since I could use a first time home buyer loan but lets assume that I use a 30 year fixed FHA mortgage at 7%.

Based on my projections I assume I would earn a negative cash flow between $400-$1,000 annually lol. 

Hoping to get some thoughts on whether my projections are severely off, whether house hacking in NYC would be a good idea at all, or if house hacking in NYC due to the landlord laws would make my investment more of a hassle. 

[Rick Albert]

Most house hacks in high cost areas don't really cash flow. The reality is if the numbers worked with 3.5% down, why wouldn't an investor pick it up at 20% down? It would be a phenomenal deal for any investor to pick up. 

A couple of "unrealized" income to consider:

1. Loan buy down.

2. Tax benefits.

3. Appreciation.

Your negative cash flow will be picked back up from the above three, so as a house hack I wouldn't sweat it. Rent Control is a two sided issue. On one end it is so horrific and cost you a lot of money and headaches, especially when there are other markets to invest in. On the other side, economics have proven that rents go up significantly and vacancies are extremely low due to rent control. So with the right vetting, solid leases, and overall best practices, you can actually do really well.