Does This Brooklyn House-Hack Work?

Question

Link here:

151 Noll Street, Brooklyn, NY 11206 | MLS #970526 | Zillow

Jasper Jurman · Answer

Hi Ferdia,

This property is in a good location that will likely experience good appreciation over the long term but appreciation is never guaranteed and you shouldn't buy for that reason only.

You will likely break even on the mortgage which is great since that virtually lets you live for free while you are there but after moving out there won't be much cash flow if any. As for FHA, check with your lenders guidelines but one unit will most likely need to be vacant at closing. FHA will be able to lend on it given its a two family; they will lend on properties up to 4 units. You should also note that this looks like a turn key property, meaning there won't be much equity in the property. If you are using FHA to put 3-5% down, once you move out you're looking at 95% loan to value leaving you with 5% equity and breaking even on the rental income every month.  You could end up over leveraged with little to no cash flow which will put you in a tough spot when there's a vacancy, cap ex, and repairs.

This is not to discourage you but to make you aware.  I am an agent in NYC and work with lots of investors. Send me a message on BP if you have any questions.

Drew Sygit · Answer

Gotta "love" the agent's claim, "a beautiful home where the rental income covers your mortgage"

Mohammed Rahman · Answer

Hey @Ferdia Kenny - good questions

I'm a NYC broker, and have worked on a bunch of multifam transactions in Bushwick and Ridgewood. I'm familiar with this listing and have toured it already, I've also recently closed on one on the next street over on George St (checkout my Youtube page @ ClosedByMo, my clients did a podcast episode with me about the challenges and results of looking for a househack in Brooklyn).

This listing is unique because its right on the edge of East Williamsburg (awesome news) and actually is grandafthered in as a 2-fam, because the city upzoned the area a while ago (will discuss more if we hop on a call).

FYI I started out in real estate as a househacker too with an FHA loan, so I get what you're trying to do and how to structure things so the loan process works out in your favor :)

What you're mentioning *may* be possible but it really depends on the lender and how you plan to use the property. Most big bank lenders won't approach this the way you want them to, local lenders however that understand the NYC market are more flexible (I can put you in touch with them).

Shoot me a dm on BiggerPockets, or for a faster response, my contact info is on my socials everywhere. Biggerpockets will delete my comment if post my number here.

Abel Curiel · Answer

Hello Ferdia,

When looking at potential househack deals in New York, one of the main things to confirm is how the property can/will be delivered at closing. You'll want to find out if at least 1 unit can be delivered vacant. If yes, then you can purchase using FHA. If both units are occupied at the time of closing, most lenders cannot close using FHA. I recommend asking your investor-friendly lender if their bank can approve the loan if you were to occupy the basement ADU.

Thanks for sharing the link for context - both units appear to be at or near market rent, and the property is in good condition. Depending on the negotiated terms, this could be a solid househack, given that rents are strong and the property does not appear to need much work. Of course, a home inspection can and likely will reveal some flaws - some will require immediate repairs, while other flaws will be addressed with ongoing maintenance.

All the best!

Abel

Taylor Dasch · Answer

sheesh what are the rents there? Thats an expensive househack have you done deals in NY before? I dont see any issues going FHA with the listing itself. You hsould get with a realtor there that is familiar with investing and they will be able to get you more local info / know more about the regulations.