All Forum Posts by: Justin S.

@Dave Foster haha! Big thumbs up but I don't even see an emoji option :)

You lost me here though- 

"I'm feeling very zen today so give me some license - I'm not sure I wouldn't want to be "that guy" who got $4 mil in the 80s for that property. $ 4mil over 40 years to invest???!!! I'd take that portfolio. Didn't our president start out with a "small million dollar loan" from his dad 40 years ago? " 

What did you mean? 

So, @Llewelyn A., there we have it. 

* Break even to rent it out currently 

* Bank 100% on appreciation 

* I will not be staying in the house much longer no matter what 

* Or look to take 500k on the 1031, 500k on sec 121, park my 500k from the 121 in the bank, re-invest into a more rental friendly Bed Stuy building with the 1031 money and let an owner occupant purchase my high end building. 

What do you think?  @Ahmed Saad, you see where I'm going with this? Big decision 

@Llewelyn A. - Thank you for the kind words, much appreciated. 

@Dave Foster

@Dave Foster, you and I have actually spoken about this on the phone before. My understanding of it is since my Brownstone is a 4 story building, and I occupy half of it, half of the proceeds of the sale can be in a 1031 and the other have can be done without paying capital gains since as a married couple you are allowed 500k as a primary. 

Llewelyn, this is why I am so tempted to sell and reinvest into something more renter friendly and not so high end. I never intended to leave the house but we are starting to outgrow it and have a 5 month old at home. 

@Ahmed Saad, Thank you for your contibution and perspective. My gut reno was actually a really wild story. I ended up firing my contractor 3 months into the project and general contracting the entire thing myself. I learned everything there is to learn the hard way. MANY mistakes, but it all worked out in the end. Extremely stressful to say the least. The one thing that came out of it was a LOT of experience. I know what I am doing now with these renovations and also have 2 massive renovations going on upstate I am supervising as well. So... That being said, I do think I could do it again, and for even cheaper. Mistakes cost money and there would certainly be less this time around. I agree, having a piece of NYC is an amazing thing to own that is almost certain to appreciate over time, but if we do have a bit of a dip, and I do believe it is coming, to sell high, buy lower and renovate cheaper is VERY tempting, and to only have 500k of my money in the house if I did a 1031 rather than 1M and have the other 500k on ice, tax free, is also super tempting. I purchased 7 units upstate this past year that will cash flow fantastically to offset my BK house should I choose to rent it out to break even. With as much money in renovation cost I have in BK, I am probably over insured and pay top dollar, but I sleep at night. Thats not something I am willing to give up. I pay over 7k per year in homeowners insurance. I rent out my top two floors for $4900 combined and think I could rent out my apartment for $4500-$5000. Comps just aren't there for much more, although nothing is this high end (which clearly is not a good thing). Between the mortgage, even at my very low rate, homeowners insurance, taxes, common area electric and water, there is not much left over. 

A lot to think about, thats for sure! Looking forward to talking this out and continuing to hear everyones thoughts. The one thing I am sure we can all agree on is if I am going to sell, this summer would be the time, otherwise its holding on very long term. 

@Llewelyn A. & @John Hickey

Here is my dilemma. I never intended on renting the entire house out. It is a legal 3 unit brownstone but I went a little too nuts with the renovation of my space in the home. Its super high end and I am afraid of renting it out. I also don't love the idea of having this kind of equity trapped in the home if we do experience a recession in the next couple of years which there are major talks of. Prices are flattening out in Brooklyn without a doubt. Lets just say I could walk away with 1M if I sold my house. I could 1031 500k and take the other 500k and park it on the side and just buy another building in the neighborhood that isn't so high end and rent it out. Thoughts? The only down side of this that I see is the current interest rates compared to what I have now. If I were to do it all over again, I wouldn't have done such a high end reno. Someones security deposit wouldn't put a dent into the potential damage they could do. 

High end custom cabinets, real marble counter tops, extensive woodwork, staining, painting and skim coating, built ins, quarter sawn white oak flooring. Lots of risk here for me LLewelyn. Curious to hear your take on this. If I rent my unit at top dollar, which I am sure I would get, I break even but have 1M sitting on the bench. No current cashflow. 

Hi @Will McGuire,

Congrats! I have a good grip on the market and have many financing options. Feel free to reach out. 

@Jay Hinrichs- Would love to get your thoughts on this. I see a similar discussion started recently on dead equity. 

Thank you all for your input, you have convinced me to hold. @John Hickey, are you the same guy who keeps on positing questions on Brownstoner by chance? 

@Account Closed always seems to point out. Its really a tough call. 

I would hate for the value of my property in Brooklyn to drop by 400-500k and I could have sold it and sat on the sidelines with the money to come back in when the time was right and do it all over again. Its a gamble any which way you look at it. 

Hi @Thomas S. Thank you for your reply. I agree that money can be earning me more of a cash flow if it was invested elsewhere. I certainly do not have more money then I have any use for. We are all here for that purpose, right? I think money is a factor to all of us on Biggerpockets, otherwise why would we be part of this community? We have excellent tenants now and the area is highly desirable so I would expect to find another. Why hold? Appreciation? Holding onto my 3% rate? Certainly reasons to consider..As I pointed out, I would 1031 a portion of the profits which would obviously need to be rolled into new investments. 

I believe I may already know the popular vote, but here is my situation: 

I purchased a brownstone in Brooklyn in 2014 as a shell and the house underwent a gut renovation. 

It is a 3 unit building that my wife and I occupy. We just had a little girl last month and I am kicking around selling. We are in a gentrifying neighborhood and the property values have went nuts but the market is starting to soften, the economy is showing signs of doubt (Dow down 800pts) and I am thinking now may be a good time. We have about 1.1M in equity in the house. 

I saw an article a couple of weeks ago in the NY post about how Billy Joel purchased a townhouse for his first wife in the 80s for 4M and its now back on the market for 20M. I don't want to be that guy! :) https://nypost.com/2018/08/22/townhouse-billy-joel...

Everyone knows NYC is an appreciation play and I don't want to cut myself short. I signed up for Biggerpockets this year and @John Hickey caught my eye. Here was a guy who had the same story as I did and ended up selling it to buy a ton of properties in Newburgh. I jumped on the bandwagon and now own a few properties there myself. It blows my mind how my 100k investments cash flow more than a 2.6M brownstone in Brooklyn, and it got me second guessing myself. I know @InvestorLew is big on pointing out the fact other people are still paying down your mortgage (which is at 3%) and maybe the house is breaking even now (it would it I rented the entire thing) but if the rents increase down the road, the property that I sold because it was breaking even, then would cash flow 3-4k per month. 

Ideally I would like more space but everything in my house is brand new. My wife and I are not 100% sure if we want to raise our kids here in NYC either. I LOVE Brooklyn, so its certainly a possibly. So I guess what I am asking the community is: 

1. Cash out 1M by selling. I can walk away with 500k without any capital gains because it has been my primary for the last 4 years. I can also 1031 the other 500k since that portion is the investment side. Buy a house in the burbs or a bigger brownstone.

2. Keep it and rent it out. The property doesn't cash flow 

3. Put an extension on the house and stay here. Would cost me at least 100k 

My purchase price was 860k and I put in 600k worth of work (nuts I know!) I learned a TON on this project and I am applying those learning experience in Newburgh. What would you do if you were me? 

@Austin Tam, I am a mortgage banker for the last 13 years and have yet to find someone to do this in NY. I did shoot her an email and she did reply quickly and confirmed what I just said. They follow fannie and Freddie and what she is referring to is delayed financing. All lenders offer this. This is off of purchase price and not appraised value. Thanks again