All Forum Posts by: Daniel C.

@Dakoda Spencer - Thank you. I forwarded him info on the book.  Up to 10 properties?  Wow, I need to check that podcast ASAP myself - so many of them though.  LOL

@Llewelyn A., everyone, thank you. I will definitely relay the feedback and contacts. Thank you.

I'm posting this question on behalf of a friend who is trying to buy his next property but is being denied financing some banks / lenders.

He purchased 3 properties over the course several years before 2008 in Brooklyn NY (Bed-Stuy and nearby areas) before mortgage guidelines become much stricter.  He's been shopping around for financing to purchase a 4th property. Although the rental income in each of the 3 existing properties covers all expenses (and in some cases cash flows); he's been advised that his debt-to-income ratio will not qualify him for a loan. He otherwise has a decent credit score; earns great income and has been employed for 10+ years. I don't know his exact numbers however.

Have you been in similar situations? If so, what options / methods did you use to obtain financing for the additional property? He'd like to avoid using a hard money lender. NYC investors - If you have any recommendations on a solid reputable lender / broker; and creative financing ideas; it would be very much appreciated. Thanks.

Thank you for the feedback:

@Daniel Montes and @Adam K. - Yes, this would be a long-term buy and hold. They area continues to improve and the rents continue to rise.

@Anthony Perez - Bed Stuy does still have room for growth. But I agree Cypress Hills, East New York and Bronsville have much more room for appreciation. I have widened my search area to include those areas as well.

@Richard M. - Yes, I try to avoid properties immediately close to housing complexes for reasons similar to what you mentioned. It's become more evident that Bed Stuy may be overpriced - at least for the small investor. Thanks for bringing up the turnover costs. I will add / factor that in the vacancy numbers.

@Llewelyn A. - All the points you mentioned are very valid; and I agree. I was hesitant when buying my first investment property in Bed Stuy in 2008. Fast forward just 8 years later and the same property I got for $700K is worth double that. The 1 or 2% rules do not work in most areas of NYC; and finding 10% caps are almost impossible unless it's maybe a 8+ units. Yes, I will use IRR and Future Value as they are much better indicators for evaluating properties in these areas for long term. Really great insight.

Hello BP.  I am considering purchasing property and would like some opinion.

The property is located in the Bed Stuy area of Brooklyn. Brick construction - built around 2006. Very recent apartment upgrades. Newer appliances. Newer mechanicals. Newer roof. Very good condition in and out. Obviously all to be verified by an Inspector!

THE NUMBERS:

Purchase price: $1.25m

Mortgage: $4529.98 Based on 25% down. 30 year fixed at 4.1% APR (confirming rate with Lender)

Taxes: $8500 confirmed

Repairs: $1,500

Insurance: $3300

CapEx: $2400

Water/Sewer: $3120

Vacancy: $3000 Very in demand area. Vacancy % tends to be a lot lower. Figuring 1 per 18 months

Electricity: $625 For light. Tenants pay for other utilities

Misc: $1200

Rental Income: $79,200 Two apts currently have rents slightly lower than market rates for the area

I am basing the above expenses on: The property is only 10 years old. The overall condition of the apartments and building - very good. I estimated the expenses at 12% more than the yearly expenses on my other existing property (which is 9 years old, also 3 units, same # of BRs, overall same physical condition, same neighborhood).

My other property cash flows pretty well..for NYC so I was considering this new property as an appreciation play. I know pretty much all BPers would shun this deal as it has a very low cap rate; and almost non-existent cash flow. Unfortunately, I have not the skills, the time, the team or desire to take on renovation. I am considering this only as Bed-Stuy and Bushwick are very in-demand neighborhoods that still have room for really nice increase.

Let me know what you think..especially Brooklyn Bed Stuy and Bushwick investors. Thanks all.

@Bernard Frazier I completely agree that a 5-family would be ideal for the reasons that you've indicated; plus vacancy-offset, etc.  But prices in NYC in general are pretty expensive especially for where I am targeting.  Also, by budget is limited.  I am considering South Bronx areas to a lesser degree (Mott Haven / Melrose).  But primary choices would be in Brooklyn as several areas are in very high demand and appreciation is phenomenal.

@Remo F.  Good point on checking out the neighborhood traffic around 6-7pm.  Apparently, Cypress Hills and E. NY are starting to transition quickly as are the prices / rents, so I will definitely keep an eye for properties in these areas.  What is your experience with the 2 family?  I find it almost impossible to find a 2 family that can cash flow.

Hello BP!

I've been hunting, but finding a good 3-4 unit investment property in the Bed-Stuy and Bushwick areas in Brooklyn has proven to be an extremely difficult task!

Why Bedford-Stuyvesant (BedStuy) and Bushwick: I prefer properties in these locations for ease of management. These neighborhoods are also very desirable; and still have room for very good appreciation (Bushwick more than Bed Stuy).

I don't want to rely solely on appreciation; so I'm searching for a property that cash flows. Although the rental market is very strong in these neighborhoods, the gross rents I've been seeing for some places can not cover PITI + all expenses - let alone cash flow.

In speaking with a rep from Quicken Loans (which has my existing loan), I was advised that the max loan I could obtain for a 3-unit property is only $967K for a $1.35m purchase (roughly - with 30% down). That loan amount is likely specific to my case (existing $425K mortage with QL, credit, etc). I have an existing investment property I purchased about 10 years ago in Bed-Stuy. But as most investors familiar with these areas or similarly expensive markets -- this may not always be enough for a 3 family in a good location (avoiding the L train line). My existing property is likely valued at $1.3m currently; so I am thinking of using an equity loan to help fund a new property.

I heard a few people in the forums suggest Cypress Hills and East New York around the areas where the proposed re-zoning is supposed to occur. I am starting to consider those areas as they offer better value and will have more appreciation upswing. However, they are a little far from up-and-coming and have safety issues.

I do not have the skills, a team, any experience, or time to take on a flip / total reno.

I will be joining 1 or 2 REI groups to gain more knowledge and network.

Let me know your thoughts about any of the above. Thank you.

@David Saba and @Llewelyn A. - I too am looking to do the same.  Current trying to find a good deal in the BedStuy, Bushwick, Crown Heights for a 3-4 unit.  Please keep me in mind if you come across something.  Thanks.

@Remo F. - I am also looking to do the same in the BedStuy, Bushwick, Crown Heights areas in Brooklyn - with the exception of renovating as I do not have the skillset or time.  It has been a bit difficult to find properties that cash flow and good areas.  Just be aware that the L train which services some areas will be unavailable for at least 1 to 2 years; so may be try to find properties closer to other train lines like the G,J,Z, etc.. 

@Chris Seveney - if you don't mind, would you also send me some info?  Thanks.

Hi @Damon Bodine.  I would definitely be interested in the next meetup as well.

Hi @George Hermann - I have also considered certain areas of the Bronx.  I will try to reach out to you as well if you don't mind.