All Forum Posts by: Joe Jor

Buy where the numbers makes sense and social issues (schools, crime, etc) are within your tolerance.  I know that isn't very specific and probably not what you are looking for.

What is your goal?

* Live rent free - The more units the better; the bigger the price & down payment; further from NYC

* Reduce current rent/mortgage payment via house hacking - closer to NYC, can be done with less units

* Invest in a cashflow negative but greatly appreciating property?

* Something else?

The challenge in lower Westchester is everyone is looking for small multi-family so the competition is high and the supply is low.

Let me know if I can provide more insight.

Joe

@Kelechi Ukonu Nwankwoala, I would offer a twist on the above suggestions:

Continue living with family and stack piles of cash.  When you are ready to move out, then execute the house hacking strategy.

Another way to simulation ownership is to pick a property, run the numbers, then "pay" yourself the mortgage payment (PITI) - reduced by realistic rent income, estimated utilities, CapEx, vacancy. This would provide some real world feedback if you can afford the house hack. Do this for 3 or 6 months. If you find yourself "stealing" from your house account, you are not yet in the appropriate financial position.

Joe

@Michael O'Hagan, how are you defining "best areas?"  My definition is almost certainly different than yours. 

If you can provide some more specifics, I have knowledge in Westchester and am happy to provide my opinion.

Why are you leaning towards an LLC?  The main benefit is if you get sued, the liability is separate from your personal assets.  If you get a big honkin' umbrella insurance policy you will have similar protection with less paperwork.

Also, if the loan is in your personal name, the bank won't allow it.  You can probably get away with it, but you risk the unlikely chance the loan gets called.

Joe

Quote from @Jazmin German:

Thanks for asking these questions! Great answers as well. 

I too currently have the same questions and concerns about investing in NY! 

 I am currently looking for my first multi-family property to house hack in the Bronx, Westchester county or maybe CT. 

My biggest concerns is dealing with bad tenants in a tenant friendly state plus evictions/courts. 

I try to network with real estate investors in this market and attend  real estate networking events to hear how investors handle this. The main advice I commonly hear and try to keep in mind is what @Nate Monson offered with #3. Have a strict process for screening tenants. 

I like to think that if you can invest/handle  NY you can invest/handle anywhere. 

It boils down to screening tenants, especially in NY.  Having good screen criteria will reduce the chance you end up with professional tenants. 

Joe

How much do you know about construction?  You can always babysit them on some easy or moderate jobs to judge their skill and value.

Took me at least 4 tries to find an electrician that was reasonably priced and knew what he was doing. it took trial, error, issues and money to get through the first three, but now I have someone I can trust.  Unfortunately, like any job/employee, there are some poor performers among the larger population.

Joe

Generally the ROI (on paper) is inversely proportional to the quality of the are. C, D and F areas will have a large ROI and a large amount of pain. As such I am not sure that is necessarily the only metric you want to measure or target.

Mt. Vernon has higher ROI, high crime, poor schools, public corruption and high taxes. It wouldn't be my recommendation.

Joe

Is anyone familiar with Fully Paid Lending Program that are offered by multiple brokerages?  What are the risks?  From my google research it seems that the only risks are
  *Contributing to fall of stock price as short sellers may borrow the stock to accelerate movement
  *Dividend risk: you would receive Payment In Lieu of Dividend which are taxed as ordinary income instead of the qualified dividend tax rate.

What am I missing?

As for the dividend risk, can this be negated if a ROTH 401k or ROTH IRA is used since they don't accrue capital gains?

Thanks for all your thoughts!
Joe

@Mario Malpelli, In my small multis in westchester, tenants pay electric and gas.  I am responsible for water, heat (gas or oil), common area electricity.  So an exact split it will not be; but it should be in the ballpark. 

Given the hot Westchester real estate market, high taxes: VERY few move-in-ready properties, in less crime-ridden areas, exist.  A negative cash flow, especially if you are living in one unit, could very well be expected.

According to county records, it is a two family, not a three family.  Given the 3 mailboxes, I assume there is an illegal apartment.  I pumped this property through my spreadsheet, as a two family; your choice if you want to take the illegal apartment risk.  Beware of fines, egress routes in case of fire and other general headaches regarding quality of workmanship in the illegal apartment.

Using my personal spreadsheet, with 20% down, a 3% rate and 2 apartments @ $2345 (assuming 2 bed/1 bath), looks like a negative cashflow of around $-200.  Key differences I see:

• Much higher rent
• Marginally higher fixed expenses around $525
• Marginally higher variable expenses around 725 - as it is an older house, as are all in westchester, frequently more things break, keep a larger repair budget available.

If you are living in a unit then you would be on the hook for about 2545 (2345 + 200 missing cashflow).  This is surely slightly off as insurance would go down, but you may have to pay more utilities.

Joe

What part of Westchester or what price range? What type of property (SFH, MFH, Commercial, ...)? It is a big county and prices can range from under $2M in Scarsdale (arbitrary) to a few hundred thousand in North Salem (also arbitrary).

More details will aid the community in providing accurate suggestions.

Joe