Advice on house hacking 1-4 units with FHA loan in NYC/NJ

[Greg Rosen]

Hello BiggerPockets Community,

TL;DR: Looking to house hack up to 4 units in NJ/NY using FHA loan + 203(k) rehab, can handle 3.5% down payment + closing costs on my own (+/- $100k-$150k)

I'm a new investor in my early 30s looking to dive into the real estate market with a strategic approach. I currently live in NYC area and am looking to house hack here (NJ/NYC) with a building up to 4 units (FHA loan). I have a stable and relatively high-paying job with savings and I'm ready to invest. I've worked in the RE industry in the past so I'm no stranger to it, though I'm not an agent.

My general approach is to 1) get pre-approved on FHA loan and 2) work with an agent to find off-market deals willing to work with FHA process.

Open to any advice, but here’s some specific questions:

1. Advice on general approach?
2. Is FHA a complete waste of time in this area vs. conventional financing? Given need to (potentially) seek outside investment from family for conventional.
   1. I've heard FHA is tough in these popular areas due to more stringent inspections, longer time to close, and perceived higher risk of riskier buyer and deal falling through. But my thinking is trying to find a good agent who might find some off-market deals who are willing to work with me unless it's seriously not worth the effort.
3. FHA vs. FHA streamlined (rehab <= $35k) - is it realistic to add enough value with maximum rehab cost of $35k in this area to add value to property/rents? (I get this is property-specific but asking more generally for now)
4. Areas I should be focusing on in NY/NJ? (Need to commute to midtown w/o a car and for it to be safe enough for my girlfriend to be comfortable walking alone in the evening)
5. I’ve thought about D4D/direct marketing but I don’t know how effective it would be in the NYC area? (and I have full time job so time is limited)

Here’s a breakdown of my investment plan–I would greatly appreciate any guidance and recommendations on making this (or some version of this) happen.

Property

• Location
  • Attributes
    • B-level areas (A-D scale)
    • Safe enough for my girlfriend to feel generally safe walking alone in the evening
    • Walkable neighborhood / close to transit (car ownership not necessary to live there)
  • Area(s) of interest (not set in stone)
    • Jersey City area
• Condition
  • B or C-level (A-D scale)
    • Semi-distressed with potential for minor rehab upgrades ($35k max)
  • Dealbreakers
    • Foundational issues / big required rehab due to FHA 203(k) max for streamlined version
• Size
  • 2-4 units (higher the better)
  • 2-4br per unit preferred
• Max Budget (FHA loan limits)
  • NYC
    • Single-Family Home: Up to $1,089,300 + 3.5%
    • Duplex: Up to $1,394,775 + 3.5%
    • Triplex: Up to $1,685,850 + 3.5%
    • Quadplex: Up to $2,095,200 + 3.5%
  • Hudson County, NJ
    • Single-Family Home: Up to $1,149,825 + 3.5%
    • Duplex: Up to $1,472,250 + 3.5%
    • Triplex: Up to $1,779,525 + 3.5%
    • Quadplex: Up to $2,211,600 + 3.5%
• Timeline
  • Title in-hand latest: Jan-Feb 2025
    • Can potentially buy earlier if I sublet my current apartment in NYC as needed (lease expires Mar 1, 2023)
  • Rehab: 30-45 days max of minor rehab/reno
  • Move-in: on or before Mar 1, 2025 (hard deadline)

Financing

• Loan type: FHA or FHA Streamlined 203(k) for rehab <=$35k
  • Possible conventional loan if I seek investment from family/friends
• Approval status
  • Goal is to get pre-approved now in advance for credibility
  • My stats
    • Employment: Full-time at large bank
    • Income: low-mid 6 figures
    • Assets: low-mid 6 figures (including 401(k))
    • Credit score: 800
    • DTI: 2.5% (student loan)

Thank you in advance for your support. Looking forward to becoming an active member of the BP community.

Best regards,

Greg