Brooklyn investing

[Account Closed]

Good morning everyone! As a new investor I'm looking for my first deal in a high priced market, Brooklyn NY. I initially wanted to invest in rentals, but an agent told me doing a flip would be the better move. What are you guys opinion on this topic? 

Thank you!

[Llewelyn A.]

Hi All. I am a Brooklyn Investor for 2 decades and have kept all the properties that I have bought except for 1 sale I did in 2013. I own 6 buildings now, various neighborhoods like Bed-Stuy, Clinton Hill, Windsor Terrace, and Ditmas Park.

I really feel the need to point out that it's not really the PROPERTY that Cashflows....... it's the INVESTOR.

Let's look at a hypothetical scenario so I can explain this better.

There is a property for Sale, 100 Main Street in Brooklyn.

Buyer A has LOTS of Money and can buy 100 Main Street all cash.

If Buyer A buys it all Cash, the Property will cashflow approximately $1k per month.

Buyer B, has some money, but not enough for all cash. However, Buyer B puts down 50% of the Purchase Price and Mortgages the property with an LTV of 50%. Under this scenario, Buyer B breaks Even, neither cashflowing nor losing cashflow.

Buyer C doesn't have anything more than 5% and must borrow 95% for the Mortgage. Under this circumstance, the Property will be fully Negative Cashflow for a long time until the Rent catches up in years to come.

The lesson here is that really..... if the Property has the Characteristics of "Cashflowing," then how do you explain that it Cashflows for Buyer A but not for Buyer C?

The answer should be obvious that it's NOT the Property that Cashflows..... It's the Investor that fully determines if an Investment Cashflows or NOT.

BTW, Buyer C may actually have the greatest ROI (Return on Investment).

But I will wait until another post to explain why since it will be a very lengthy explanation.

I hope the Readers of this post can gleam something from this post.

Thanks for reading,

Investor Llew