Insight Requested: NYC Native Starting to Invest, Which Route??

[Alex Poh]

Hi Everyone!

I want to begin investing in real estate and have two scenarios in mind. I would love for the BP Community to chime in and give me their 2 cents.

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--GOAL--

1) Transform my monthly housing expense to $0 or into an income

2) Begin investing in property

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--BACKGROUND--

I am a 31 year old living in NYC. I have a jewelry company based in Midtown Manhattan by the diamond district. Many of my clients and vendors are located here so I need to live in the area until I create an online retail focused business. 

I currently have a studio that is a 10min bike ride from work. (It's great!)

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--Question--

To reduce my housing costs to $0 or cashflow positive I have come up with two potential scenarios...

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Scenario 1:

Move into a two bedroom apartment in Manhattan and rent the extra bedroom to break even on my monthly living costs.  Invest in real estate by investing Long Distance in a 50k multifamily in Kansas that will be about $200 cash flow positive/month.

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Pros

- Be able to keep a short commute to work

- Live in the heart of Manhattan while paying no rent

- Low cash deposit to begin investing in property

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Cons

- Run the risk of my land lord not allowing AirBnBs (which could be mitigated by upfront communication)

- Investing long distance for my first deal is terrifying

- I won't be able to use an FHA loan on my first property

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Concerns:

Am I opening myself up to too much risk by signing an apartment lease and a mortgage?  

How do I navigate my NY Landlord and an AirBnB rental?

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Scenario 2:

Buy a multifamily in an outer borough of NYC probably in the Bronx, Pelham or Queens.

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Pros

- Be able to use an FHA loan to invest

- Live on the property that I am refurbishing and investing in

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Cons

- Quintiple my commute time (45min to an hour on the train or subway depending on where I invest)

- Most likely partner with someone on the investment rather than own it myself

- Perhaps be buying into a saturated market

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Concerns:

Should I increase my commute by an hour just to get into Real Estate Investing?  The first episode of BP Money Podcast makes this sound like a loud no.

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What other questions or concerns should I be thinking about?  What would you all do in my situation?  I know it comes down to the numbers and valuations, but what price would you put on commuting and peace of mind?

Looking forward to what the think tank that is BP comes up with!

[Alex Poh]

Thanks @Craig Wilcox

Yeah, this is one of those types of questions where really I just need to put the work in the figure it out.  I was able to speak to a realtor from the area and told him that I was looking to house hack for investment purposes in NYC.

He advised me to hold off on investing in NYC.  According to him, there has been a lot of downward pressure on rent in NYC and that he's seen 10% decreases in his own rental properties.  On top of that, in his opinion the renters in the neighborhoods I am looking to invest in aren't always timely with their payments.  

I'm leaning towards moving somewhere cheaper and investing long distance so that I'll be in a better cash position once NY Real Estate does correct.

I guess I'll be listening to a lot more bigger pockets money podcasts and reading up on Mr. Mustache!