New Investor NYC. Where to Start?

Question

Hello BiggerPockets community! This is my first post!

I want to get started in real estate. I read 4 books on RE investing and currently reading Brandon Turner's "The Book on Rental Property Investing" I live in NYC and know Queens, Manhattan, and Brooklyn very well. I also know Binghamton, NY fairly well.

HOW CAN I USE ALL OF THE BELOW? WHAT WOULD YOU DO IF YOU WERE ME?

I think a have a GREAT  financial starting point but I just need that push in the right  direction. My biggest concern is a lack of cash given NYCS's INSANE  house prices. But in theory I can 0% down VA loan.

WHAT I WANT:

I want to house hack or buy a single-family home to generate income. Then quit my job and go back to school and not worry about being a broke grad student!

WHAT I HAVE:  FINANCIALLY:

(1)   $10,000 in cash to invest in RE that I can afford to loose

(2)  $93,000+ base salary, not including bonus, commissions and over-time which I do earn!

(3)  $0 debt (no car or student loans, or credit card balances)!!!!

(4)   790-810 credit score  (5)  I qualify for a VA loan (I'm a vet)

(6)  My parents own a condo in NYC which is paid free-and-clear ($700k+ equity!)

(7)  I can live there for free whenever I want and save on rent.

(9)  I contribute $19k to my traditional 401k because between employee match and 30% savings in marginal tax, my yearly return is is 65% on that 19k! So I'm unwilling to divert retirement savings money from this into cash savings

OTHER ASSETS:

(1)  Early 30's guy with a great work ethic!

(2)  A decent knowledge of finance and accounting because I work in finance :) !!!

(3)  A good car that runs

(4)  Decent DIY and home improvement skills

(5)  Amazing design skills; I can make crap look luxury like magic (I have spent years honing this skill) Fixer-uppers?

Thank you all.

Darren Sager · Answer

Account Closed welcome to BiggerPockets, and great question for your very first post.  I would say you want to house hack to the extreme and take advantage of that VA loan to make your ROI go to infinity.   Talk to a lender, find out what you can get a mortgage up to.  Get into the most amount of units you can for the budget in a place where you're close to where you need to be, rent out the other rooms in your unit however you can.  Use your mad skills to fix up the place in all the ways you legally can.  Start building equity with other people's rent checks and get it done!

Barry Sanders · Answer

Hi Alex, you will have a harder time cash flowing on zero down but im sure its possible if you buy right.

First educational thing you need to learn is what it really means to cashflow. Its not just covering your mortgage payments.

If you can get off market listings and buy underpriced that is your best bet but if you have few connections and havent yet built a network you will need to buy MLS market deals.

First action step i recommend you do is talk to a lender and see what max loan size you qualify for in the single family and duplex property type. And how much money you need for closing costs.

Once you do that find a house for that price or less where you can at very minimum cover mortgage and utility expenses with your rents while living there for free

You may have to be creative ie: using your living room, attic, etc. as your bedroom to make it work but depends on you and what you are comfortable with. I only say these things because it has worked for others

Account Closed · Answer

Thanks for the comments.

I'm not looking to go into RE full-time. But I do want to diversify my income and have a few hundred bucks of post-tax cash flow a month during grad school. (No unrealistc expectations here).

Krista Kennedy · Answer

Hi Alex,

We did exactly what you are describing— house hack in BK on a VA loan. I have an amazing lender I can recommend to you who did ours. I would like to clarify a few key details:

1- VA loans (0% down) max out somewhere around $700k. We bought a large house in Ditmas Park roughly double that price so we had to put 10% down on half of it.

2- VA loans typically do not apply to apartments or condos so you are limited to homes in the NYC area.

3- We are not even close to positive cash flow, even with a fabulous 3.5% interest on our mortgage. However it is still financially a good deal for us because our former rent money is now going towards our mortgage which is a financial asset.  This was my goal for this property. (However if we had an option to live elsewhere for free we could probably break even or make a small profit.)

4- NYC is very sensitive to Airbnb so if that is part of your house hacking strategy, reconsider. We are not using it, but one of our neighbors thought we were and suddenly we had NYPD and DOB at our door asking questions. Not fun.

Good luck! Feel free to direct message with any questions.

Krista

George Blower · Answer

@Alex Canizales

Welcome to BP!

New Investor NYC. Where to Start?

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