Possibly Jumped the Gun: NY Investment Property

[Selena Williams]

Hello all. Newbie here, lol.

I currently own a co-op apartment in Manhattan and I’m looking to sell it and buy an investment property (multifamily home) in Brooklyn. I estimate after closing costs I will have about $150k. I put my place up for sell thinking with that type of down payment I could easily get at least a two family in this market but I really should have done my research.

I've seen people mention that investors are able to purchase with as little as 3% down but does that apply to a market like New York? The cheapest multifamilies I'm seeing that are turn key are $999k. Even if I put the whole $150k down I would still need a loan for more than $679k - what I researched the max is for an FHA loan.

Did I try this too soon? Should I wait until I have more equity in my place/paid off more of my loan so I have more to put down? I’d love to make the move now but if I end up paying a ton of fees that eat into my rental income or simply can’t do it that would suck. I already have two offers on my current place.🥺

[Alex Horelick]

Hi Selena,

You can certainly leverage that $150k to buy a rental in the NYC area that cash flows. FHA limits are different by each metropolitan area and type of property. You can get a 1-4 unit through FHA in NYC and the surrounding areas for 3.5% down however the standards are stricter for 3-4 units so the numbers on those deals typically don't fit in this market. I can explain all of this if you like - it's sort of my specialty with my clients I work with as an agent. Basically you're best move is likely to buy a 2 unit property (because the FHA guidelines make it near impossible to fit the numbers on 3-4 units in this area) and FHA will loan up to $930k in this area on a duplex which is a $32,550 down payment @ 3.5%. You can put down more if you like of course. The rental income will help with the affordability but they will only credit you for 75% of it when you go to qualify for the loan so the loan amount that you can take essentially depends on: your down payment, your personal income and assets, the rental income of the property and the expenses of the property like tax and insurance. You can send me a PM if you want more details or to make time to talk I'm happy to help!