Areas in and around NYC that cash flow as house hack ??

Question

Hey guys! Me, my wife and 3 year old son are looking for areas just outside of NYC (or perhaps Brooklyn/Queens) that have multifamily properties that we could possibly live in and that would eventually cash flow after 12-18 months of living there, moving out, and repeating in a new multifamily, all the while taking advantage of lower money down on FHA loan. I know this makes the mortgage higher due to less money down upfront, but that is the only way we could afford to get in a multi family home in our area it seems.

Oh and the kicker! The area must have decent schools. Maybe NJ, New Rochelle, Mount Vernon, Yonkers, what else am I missing? I know this will likely drive the property taxes way up, hurting potential cash flow. We need to be able to commute into the city without a car, and live in a district with a good school.

This is the ultimate conundrum for us, and we’re often led to believe that investing in multi family units remotely in cheaper but growing areas of the Midwest while continuing to rent in Brooklyn makes more sense for our goal of achieving financial independence within the next decade.

Any thoughts, tips on areas I may be missing or opinions on the numbers in areas I mentioned would be greatly appreciated! Thanks!

Alex Horelick · Answer

Hey @Thomas Hartman,You can find these types of deals in Westchester and the cashflow numbers will be better than in NYC. I work on a lot of these deals with clients and folks from BiggerPockets looking to house hack. I also live in a house hack myself - couldn’t recommend it more! You can do a little better with the school districts than Yonkers, etc. There are good areas here with a bit better schools that also are a quick drive or metro north ride into NYC! If you are willing to do a rehab loan (FHA 203k) then you will expand these options even further!

Abel Curiel · Answer

Hey Thomas,You and your wife certainly have the right plan in mind as far as house-hacking. An attractive plan B in high priced cities like NYC is typically to rent... but when you do the math over time, it doesn't stack up well against house-hacking.House-hacker clients of ours in BK, Queens, Bronx and Long Island have done low-down payment FHA and even VA loans on properties that will cash flow once they move out and rent the space they currently occupy. Whether this is possible for you would depend on your pre-approval amount as that will show you what options you have. Once you have the PA amount, you will be able to see what kind of buying power you have in areas with desirable schools and what your total monthly mortgage would be. At that point, all you need to know is the market rents and you can determine.Areas outside of the ones I mentioned above certainly have lower-priced homes (many with higher taxes) AND good schools. The main downside there is that you'll be expecting lower annual appreciation. With respect to future potential cashflow, good commute to NYC via public transportation, AND good schools - You'll find what you're looking for in NY, NJ, CT, or PA.Best of luck to you on your journey!Abel

Adam Cherko · Answer

I completely agree with @Alex Horelick and @Abel Curiel, and what they have written, I similarly am doing the same thing. I’m originally from New Rochelle and was able to find a great duplex walking distance to The New Rochelle Metro North/Amtrak station as well as walking distance to the Pelham station. I am a product on New Rochelle’s diverse public schools and would never trade that! I was able to easily complete a 4 year architectural engineering degree with ease at the school of my dreams, and I owe that to the incredible education I received in New Rochelle. There are other options as well depending on your price point. the biggest thing to keep an eye out for is the number of bedrooms in each unit. As you are aware a building with 3 - three bedroom apartments will rent for significantly more than a building with 3 -one bedrooms. There are a few other factors I considered when I bought mine a year ago. We do have a property for any flavor here in westchester but given your variables they may need to be looked at on a case by case basis, but that’s no trouble.

Joshua Farley · Answer

@Thomas HartmanSorry app crashed before I could finish. My last thought is how low property taxes are in brooklyn and queens for a two to four family house. Our taxes are only 2600 a year. Have gone up 800 dollars in the last 8 years. Feel free to send me neighborhoods you are looking into and I can give you my two cents. Cheers and Good luck,Josh

Joshua Farley · Answer

@Thomas HartmanEveryone above has given you great advice. I live in a two family house in Prospect Heights, Brooklyn. Live in the bottom triplex about 2400 sqft and rent the top floor on Airbnb. This generates an average of 5K a month for an 850 sqft two bedroom apartment. Cleaning costs usually are 700 a month. We were luck to buy our turn of the century brownstone in 2011 for 520K. Had cash and good credit during the recession. We paid the house off last year. If I was starting again in today’s market I would look in forest hills queens area. I would rent an apartment in the area so you can walk for dollars and meet people that can help you find a diamond in the rough. My kids are in public school in brooklyn. They are getting the best education out there. In class with kids from every ethnic group and every soci-economic class

Alex Horelick · Answer

@Thomas Hartman - I sent you a private message

Thomas Hartman · Answer

@Alex Horelick hey thanks for your responses ! Could you clarify what areas you’re aware of north of the city that have good schools, or at least better than Yonkers? Our son will be in Pre-K from this coming Fall. Also planning to have another kid soon. Schools, Safety, getting into the city relatively easily with or without a car and ideally a diverse crowd of people are important factors for us. Would love to chat more about this ! We’d ideally want to get started on our first house hacking property in the first half (maybe even first quarter?) of 2020. At first I would plan to manage the property on my own, but do you know good and reputable property managers with references, as well as contractors? And would you be willing to connect me with folks you’ve helped out to find a house hacking multi family in these areas in recent past? Also could you elaborate on the rehab loan (FHA 203k)? Sorry for all of the follow up questions, but I’m looking forward to connecting ! Tommy