Feeling stuck. Analysis paralysis .help please

[Faysal Alam]

I've been on BiggerPockets for about 2 years now , I've been kind of lost on what to do , I originally wasn't sure if I wanted to house hack in my expensive market of New York City , or invest in upstate NY or out of state . I'm currently renting a 3 bedroom for 1750 , I have my brother paying 1k of that , I'm sharing a room with my little brother , at 25 years old you can imagine how frustrating that may be . My parents stay in the 3rd bedroom . But paying 750 for rent has allowed me to save up 81k in my savings account (not invested because I'm looking to buy) . I have another 12k in my Roth IRA . So in total 93k. I've been pre-approved for a 2 family in Queens , Ny for 750k , I'm looking to house hack . I'd live in the basement unit for about the same amount a month , rent out the top 2 units , one to my family for 1k (from my brother , same amount he's paying now ) and have my parents and little brother live in that unit where I'd get 1k a month , then the 2nd unit would be rented for 2k . Leaving me with a mortage payment of about 750 same as I'm paying now . I saw a 4 unit building yesterday that has 2 units already rented 2 bedroom 1750 and a one bedroom for 1550 . With another 2 units vacant , also can be rented for the same amount (2bd-1750 1bd- 1550) but the apartments are too small to move my family in , so i would probably rent out the whole thing and live in the basement apartment. In this case my mortgage would be about 5200 but id be getting rents for 6600 , which means ill have 1400 left over and a free place to live but id still be responsible for the $750 rent in the 3 bedroom apartment my family lives in . The ask for the 4 plex is 950k but i can probably get it for 900k . would this be a good idea ? (also i can rent the basement out for 1400 once i buy my next house hack so it would be 2800 after the mortage once i save enough for my next house hack . should I go this route ? or hold off till i find something that my family can also move into where i can also live in the basement apartment but would still have to pay around 750 out of pocket . ive been stuck on this for a while now , but in the meantime i am adding 500 a week to my savings . Any help would be greatly appreciated !

[Llewelyn A.]

@Faysal Alam

Hi Faysal!

21 years ago, I did EXACTLY what you mentioned in your first post.... bought a 2 family building in Brooklyn, lived in the basement and rented the other 2 apts, did not have cash flow but at least broke even.

Back then, I bought the property for $340k with a Mortgage of $272k, fixed.

That Mortgage is nearly gone and 21 years of rent appreciation has given me a very decent cash flow as the rents rose way above my mortgage and other expenses.

This is NYC, it is normal for Market Rents to rise very consistently for a long period of time, barely dipping.

That house is current worth $1.7 Million conservatively. The original rents which were around $1k each apt is now over $2.5k each.

Over the 2 decades, I have bought 9 other Brooklyn properties, all based on the ever increasing equity and cash flow of the 1st property. I was able to leave the rat race within 10 years of starting to build my portfolio. I hardly needed any other money since the 1st building, constantly leveraging off that equity, and then the equity of the 2nd, 3rd, etc... to eventually now, buying $1.5 Million buildings all cash in LLCs.

I'm not saying that this will be your future, but it's a very compelling future if you visualize it well.

Don't forget that if you used a fixed rate Mortgage, even if your property does not appreciation, the Mortgage balance decreases over time, and your equity builds up.

That equity then seeds capital to your next deal. The 3rd deal will be seeded by the 1st and the 2nd deal, etc.

The one thing I have to absolutely tell you to do is to become an EXPERT at Tenant Screening. This is your priority because if you screw this up, you are screwed for a long time. Get this right and buy good properties that you can get tenants that can pass a high standard tenant screening, will help ensure you will NOT encounter too many bumps in your road to achieve equity growth.

Lastly, I did rent to one of my brothers, but I had explained to them that it's a business. If my expenses go up, so do theirs. I also put my Brother through the same tenant screening process because like most of us here, we got screwed by relatives.

However, my brother had a good job and was financially responsible. So it all worked out in the end.

Good luck to you, even if you choose to not buy in NYC.