BUYING A FIRST PROPERTY IN NEW YORK. HOUSE HACKING STRATEGY ?

Question

Hello Bp team,

I am a newbie to this investment world. I have came across the house hacking strategy and I feel that it fits me. My man focus is on single family/small multi-family. But my question is do anyone recommend investing in condo units especially since I do live in an expensive market. I am thinking of being roommates.

Tracy Belizaire · Answer

@Frank Chin Wow that sounds like a headache ! Lol  Thank You for sharing . I’ll figure something else out!

Frank Chin · Answer

No, I don't do condos any more. The ones I got, got it in market crashes at 60% below market through auctions, and I still live in one, a duplex I got at auction. The ones in MA I got I was blindsided that the building needed $1,000,000 in additional rehab, with 104 units in the complex, each owner is assessed about $10K towards it. I still made $60K profit, bought it for $40K, sold it for $100K after 10 years, even giving the buyer $10K off. I cash flowed about $2K a year, not bad. But compared to what I was able to do in NYC, with duplexes and triplexes, that's peanuts.

Just inherited my mother in law's coop on her passing, mortgage free, but everything needed board approval. Like condos, I got to deal with boards. Normally, they would have a board meeting to approve buyers but because of the pandemic, half the board members are out of town, and signoffs on documents takes several weeks. Because of the pandemic, thankfully, they skipped interviewing the buyer. We sold it, and closing was delayed for 3 weeks because of this. We thought of renting it out, but the process is such a pain, that we decided to sell it. We got a laugh when we asked about renting it out, and was told the owner has to live there at least 2 years before eligible to rent out, and they're not sure inheriting it counts. Rather than dealing with the board, going in circles on everything, we figure we'll just take the money selling the place, and run.

If you're looking to do something in the NYC area, you run into these issues with condos and coops boards with coops more of a pain. Still, they're cheaper than a SFH.

Jaydin Perez · Answer

@Tracy Belizaire

Hey Tracy,

Frank hit a really good point. Condos and townhomes are known to have HOA (Home Owner Assosciations).

They have a bad rap for being controlled by power hungry home owners and, like Frank said, those fees wear down your cash flow.

However, over here in the panhandle of Florida, some townhomes and Condos do not have HOAs. Just be sure to do some research on the MLS or zillow.

Tracy Belizaire · Answer

@Frank Chin Hey thank you so much for sharing your experience! Yea the idea on having to depend on someone else sounds like a headache .  Are you still doing condos or did you move on to a different niche ?

Frank Chin · Answer

I owned a condo where I lived in it. I also owned condos in MA which I rent out. Based on my experiences with them, I would avoid them.

First, there's the issue of HOA's that sets policy. The one I have in NYC was newly renovated, bought mostly by young buyers, and the HOA set unrealistically low fees. Result was the condo fell behind on it's bills, mainly electric for the common areas and central heating. The utility threatened shutoff. Special assessment had to be made to pay them which ran six months behind. That's what happens when finances are in the hand of others and makes budgeting hard for me.

The other condos in MA was in a complex where the HOA hates renters and absentee landlords. Only 20% of the units can be rentals, and I qualifies under the 20% though the HOA tried to lower it to 15%. At first it was OK, but later on they gradually tightened the rules where they have to approve renters. The problem I learned here was in NYC where I owned rentals near COOPS, where the boards approve renters, they take so long that renters rented from me instead, rather than wait for board approval. I normally have no more than a 30 days vacancy between tenants, but waiting more than that, 60 to 90 days, makes it unacceptable for me.

Some people do OK as in many cases, condos are cheaper. But for me, there more minuses than pluses doing rentals.

As to roommates, I condo I have in MA only issue front door keys to authorized people, and roommates, unless authorized will have problems getting front door keys to the building.