NYC: To buy my home or invest first?

[Eric A.]

Question for my seasoned investors and mentors. I'd like to get a healthy debate going here. I live in the very expensive Brooklyn/NYC market. I have about 250k in liquid assets and I earn a high W-2 income. I have a family and I currently rent in Park Slope. My goal is to diversify my income away from my W-2 career and eventually become financially independent one day. The question is, what should I do first? Buy a home for myself (this will definitely cost at least $1mm for the type of place I'd want) or keep renting my residence and use my money to invest in flips/buy and holds with partners? Buying a primary residence will wipe away my liquidity but at least put me in the game of building equity and benefiting from appreciation and get me out of renting. It will also get me a much needed tax break from Uncle Sam. It will take me at least 2 years to build up a similar liquidity again. If I see appreciation, taking home equity out is always an option but this is far from a given, especially how late in the cycle we are. Partnering up and investing in flips or buy and holds gets me into the game of being an investor right away and helps me build a track record for lenders, which opens the door for better financing eventually. However, I'd continue renting and getting no tax write offs against my high W-2 salary. Before anybody suggests "house hacking" in a multi-family, I've been searching for that elusive unicorn in Brooklyn and Queens for the better part of a year, but I've concluded that multi families are way too expensive in neighborhoods I'd want to live in (I have a stay at home wife and two young children). The rent you make from the rental unit barely makes a dent in the huge mortgage payment and then I become a landlord when I barely have enough free time between my family and job as it is. So, what do the mentors and philosophers out there say?

[Account Closed]

@Eric A. I also live in NYC so I feel your pain, maybe even a little more since I am currently living in Manhattan.  I've come to the conclusion that for me it makes more sense to invest my capital in multi-family homes than sink it in a home.   Of course our circumstances are very different so what makes sense for me may not be the same for you.  

I do think that there is room to do both.   You can purchase a modest starter home and invest in a multi-family outside of the city.  If you invest in Yonkers for example you can buy a 3-4 family home for under $500k.  That property will cashflow well enough to pocket a decent amount of cash even if you engage a property management company to run the place.  I've built a portfolio of 18 properties in Yonkers, I know the city very well and would be happy to share some insights. 

Living in NYC means sacrificing.  You can get all the room you want but you're not going to get it in the neighborhood you want and at the price you want.  So if you're serious about buying a home and preserving some capital for investing then you need to be open to moving.  Same for investing.  Make your money in the city but invest it in much more economical areas. 

Best of Luck!