What to do with my first purchase??

[Account Closed]

Hi All -

I bought my first apartment as a primary residence about three years ago in New York City with a conventional residential loan. I completely renovated the apartment immediately and have been living there ever since. As I've become more familiar with real estate investing strategies, I've started to think more carefully about what to do with this apartment. 

By way of quick background, my goal is to build a portfolio of buy and hold multifamily properties and small apartment buildings, starting with one purchase this year. I've started to research a few areas to narrow down where specifically I will make that investment, and I intend to again use conventional financing (although commercial given the number of units).

Having said that, I'm still paying a mortgage on my first property, and while I know I'm building equity, I can't help but feel that the payment is a cash drain. In my opinion I've got three options and I would love to hear BP's feedback on my thinking. 1) Do nothing and pursue the multifamily strategy. 2) Cash-out refinance and rent the apartment (would be subject to sublet fees, etc. from the co-op). 3) Sell the apartment and use the cash to put a down payment on a house hack.

Has anyone been in a similar situation? Would love to hear people's thoughts on any part of the strategy and maybe other options I should be considering.

All the best!

Mike

[John Hickey]

Mike Acri I House hacked a 3 family in Bed stuy in 2006. The first few years if you include closing costs and fees and renovations I was probably out of pocket 150k. After a few years I was breaking even. By year 3 I was making small profit. By year 6 I had most of my money back.

I think that in NYC the market is such a different animal. Even when compared to westchester or NJ. It’s extremely difficult to get property and hold onto it in NYC.

Before you think of selling...and not trading up in NYC......I would speak with other veteran NYC investors. Get their take. Unless you don’t plan on staying here. It’s pretty common to hear of investors selling NYC property to buy assets in another market and later hear that they got lapped a few times in 10-20 years by their NYC neighbors that held on. If they decided to rent in NYC they got taken to the cleaners.

I know many of my fellow westchester neighbors sold property in NYC to move up here by me. That’s pretty normal. Some of them sold 10-20 years ago. They all wish they had kept the NYC stuff. Not always possible financially. The people I bought my current house from sold property in NYC in 1997. The NYC property appreciated at a Crazy rate and the westchester neighborhood appreciated slightly. That’s pretty typical accords the US. Many, many areas stay flat for 10-20 years. You could get lucky and find the next Crazy Midwest market but chances are NYC would do the same thing with much less risk.