Any tips for trying to House Hack a multi-family in Brooklyn?

Question

My family of six plus our live-in nanny are looking to relocate back to NYC and we're interested in buying a 3-4 family home in Brooklyn and living in one of the units. For personal and logistical reasons (i.e. work, social, and school), we're primarily interested in the following neighborhoods: Greenpoint, Williamsburg, Bushwick (bordering Williamsburg), Crown Heights, Prospect Heights, and Prospect Lefferts Gardens. My husband and I make around 650k gross (we will continue to work remotely with our current employers) and we currently have about $600,000 between our savings and taxable brokerage accounts. Can we house hack in one of these neighborhoods and have a positive cash flow? What would our financing options be for a property around 2-3 million? Thanks in advance for any insight!

Eric Hajdu · Answer

@Nicole Sharpe

Congratulations on your decision to move to BK, we’re raising our children here and wouldn’t live anywhere else.  In regards to your post, if you house hacked in any of those areas, you might be able to cover your mortgage, but cash flow would be tough.

There is a large difference of availability and price amongst the various areas you mentioned.  For instance a property in Williamsburg is as at least double a similar one in PLG.  Beyond that, there is large price differences within the areas themselves depending on location.

Also, I’m not sure if your doing public or private school, but all the areas you mentioned are not very strong school districts.

Lastly, I think with your financial profile you’d be fine to purchase a the type of property your looking for with 20% down.  You and your family would take 2 floors and rent out 2 units.  You are very smart to do this, we went the luxury condo route, and in hindsight it would have made so much more sense to house hack.

I’m in the process of buying a multi family home in Cobble Hill Brooklyn as an investment, feel free to message me with any specific questions.

Jonathan Greene · Answer

@Eric Hajdu nailed it for you. I grew up in Brooklyn Heights and lived back there and in DUMBO about 10 years ago and wished I would have bought the brownstone I was renting in when I could have. You can definitely do it with your financing and income, but with 7 people the size of the units might be a problem in a multi for the whole family. You would not cash flow, but could get a little back by buying a big two or three, with one big family unit and two small ones, with one going for the live-in and one to rent.

Ahmed Saad · Answer

Hi Nicole,

I live in Brooklyn. I think what you're looking at is very doable. Eric's comments are spot on. As far as cashflow, that will likely depend on the property and the deal metrics. The lower your down payment, the higher your monthly payment thus the lower your monthly cash flow. If I were you, I'd look at buying the right property. If it's a 3 family, try to get a 4 story property; with the garden duplex and the 2 rentals above. If the rentals are 2 bdrm, you'll have better rent than just the 1 bdrm. Also, make sure you're agent helps you calculate what the new taxes will be. Once you buy, the taxes go up. If the property hasn't changed hands in a while, there's a good chance you'll be in for a solid increase.

Alexander Szikla · Answer

Unlikely to cash flow if you are living in one of the units - but hey, you are putting cash into an appreciating asset!

In the $2 mm - $3 mm range, you would not be eligible for FHA. So likely a traditional 20% down option.

Have you explored Sunset Park / Gowanus / Red Hook? That area is gentrifying quite nicely and you can find more value there.

Ben Lin · Answer

@Eric Hajdu gave you a sound advice.

I would make the move sooner than later because there are still deals to be had in BKLN. Not sure for how much longer because I am seeing a trend of people moving back to NYC from the suburbs and from other states, now covid restrictions are mostly eased. When the pandemic is over I am predicting a strong real estate market in NYC as people want to be in the city.

I've traveled all over the world and I can tell you there is no place on earth like NYC. NYC is the capital of the world, thus If the city doesn't make a come back we are all doomed LOL.

Good luck!

Nicole Sharpe · Answer

I appreciate all the responses!

@Eric Hajdu Thank you for your insight! We're going the private school route so location is not an issue in terms of schools. I'm going to take you up on your offer to message you. I'd love to hear more about your buying experience.

@Ahmed Saad Thank you for your response! You made some good points.

@Jonathan Greene Size is definitely going to be an issue. After writing my post and crunching numbers, I think my best case scenario is to have a net loss that would be lower than renting a huge townhouse.

@Alexander Szikla I actually really love Red Hook and Gowanus be we want to be in walking distance from friends and family to maintain our sanity so none of those options would work for us.

Any tips for trying to House Hack a multi-family in Brooklyn?

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