Affordable multi-family within commuting distance from NYC

[Justin C.]

I am eager to get started in multi family investing and am hoping to do so by buying and living in a multi family home (probably using an FHA loan). The challenge which has held me back for the past 2 years is that I live and work in manhattan and am recently out of college (24 years old).

Buying in manhattan isn't realistic for me nor does it provide me with a good enough cash on cash return for someone starting out (even if I did have the money to buy a multifamily here, I'd want to invest elsewhere). However, I am willing to move and make a commute to work each day in order to get started in real estate investing now.

I would like to be able to get to grand central terminal within ~45-60 minutes, and would be looking to purchase a 2-4 unit (hopefully 4) multifamily where I could live in one unit. I want it to be a safe and reasonably desirable place to live. It would be ideal to get 4 units for 500k or less (of course, I would be looking to maximize rent relative to purchase price) but I am really just looking to learn about what's out there.

I don't know the surrounding area very well and am wondering where you all would suggest looking. Much appreciate the help. Thanks,

Justin

[Kevin K.]

@Justin C.

I can give you some insight on most of Hudson County, NJ (Hoboken, Jersey City, Union City, North Bergen, Weehawken, West New York, Guttenberg...I don't know Bayonne, Secaucus or Kearny that well).  You may want to open up Google Maps to find the neighborhoods I mention here, and use it to map out your commute.

You will rarely/never find MF at less then $150K/unit in Hoboken, downtown JC or the waterfront (mostly high rise) so forget that...cash on cash returns there are crap at the moment anyway...pricing is based on a condo sales market since prices are now well over $600/sqft for newly renovated condos.  Journal Square area is doable but has become pretty popular because of all the glitzy headlines recently about Kushner's new high rise rental coming to the area.  JC Heights area is also doable.  I would generally avoid Greenville and West Bergen in JC, although some areas along the 22nd St Bayonne light rail are reasonable I've heard.  Bergen/Lafayette area closer to light rail is somewhat blighted but changing.  Could find good value there potentially.

Union City is mostly hispanic but has relatively inexpensive multi-unit buildings where cash on cash returns are still attractive, and it's relatively safe.  For a midtown commute, live somewhere near a bus to Port Authority.  If I had to pick a place, I would live in the Union City area close to Weehawken along Park Ave, but many other areas of UC are good commute to Port Authority.  I have tenants who commute to midtown from my rentals in UC.

Weehawken is pretty expensive and mostly above your target price per unit, and also relatively lower cash on cash returns.  West New York has good value still.  North Bergen is probably a bit more difficult commute except for the parts that are close to the Hudson River.  Guttenberg is such a small area so I rarely see deals there.

Another thing to keep in mind about the cities in Hudson County, all the cities have their own rent control laws so you have to know each (most are on the city websites).  The good thing is that most rent control laws have exemptions for owner occupied units up to a certain size (3 or 4-family usually) so you should be ok.  But if you move out, I think it falls into rent control so you should always ask to confirm if rents are registered and where the registered base rent currently is.  Rent control in these areas usually means that increases are capped to CPI (usually) or just a few percentage points, and you can usually get temporary or permanent increases in base rent by improving units (most are temporary but I think JC is permanent, some places like UC recently repealed their improvement laws so it can change, but I've heard it's coming back).

Good luck.