Brooklyn Live-In Equity Investment

[Peter Golfman]

Hi Folks,

Disclaimers: planning to live in Brooklyn for next 10 years, recognize that its an equity play, not a cash flow play. Currently paying $2700 a month for rent in Brooklyn. 

Considering a deal in Bushwick, Ridgewood (I know that's technically Queens) Bedstuy, Crown Heights. The ideal place doesn't need a gut renovation, but does need new fixtures, paint, etc. I've seen several places that fit the bill. Would live in one unit, rent out the other 1 or 2 units. Continue to work on the unit we live in it. Eventually, would rent that unit as well if the numbers work.  

Here is the catch. While we have a reflectively high income (near $200k year and good future projections) and a strong network of people with experience doing renovations, we don't gave the 20% downpayment. The solution is to pitch several extended family members who can help. Assuming their interest, what do people recommend for an investment proposal? One option is to pay back in monthly payments, ensuring interest comparable to stock market returns. The other is to offer equity, or some combination of both. Additionally, down the road a cash out refinance to pay off the family investors is a possibility, assuming our income increases. 

The basic model for discussion purposes looks like this (subject to many factors, I know):

House cost = 1M. Downpayment = 200k (to avoid PMI). That leaves a monthly payment of approx. $5,000. We should be able to collect $3000 (conservatively) in rent. That means we could pay the remaining $2000 of the mortgage our of pocket, while still paying $1000 to the family investor. Result is we pay similar to our current rent while building equity.

Please feel free to direct message me with leads/ideas. THANK YOU ALL!