A Strategy For Getting Started in NYC (from a newbie perspective)

[David Diner]

I'm hoping for some insight on an idea for getting started in NYC. I'm largely basing this off of what a friend of mine did while at University (bought a run-down, but livable house with a group of friends for $75,000, fixed it up over four years)

For example, (I just picked a random house on Realtor.com in Bay Ridge, Brooklyn with 5+ bedrooms for less than $1,000,000). Now I happen to work in a lab with about seven people on average. Asking a couple of them to share a room (although weird) wouldn't be out of the question. Let's also assume that a couple of professors are interested in doing a real estate deal (but they say they don't have the time / no where to start). Some back of the envelope calculations. 25% down payment ==> $200,000. (I don't know how to determine closing costs... I've been meaning to look that up, but I'll just use 10% for now, please correct me if this is low or high) so add another $80,000. That's $280,000 we need to bring to the table. So now the problem becomes how do seven grad students and a professor come up with $280,000. Split evenly... this doesn't seem doable. but... if seven grad students contribute $140,000 and the professor contributes $140,000 all of a sudden, you're looking at something possible (The students that were in industry before going back to school definitely clear this, Otherwise, it just takes a year or so of saving your stipend to be able to contribute the necessary amount). The monthly payments work out to about $5,500 (back of the envelope calculations). Split seven ways, this yields $800 per month (plus utilities). Now most students I know are paying ~$1500 on rent (based on word of mouth). If the lab members agreed to pay $1250 a month (put another way, that's $3000 a month to help offset the professor initially). So here's where things get interesting. What happens when the initial batch of grad students graduate? There's still $3000 a month coming in from students. Let's say half goes to the professor and half goes to the rest of us. That's an extra $200 per month for a bunch of people fresh out of grad school. Well... that's not much. So let's fast-forward a bit and assume we've put in some sweat equity so the house is the nicest on the block. Other homes in that area are selling for about $1,000,000 So I'm going to assume that we can get at least that much. Let's also assume that we only get to keep $900,000 (after fees and such). Well, this let's us get started in NYC. 

I know this was long winded (and it is very long term oriented), but let me know (if at a high level) it seems viable. If it does, I might start drilling down into the details and I would love to connect with other students who have done house hacking (or are thinking about doing house hacking)...!!!

~Diner