4 Family in Ridgewood/Queens, NY

[Jon Arteaga]

Hi All,

I'm looking to help my cousins out. Their parents bought a 4 family house in Ridgewood in the early 90s and its value has increased tremendously. Its valued at 1.2 million dollars based on the recently sold comparisons and cash offers they've received. The house was built in the 1920s and needs some updating on the inside (its last been updated in the 80s). Rents are low due to close relationships with the tenants and are currently $1400, $1300, $1600 and the owner occupied (parents). The house has 20k left to be paid off and one of the cousins works in Times Square and is looking to occupy one of the apartments. A full renovation would cost easily $250k. Rents for three nearby homes are $2500-$2700 for a 2 bedroom, 1 bath apartment. In my opinion, they should leave the house as is and try to maximize its rent potential ($1800 each apartment?) with the existing condition or more cosmetic improvements. The surrounding apartments had major improvements that maximized the space (larger windows, removing hallways and changing entrance, decks, cameras etc)  and created a very nice space. In my opinion, they should take out a home equity loan and buy another house in the area that is a rental and let it bring some cashflow. All opinions and options are welcomed... I personally am in favor of leaving the building as is with some improvements (Kitchen/Bath/Floors), investing maybe $80k into the house and using the rest of the money to buy another property nearby. 

[Josane Cumandala]

This is a nice problem to have! I live in Bushwick not too far from Ridgewood. I also appraise real estate in Manhattan and Brooklyn. In my personal and professional opinion this is probably not the best time to buy a rental property in New York City. Inventory is super tight, the market is pretty flat, rents are falling and landlord concessions are high. Granted, this data is skewed towards the high-end A-class properties but even on the lower end of things at least for now rents seem to be pretty stagnant. There is still opportunity out here but a lot of it is going to be reserved for major developers and institutional investors. 

It's not a bad idea to take some of that equity out now while the market is still strong and do SOMETHING with it, just be aware that real estate is very cyclical here and we are most likely near the top. I would not buy something now with the expectation of the same amount of appreciation we saw in recent years nor would I expect a significant increase in market rents for any particular neighborhood. There's just too much oversupply in the apartment space that will take several years to absorb. 

And be aware that it's probably better to do some improvements now before they become serious deferred maintenance. If nothing has been done since the eighties it's probably not a bad idea to look at the roof, windows, foundation etc. 

I hope that helps. Best of luck! :)