NYC/NJ Investor Question - B&H vs F&F

[Maxwell Dolgin]

Hi All,

I've been searching the NYC/NJ area for approx. a year now, analyzing different markets and trying to figure out the best areas to attack for my first RE investment (don't want to screw it up). At this point in time, I have two buying opportunities that are two different strategies; buy and hold, versus renovate/fix and flip. Both are opportunities, however I would like to ask to the Pros which one may be better as a first time home buyer/investor, as I do not have anyone in my current network that would be able to advise. Here are more details:

First opportunity is a buy and hold 4-unit property in Yonkers, which could be a good option to walk into as a first time buyer as I will start off cash flow positive, but it's in an area that will not see as good annual appreciation as the 2nd opportunity. The 2nd opportunity is a 2bed 1bath condo in Brooklyn. It can be rented out in it's current condition, however it needs to be renovated to command market rents. I believe it is currently about $100k under what a renovated condo would go for at the same size in that area. For both of these properties, I will be using a 5% down payment through a first time home buyer program, which also I also need to think about which property may be better to use that with. I will not be able to use a first time home buyer program for any purchase after the first (obviously). One caveat to the condo - there is another 2BD 1 BA condo for sale in the same building, but in a better condition with 100 more SQFT, for $40k more ($540k), and has been on the market for 100 days. This is concerning because its telling me that if I renovate my condo, I can only sell for $40k-ish more. What makes this more confusing, is that all the other similar 2 bedroom condos comps in the area are selling for $600k+, so I'm not sure why this particular building is under valued. The building is a normal brick building, nothing odd about it. Someone please shed some light!

Here are more $$ details:

Buy and Hold:

Yonkers 4 unit multi-family house (5 minutes to Metro North station)

Monthly expenses: $5k

Current rent roll: $6k (can be increased with more renovated units, and current landlord keeps rents low to keep tenants)

Renovate and Flip:

Brooklyn (Bed Stuy/Bushwick) Condo 2 Bed 1 Bath 850 SQFT- 5 minutes to J/M train station

$500k Purchase price

Monthly expenses: $3.2k

Estimate monthly rent: $2.2k, $2.5k renovated

Thank you all for your time and input!

Max