New to REI from New York / NYC

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New to REI from New York / NYC

Gregory Mizzi
Member since 2020 · 12 posts · 1 vote

My name is Greg, I am 30yrs old and I live in NYC, specifically Manhattan. However, I was born in Queens and lived in Brooklyn for a few years. I was born, raised, and lived in NYC all my life. I have zero experience in real estate. My parents have always rented and I currently rent. My main job is in Office Operations for a tech company, which involves some commercial real estate projects whereby I work with the vendors and contractors among my other duties. Ideally, I want to purchase my own home and grow my portfolio so that I can retire early. My current goal is to be financially independent by the age of 40.

I currently have a $70K stock portfolio that usually does very well, market downturns notwithstanding, plus ~$30K in unvested employee stock options and a continuous employee stock purchase plan. Overall, I should have ~$100K invested by next year assuming there is no crash (though I do think there will be one in the next few years considering all the stimulus money being "printed" but no where to really spend it yet, among other reasons). My current goal is to continue investing regardless of volatility, buying low during a dip and holding.

When it comes to real estate specifically, I watch videos and read articles about how people become much more well-to-do more quickly through real estate than other forms of investing if done correctly. After watching YouTube videos about real estate from users, such as Graham Stephan, I was eventually suggested a BiggerPockets video about analyzing a deal by doing an in person walkthrough and the rest is history. Typically, I listen to the BiggerPockets podcast when I can and I have two BiggerPockets books, one by Brandon Turner and the other by David Greene.

With all of that out of the way, my real estate journey is just beginning. My current state is what you might call uneasy for a number of reasons. One, the biggest hurdle in my opinion is the NYC housing market. It is overpriced and overvalued. I am not comfortable investing here. My current paycheck affords my rent (which is 50% of my net income), which leaves little room to save between food, utilities, helping my wife through college, etc. What I do "save" goes straight into my portfolio. I am, however, debt-free* (insofar as I pay my credit cards off immediately as I use them for everything to accumulate points, therefore I carry no balance or incur interest charges). I am also shooting for a promotion at my job which would require me relocating to Denver, CO. Which, if it does not work out, I plan on moving anyway because, despite living here all my life, I do not like NYC. Therefore I have considered long distance real estate investing (which is covered in one of the books), and waiting until I move out of the city so that I may have more disposable income to work with. I have been mulling over some strategies that could possibly work for me in the near future, but that is for another discussion/thread.


Thank you all in advance for taking the time to read and respond to this. My notifications are on and I look forward to being more active.

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Jeff WhiteBusiness Member
Realtor · Denver, CO · Member since 2016 · 278 posts · 371 votes
5y

@Gregory Mizzi Sounds like you are motivated to take action, that is the first step. I can't speak on NYC market, but I know it is a tough out there with how expensive it is for people not making 500k per year. 

I know Denver very well, and I think it would be a great market for you to invest in. It has great appreciation and long-term growth. Cash flow isn't the primary motivator for most investors out here, but there are strategies to achieve better than average returns out here (rent by room, Airbnb, etc).  In addition, we have lots of New Yorkers, so you would feel right at home, but with sunny days in the winter! 

Long-distance investing can be challenging without a great team in place.

Of course, there are plenty of markets in the Midwest and South that would be the bill for cash flow, but a lot of those markets don't have much appreciation or long-term potential.

If you get your promotion, what are you goals and strategies? Do you want to house hack with your wife?  Live in a multifamily?  Live in a nice home and invest in investment properties? Buy a house with basement apartment?  Rent by room?  Airbnb?

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  • Jeff WhiteBusiness Member
    Realtor · Denver, CO · Member since 2016 · 278 posts · 371 votes
    5y

    @Gregory Mizzi Sounds like you are motivated to take action, that is the first step. I can't speak on NYC market, but I know it is a tough out there with how expensive it is for people not making 500k per year. 

    I know Denver very well, and I think it would be a great market for you to invest in. It has great appreciation and long-term growth. Cash flow isn't the primary motivator for most investors out here, but there are strategies to achieve better than average returns out here (rent by room, Airbnb, etc).  In addition, we have lots of New Yorkers, so you would feel right at home, but with sunny days in the winter! 

    Long-distance investing can be challenging without a great team in place.

    Of course, there are plenty of markets in the Midwest and South that would be the bill for cash flow, but a lot of those markets don't have much appreciation or long-term potential.

    If you get your promotion, what are you goals and strategies? Do you want to house hack with your wife?  Live in a multifamily?  Live in a nice home and invest in investment properties? Buy a house with basement apartment?  Rent by room?  Airbnb?

    3Reply
  • Gregory Mizzi
    OP
    Member since 2020 · 12 posts · 1 vote
    5y

    @Jeff White I have been looking at Denver for about a little over a year now ever since my job mentioned they were building an office there. It looks and sounds ideal from what I have read and have seen from YouTube videos about the various neighborhoods. Winters can be kind of miserable here but sometimes nice. Though the slush can last for a good month. And despite being a from the city, I enjoy the outdoors quite a bit, so Denver seems to be the best place for all my wants, so I am really gunning for that promotion.

    For the long distance bit, I originally looked at Cleveland, OH since it was not too far from NYC and inexpensive, but I do not want to buy just because it is low. It could be a money pit with no returns and the city, from what I researched, is not growing much. I have been looking more recently at Houston since there seems to be a trend of people moving to Texas lately, and their homes are cheaper than Austin. Most of these searches are for mock analyses to see what a potential ROI would be using conservative estimates (such as using a 70% loan to value on a potential cash out refi on a BRRRR). So lots of practice and theory for the moment. I am always amazed at how far my money could go elsewhere. $300K in Houston will get me a mansion, but here in NYC it might get me a shoe box studio. Single family homes in Brooklyn where I used to live were going for $1.2M+. Not only were they were nothing to look twice at and had no parking either. NYC real estate is nuts.

    If I do get the promotion, or I find another job and move, I have been thinking of a strategy. I was going to post another discussion about it, but the gist of it this: I want to BRRRR to build the equity and net worth. Cash flow is secondary for me currently. Enough to pay the mortgage and repairs, or at least a significant percentage of it would be enough for now. However, I am under the impression from doing some hypothetical analyses and reading some discussions here that BRRRR's are better with at least a 20% down, and that doing an FHA or VA loan (my wife is a veteran) will probably not leave enough left over to cash out. I could use my portfolio money, but I would rather not between the potential for loss and the capital gains tax. So I was considering buying a fixer-upper, living in it for a year or so with an FHA or VA loan, sell to realize the entire value (minus the loan) as profit, not just 70%, then BRRRR. Best way I can describe it is a long term flip with a conventional mortgage vs. and interest only loan since I will be living there. It is slower, but safer I think. That is the current strategy I have been thinking about for a few days now. I do like the idea of house hacking, so a duplex (especially if it needs work), triplex or fourplex would be fine as well. Though I do not think I could realize enough money for a down payment from a duplex rental fast enough to BRRRR. But a tri or fourplex could work, so I am open to that if one happens to be available in my price range at the opportune time (whenever that might be). I know renting by the room and AirBnB's can have higher potential rental income, I just hate roommates. Neighbors? Fine. Roommates? No thank you. It could work in a multi family, but not if I buy a single family. I am after the appreciation, especially forced appreciation through renovations.

    0Reply
  • Jim Cummings
    Residential Real Estate Broker · College Station, TX · Member since 2013 · 1k+ posts · 969 votes
    5y

    @Gregory Mizzi. Regardless of where you decide to move to, I think there is a lot of wisdom in Bigger Pockets Podcast # 448

    https://www.biggerpockets.com/blog/biggerpockets-podcast-448-dion-mcneeley

    The Lazy Person’s Guide to Financial Freedom in Less Than 10 Years with Dion Mcneeley
    0Reply
  • Alexander Szikla
    Real Estate Agent · New York City · Member since 2020 · 819 posts · 641 votes
    5y

    Have you considered house hacking via FHA in NYC right now. If you can get a 4 unit and a basement, that would be ideal and create major cash flow and equity creation, plus you can not worry about a property manager and boost your yield.

    Personally, I am very bullish on New York and NYC itself. Sure it suffered due to COVID, but you want to buy when there is distress. I think all the folks who moved away are already getting bored and already coming back. Plus, the vaccine is getting rolled out which will curb the spread tremendously. Now is the time to buy.

    Cap rates came all the way down to 3% (or below!) during the "boom" times but COVID has loosened everything up and now 5% can be had in Manhattan, 6%-7% in Brooklyn and even 8% in the Bronx. Nationwide rates hit a low of 2.7% - so there has really never been a better time "spread" wise.

    Long term, I think NYC will come back as it always has time and time again. I am also a great believer in investing when there is distress and deploying capital when you can.

    If you are looking for yield in the short run, Manhattan may not be for you. However, it is certainly the most attractive it has been in years from a cash flow perspective. If you are seeking out asset accumulation and equity appreciation over the long term then there are certainly fortunes to be made. And there is still plenty of cash flow opportunities in the outer boroughs if you buy right!

    0Reply
  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    5y
    Originally posted by @Gregory Mizzi:

    My name is Greg, I am 30yrs old and I live in NYC, specifically Manhattan. However, I was born in Queens and lived in Brooklyn for a few years. I was born, raised, and lived in NYC all my life. I have zero experience in real estate. My parents have always rented and I currently rent. My main job is in Office Operations for a tech company, which involves some commercial real estate projects whereby I work with the vendors and contractors among my other duties. Ideally, I want to purchase my own home and grow my portfolio so that I can retire early. My current goal is to be financially independent by the age of 40.

    I currently have a $70K stock portfolio that usually does very well, market downturns notwithstanding, plus ~$30K in unvested employee stock options and a continuous employee stock purchase plan. Overall, I should have ~$100K invested by next year assuming there is no crash (though I do think there will be one in the next few years considering all the stimulus money being "printed" but no where to really spend it yet, among other reasons). My current goal is to continue investing regardless of volatility, buying low during a dip and holding.

    When it comes to real estate specifically, I watch videos and read articles about how people become much more well-to-do more quickly through real estate than other forms of investing if done correctly. After watching YouTube videos about real estate from users, such as Graham Stephan, I was eventually suggested a BiggerPockets video about analyzing a deal by doing an in person walkthrough and the rest is history. Typically, I listen to the BiggerPockets podcast when I can and I have two BiggerPockets books, one by Brandon Turner and the other by David Greene.

    With all of that out of the way, my real estate journey is just beginning. My current state is what you might call uneasy for a number of reasons. One, the biggest hurdle in my opinion is the NYC housing market. It is overpriced and overvalued. I am not comfortable investing here. My current paycheck affords my rent (which is 50% of my net income), which leaves little room to save between food, utilities, helping my wife through college, etc. What I do "save" goes straight into my portfolio. I am, however, debt-free* (insofar as I pay my credit cards off immediately as I use them for everything to accumulate points, therefore I carry no balance or incur interest charges). I am also shooting for a promotion at my job which would require me relocating to Denver, CO. Which, if it does not work out, I plan on moving anyway because, despite living here all my life, I do not like NYC. Therefore I have considered long distance real estate investing (which is covered in one of the books), and waiting until I move out of the city so that I may have more disposable income to work with. I have been mulling over some strategies that could possibly work for me in the near future, but that is for another discussion/thread.


    Thank you all in advance for taking the time to read and respond to this. My notifications are on and I look forward to being more active.

    You are in a good company Gregory!

    0Reply
  • Gregory Mizzi
    OP
    Member since 2020 · 12 posts · 1 vote
    5y

    @Jim Cummings Thanks, I will check it out. Certainly sounds like it fits what I want to do.

    @Alexander Szikla I see what you are saying about NYC, however I am fairly bearish on it. I hear from people all the time that they pay too much rent for a place they can do nothing in. That, even pre-pandamic, they never had the money to really enjoy living here. Between the ludicrous rents, insane home prices, businesses being destroyed by the lockdown and unyielding commercial rents, I do not think NYC will be a place worth living for a long time. The small businesses that make it worth it are being replaced by Citi banks and Starbucks. I hear it from recruiters at my tech job, why should people who can work from home move, live or stay here? The numbers are certainly attractive but from my perspective and my own opinion about the city between high rents, everything being overpriced, taxes being very high, homeless issues, drug issues, the rise in violent crimes and the overall filth of the city, it is not worth the bet. At least not for me. I feel like I pay a premium to live in a pigsty. Even if I did consider house hacking here, the price of multifamilies are way outside my budget. Even if I could swing the downpayment I could not afford the mortgages, and I would want to be able to afford the mortgage when there is no tenant picking up the slack. I also really want to move.

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