Initial investment property in NYC

[Sahil Rohra]

Hi everyone,

I am new to the BP community, and looking to invest in NYC/NJ with 2 friends I grew up with and have been stuck in "analysis paralysis" while reading books, forums, and listening to the BP podcasts.  We grew up in NYC and are looking to get our first rental investment property somewhere close to home (to start).  I am hoping to get greater insight on the below in order to take the next step.  

Both of my questions are pretty common, basic questions - but thought I'd put them out there in an effort to end this perpetual "analysis paralysis" loop. Thank you all for your help in advance.

1.) Everyone mentions starting an LLC for asset protection, etc. We have been entertaining going this route, but not primarily for this purpose. Given we plan to invest together, we thought an LLC would help as it would keep us from having a loan in just one or two people's names. But with that comes the challenges of securing a conventional loan. We have found lenders out there willing to underwrite a loan to a LLC, but at a higher interest rate. As for asset protection we were thinking of looking into umbrella coverage. Just wondering if anyone has any recommendations on how to handle the above? Is it possible to get a loan in 3 peoples names? Does anyone recommend any lenders that issue loans to a LLC?

2.) We are very numbers based, and through research we gathered a good sense of what makes for a good investment from a metric perspective (i.e. preferred cap rate, CoC return etc.). Granted every market is different, problem is finding deals in the metropolitan NYC and NJ area which satisfy these benchmark metrics have proven to be challenging. Wanted to reach out to see if this is just the reality in NYC given the high prices, property taxes, etc? In which case, is it unrealistic to expect these "ideal" returns? Or is this more a product of not looking hard enough to find a good deal?

Currently, we are open to SFH or 2-3 unit multi-family homes.

Thanks again.

Sahil