Long Island NY - what do you look for in a buy and hold property?

Question

Hello BP - first time poster here!

I'm curious as to what my fellow LI buy and hold investors search for in a prospective investment. Recently, it has been hard to find enticing prospects and I'm beginning to think that I should lower my required return expectations given where we currently sit in the market cycle if I want to continue investing on LI.

I'm still relatively new to RE investing. I've had success with my first buy and hold property in Suffolk county. It was a targeted purchase using the principles laid out in HOLD: How to Find, Buy, and Rent Houses for Wealth. The property delivers an 8-10% annual cash on cash return and has ridden the recent market upswing and appreciated about 25-30% in value since purchase (March 2016).

That being said, I've been searching for something that would deliver a similar cash on cash return (not concerned with appreciation as that would just be icing on the cake) located in Suffolk/Nassau. Any input from fellow BP'ers would be greatly appreciated!

Craig Schneider · Answer

I ended up doing 2 properties in a 1031 and purchasing a 14 unit in Huntington.  Typically in Suffolk, we do not sell any cashflow properties.

We have been looking for more properties, they are very hard to come by.

Michael O. · Answer

Darryl – I’m familiar with the property on Tanners and I’m not surprised it turned into a bidding war. Those taxes are insanely high though. It’ll be interesting to see what happens to prices as owners begin to feel the full impact of the new $10k limit.

Craig – sounds like you must be pretty busy, best of luck with the new properties. I agree and once you find a prospect there’s typically a bunch of competing offers. I wonder if people are looking at the math or simply buying anything they can get their hands on and banking entirely on price appreciation.

Darryl Toomer · Answer

The school tax alone for the property mentioned above is $9.2K and the general taxes are $5.1K so $14.2K total - this is for a 6000 sq ft lot with 1200 living space. The numbers are what they are but you have to factor them into what you want to get in returns.

James Caruso · Answer

Nassau taxes must be way high if Suffolk taxes are considered low to you guys! My personal home is 1300sf 3/2 on .3 acres and paying 7k even with a STAR exception!

Darryl Toomer · Answer

Hi Michael, Nassau County is pretty challenging because of the property taxes. They really eat into your returns.  There was actually a property up for sale in Levittown recently on 45 Tanners that could have fit your metric but because of the market we're in I think it ended up in a bidding war over it. Suffolk County has been a good place to get into for buy and hold investments because of their relatively lower taxes.

Michael O. · Answer

@James Caruso Western Suffolk seems attractive for a pure investment property. I like some areas in and around Ronkonkoma and Huntington but have also found myself searching in Middle Island recently. If an opportunity to house hack a MF came up I'd stick to Nassau and would consider pretty much any town with a decent school district. I see myself growing and investing out of state eventually, just not at this point in time. What kind of CoC returns do start getting excited about when looking on LI?

@Craig Schneider Congrats on the recent sales. Were you able to utilize a 1031? How long do you typically hold on to good cash flowing properties before exiting? I’ve looked at Shirley and Mastic as well but came to the same conclusion, they’re not for me.

James Caruso · Answer

I agree, I live approximately 15 minutes away from Shirley/Mastic, so I'm pretty familiar with it. No way would I touch that area.

Craig Schneider · Answer

I owned a couple of properties in Nassau and recently sold them and purchased in Suffolk due to the higher taxes in Nassau.

Shirley and Mastic have not been for me, if it is for you, I would wait for the downturn and you can pick those up for $50K each.

James Caruso · Answer

What towns are you focused on? Most buy and holders I have met are doing deals in the Shirley/Mastic area. Even those areas seem to be ridiculously priced now. Property taxes are out of control as well.

Out of state seems to be the best option and what I have been targeting.

Long Island NY - what do you look for in a buy and hold property?

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