Is BRRRR possible on Long Island, NY?

Question

I was listening to the Bigger Pocket Money podcast #60 with @Mindy Jensen @Scott Trench featuring @Gino Barbaro.

One thing that immediately resonated with me, and as usual shocks the rest of the world, is the mentioning of Gino's property taxes in NY being $27,000. This is how it is on many parts of Long Island too. My parents, who no longer have any kids in school and probably should downsize to be honest, continue to pay 18k for their taxes. My wife and I as newly weds, rent a portion of a family owned home, as we continue to explore our house hacking options. There are obviously many who have been leaving areas like NY for places with a lower cost of living.

So I ask BP, do you think we are wasting our time looking for BRRRR type deals on Long Island? Are we approaching something that might lack scalability due to the extra NY cost of living burdens?

May Emery · Answer

@Alaxander George You need to find homeowners who are likely to sell but haven't done the work to list it yet - the off-market leads. @Gino Barbaro gives a great example - his mother in law. I'll bet she is a senior who owned the house for more than 20 years. It wouldn't be surprising if the house hasn't been updated much lately - possibly even with some deferred maintenance (my apologies if she was an exception)

You can work with a list broker to find some targets for sellers with houses that might tend to be selling for less than the typical. The people with a 20 year old kitchen probably won't expect the same $ as their neighbor with the shiny new kitchen, fresh coat of paint and new landscaping.

Two targets might be Seniors with Long-time Ownership and Owners with Low Financial Stability Scores (FSS). You can send a letter telling them how easy it will be to sell their house if they work with you!

Gino Barbaro · Answer

@Alexander George

Your question is very personal. DO you want to continue to live in NY, where cost of living is going to increase and where they champion kicking out 25,000 high paying jobs that would create an additional 75,000, with job multiplier. I decided no after living there for my entire life. It was a very difficult decision, having an Italian mother and our entire family there.

I kept catching myself complaining about the politics and the taxes. I teach being personally responsible, and I felt I was violating my own words.

I love NY, but I have also loved living in Florida near the beach, with a better quality of living, friendlier people, and the cost of living that is much more reasonable.

If you can find a place where you can buy a triplex, and rent out the other two apartments to pay the taxes and insurance, that would be an option. I just fear the valuations can not continue to rise due to people leaving and the high taxes. My house value in NY is no where near the 2007 valuation, and will not come close for a LONG time.

Create a list of pros and cons as to leaving, and see which side wins out. I had a bunch of pros and only one con, and I almost did not leave.

I hope that helps.

Gino

Syed H. · Answer

I flip in LI a lot. BRRRR’s aren’t worth it in LI. I own all my rentals in NJ and PA for a reason. You can do it in Shirley, mastic, & wyandanch tho.

But flipping in LI and northern NJ is great. Also i believe the demand is there.

The flips I do between $900-$1.2m in good school districts sell extremely quickly. People aren’t complaining about the $20-$30k taxes even today (I have 3 flips right now with taxes above $24k).

Cheaper houses (below $500k) also sell very quickly in mediocre to bad school districts.

Gino Barbaro · Answer

@Nick Calamia

The funny thing is all it takes is one person. My mother in law just moved, and my brother is heading down soon.

Higher emotions lead to Higher intelligence. Try to take out the negative emotions of making the leap, and focus on all that's positive, and that will help you.

If NY doesn't want Amazon, then they sure as heck don't want Gino.

Good luck

Alexander George · Answer

Hey Andrew, I appreciate the input. I would like to meet other on the island that have tried or are doing it. Everyone I've met outside of NY thinks it is insane here, but then folks here think "Oh your taxes are only 17k, not bad!" So it is all perspective. I am also going to start attending some of the BP events here on the island to get a feel for what others are successfully accomplishing on the island. So far, I cannot get the numbers to make sense in various areas I look.

Andrew Syrios · Answer

@Darren Sager has a great Meetup in the NY area you should definitely check out!

Paul DePalo · Answer

@Alexander George we all know we make our money on the purchase that said being a long islander i do believe it’s possible maybe with a lease option even the traditional way but i believe it would have to be an off market purchase .  I like the model myself however seems tradition rehab flip works better on Long Island

I have been thinking of looking at other markets like Brooklyn or queens ?

Philip Coiro · Answer

Things are crazy here on Long Island but I do follow an investor Charles aka 'The Handsome Homebuyer' who's buying 100 houses a year here! Go look him up he's awesome. You can obviously BRRRR here on LI if he's clearly able but you have to find the property off market it seems, there's nothing on the MLS that will really work.

Good news about LI is the you build equity, I purchased my house in 2014, updated it and now have $260k in equity 6 years later! I now have a HELOC that I used to purchase a out of state flip that went really well. I'm now looking for my next investment

Ray Danishyar · Answer

@Alexander George I feel different - the more opportunity for us in New York is higher. Two reasons to be able to succeed in New York home rehab is deeper pockets and also networking. As taxes go higher and higher and people are leaving that means it’s unaffordable which means more people will be in distressed situations which in turn means you can buy more houses for cash rehab and repeat. We are a full interior design firm and we are also extremely active in buying homes for cash. My motto is run to the fire if you want to make money. When others are leaving you should be coming in buying, opportunities are always there when there is uncertainty. I am 6 months in BP and would love to connect with Long Island wholesalers, agents who are investment property driven, and other individuals who want to partner.

Shawn Thomas · Answer

@Alexander George the only areas on LI that really seem worth investing in is Mastic & Shirley. I wouldn’t embark in Wyndanch / Central Islip.

Is BRRRR possible on Long Island, NY?

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