Property 2: Turn Key Investment

[Aniqah Kalam]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $1,380,000
Cash invested: $450,000

I was looking for a multi-family investment property in the same neighborhood I live in so I could easily manage it myself. It was expensive but still a good deal for a new building in Long Island City.

What made you interested in investing in this type of deal?

I was looking for something with at least 3-4 apartments to insure that it would cash flow.

How did you finance this deal?

I paid 30% down and took out a mortgage.

Lessons learned? Challenges?

This building has a tax abatement for another 5 years and as a result, it is rent stabilized as well. I had to learn about all the rules and regulations regarding rent stabilized buildings and tenants. I used to be under the impression that buildings over 6 units can be rent stabilize but clearly that isn't always the case. I had to sit with a professional and figure out the legal rents for each apartments and make sure there aren't any overages because treble damages cases can be very costly.

[Doug Spence]

@Aniqah Kalam I'm glad to hear the current rent isn't much lower than the market rent. The whole concept of rent control is scary to me as a long-term buy-and-hold investor!

Regarding your market question, population growth is definitely important, but I wouldn't disqualify just because it doesn't mean someone else's arbitrary standards. Neal Bawa is very experienced and his standards are different from other investors. I think there is money to be made in every market! You just have to decide on a market that fits your long term strategy, risk tolerance, etc. Its definitely a good idea to consider things that Neal Bawa and others say, but ultimately you have to decide your own standards. For example, maybe he's not interested in a particular market, but you have an advantage there because a family member knows a rock star property manager there with access to off-market deals! If you solely went off Mr. Bawa's recommendation, you could potentially miss out on opportunities in that market. 

Good luck picking your market!! "It's more important THAT you decide, than WHAT you decide" (I wish I knew who said that, but I know I heard Brandon Turner say it on a BP podcast episode).