?Lets Try This Again!

[Brittney Lynn]

Alright so my first potential deal was somewhat of a dud. Would you guys mind taking a look at potential deal number two. This is one of the 'best' deal in this area on the surface. I say that based entirely on the layout of the house and price. I have an appointment with my broker to take a look at it this weekend.

Triplex House - listed at $600k (again, similar comps in the area have been selling for $550k or less)

Market rents are 3bd-1800, 2bd-1500, 1bd-1100

Mortgage will be with a credit union that allows me to put down 10%. I have enough for 20% but I want to keep a good chunk of my money in case of emergency/capital expenditures.

Principal, Interest, Taxes, Insurace:

At 10% my monthly payment is $3653

Principal & Interest + MI= 3010

Taxes:433

Ins:210

At 15% my monthly payment is a bit lower at $3422

CapEx is calculated at 7% of monthly rents (is that a good number to use?) at $308

Vacancy (NYC) is 3% of gross monthly rents at $132

Maintenance is 3% gross monthly rents at $132

Fuel/Water monthly cost is $542 based on owner records

Total non-PITI expenses of $1114/month

Total Expenses of $3422+1114 = 4536

I would be living in one of the units so essentially I would be paying $1636/month to live here assuming I live in the 2bedroom unit. With the monthly rents of 4400 this would leave me with a negative $136/month in cash flow. My plan is to aggressively pay down the mortgage to get rid of the MI which would save me $234 per month. At that point I would cash flow approximately $100/month. Raise rents to keep in pace with the market and in a few years be cashflowing a respectable amount for a small New York City landlord.

I know I know, that negative cash flow is not good but hear me out: I MUST live within NYC for work purposes and I MUST live in a house with a driveway/parking spot. These two things are premiums here. If I was to buy a 2 bedroom condo, it would go for $600k and no one would be helping to pay my rent - I would end up paying over $3000/month out of pocket with all the fees. With a multifamily I am essentially paying half of what I would which puts more money in my pocket for other things at the end of the day and eventually deal # 2 which will 100000% be outside of NYC. I do not have a million bucks to buy in NYC where I can find cash flowing deals from day one or deals that meet the 1% rule. If I was to buy in a shady area it would definitely be doable but they are very dangerous. The real area I want to buy in has run-down 2 family homes with no parking for 850-900k so these types of deals I think are the best that I can find. Maybe I should have posted this in the 'investor psychology' forum but this home is where I have to live too - if it was 100% investment it would be in an area where the numbers worked.

Sorry for the rant but it is just frustrating not being able to buy where I want, only finding 'good deals' in the sketchy parts of town and then finding these 'deals' where there is slightly negative cash flow.

A question to anyone out there who has done this in NYC recently. How did you make it work?

Thanks again for reading through my wall-o-text. Any responses no matter how truthful or grounding they may be will be extremely appreciated.

-Britt