Brooklyn 7-Unit Multi-Family in Sunset Park

[Laura Moreno]

Hi there,

I am looking for a building in Brooklyn to buy so I can use one unit to live in and the others to rent out.

This is what I found today:

- Purchase Price: $1,350,000

- Units: 7 (5 two bedrooms / 2 Studios)

- Rental Gross Income: $94,500

- Expenses (inc. taxes, mortgage, insurance, $5k/yr for repairs and utilities): $31,000

Others:

- It is close to the subway and a beautiful park

- The area projected to go up in value

- Units rent <$1,000 per unit, which for New York is really low so I imagine I could increase the rent in the future

What do you think?

Thanks so much!

Laura

[Adam K.]

@Laura Moreno Based on the rents and that it's 6+ units, it sounds like it's a rent stabilized building and you'll have a tough time raising the rents.

You're also going to find it probably pretty difficult to finance because it will be a commercial loan and A) Those can't usually be owner-occupied B) A big bank will want to see a track record of landlording, and they underwrite based on the building's financials, which don't sound too good.

So unless you're paying in cash and you're prepared to wait for tenants to move out to get fair market rents, I'd look elsewhere.

Also, the mortgage on that alone (at a 75 LTV) is like $50000 a year, so not sure where you are getting the expenses. And I'd budget at least $100/unit/month for maintenance and around the same for utilities (so, around 17K total) and also budget more for Capex.