House Hack in NYC or Florida?

Question

Hi everyone, my first post here.

I currently live in NYC (on a rent, one more year on the contract) and I am planning to get my first property this year. My ultimate goal is to make 5k/month as passive income (from rental properties) to retire early. However, I am going in between two options:

Option 1: Start with a house hack in NYC, live here one more year, and move to Florida to get my other house hack or rental properties.

Option 2: Don't house hack in NYC, move to Florida and house hack there and keep investing in rental properties in FL.

There are ups and downs to both options:

Ups of option 1:

- I can check the properties in person since I already live here in NYC, I know the neighborhoods good enough

- Utilize FHA loan in a high cost market like NYC. If I don't use it in NYC for my first property, I don't think I can afford NYC in the future by using a conventional loan, due to high down payment. So this could be my only chance to get a property in NYC.

Downs of option 1:

- continue to pay high NY income taxes one more year while my job is remote and I could live in a low tax state.

- worried about bad renters so I don't want to lease the other unit in my house hack property to a long term tenant but also STR (Airbnb) may not be an option neither due to NYC restrictions on Airbnb

Ups of option 2:

- Low income tax if I live in FL. Sooner the better for tax purposes, I believe.

- Might be able to get more than one property in FL without waiting 1 year since a) cost of properties are lower in FL b) can check the properties in person if I am already in FL

Downs of option 2:

- I don't know much about neighborhoods in FL (primarily looking at Ft Lauderdale area) so not sure about the actual value

- I currently don't live in Florida so not sure how I can remotely check the property given the distance. I have one more year on my NYC lease so I need to figure out subleasing or breaking the contract etc to move to FL and check the properties in person.

I am sure the list can be much longer but I just highlighted the most important info.

My questions as follows: 1) Any critical info you can think of which I have missed above? In other words, what else would you consider while making a decision between options? 2) Based on the info above as well as your experience, what would you pick?

Appreciate any pointers, suggestions, guidance from the community. Thank you!

Shawn Mcenteer · Answer

Hi @Halil C. House Hacking is an amazing way to reach financial freedom.  My wife and I have been House Hacking outside of NYC for many years.   What's great about New Jersey is constant demand for rentals, this past year I had one property alone receive a $500 increase in rent per month without me doing anything to it.  Becuase of this high demand, high quality tenants are easy to find.  My wife and I have collected over 400 months of consecutive rent without a missed payment across our properties.  The best part of North Jersey is like you I needed proximity to NYC.

Mohammed Rahman · Answer

Hey @Halil C. - I'm actually attending my "Are You A Newbie Investor" meetup this evening from 6-8pm (location is the STARBUCKS in LIC: 26-14 Jackson Ave Queens Long Island City, New York 11101. Alternatively, you can just contact me at the cell number posted below in my signature. Text/call works fine.

P.S. @Shawn Mcenteer is your guy for all NJ househacking and investing needs. He has a few of his own investments and enough skin in the game to advise you on what's best for that market.

Halil C. · Answer

Thank you Mohammed, I would like to connect. Do you attend to any NYC real estate meetups or events that I can come?

Zachary Gilbert · Answer

Do both. I would start in NJ - something on a train line to NYC. Think of it this way, there are two ways to make money: working in luxury or the cheapest of the cheap.

NJ is a luxury market. It has all the Pharma companies, tons of commuters to NYC and a plethora of schools. There are a lot of higher income jobs and stable economics in NJ. Which means you can charge high rent and get a quality tenant. Also there are a good amount of towns that don’t have rent increase limits.

Once you have the cash, buy in Florida.

Let me know if you want to connect.

Rachel Fiegler · Answer

Hey @Halil C. - I’m originally from south Florida and have done real estate there and here in NYC. Right now sofla is overpriced and is headed for a correction. I would wait on making any moves there right now. However, the rents are very high there as well right now, much higher than normal. From my experience down there, sales and rental prices will drop. The difference with NYC real estate is that it’s always high and rentals are always in demand. Depending on where in NYC, you might be better off starting here where you already are for a year or 2 before moving to my hometown :)

If you want to chat more about Florida or NYC I’m happy to chat anytime. You can DM me.

Halil C. · Answer

Thank you Zach, yes I am thinking about doing both but not sure to go with NJ vs NYC

Shawn Mcenteer · Answer

@Halil C. just so you know @Mohammed Rahman is super bright guy who knows the ins and outs of working with investors. 100% connect with him

Mohammed Rahman · Answer

Hey @Halil C. - thanks for sharing your perspective so clearly. I'm an investor & realtor here in NYC, and I also invest long-distance. It boils down to what your risk appetite is. There's not going to be any right answer because as you so succinctly mentioned, each scenario has pros & cons. No one in the forums can give you an answer, although you'll see a lot of people telling you what they think you *should* be doing.

I'm for the mindset of your first property being somewhere that you're already familiar with, as that already gives you an advantage vs. somewhere you aren't directly involved in (even if you have family there). On the other hand, if you do your homework properly, long distance investing can also be on auto-pilot (after the first few months of getting up to speed).

Shoot me a DM I'm happy to chat more about my experience overall and maybe it'll help you get some clarity at the very least. Good luck!

Rachel Fiegler · Answer

NY isn't terrible for landlords, but I do understand your hesitation. If it was as terrible as everyone thinks, there wouldn't be any mom-and-pop landlords, but there are thousands of them across the city. Have you worked out the numbers you need to be at? That might be the deciding factor for you. I'm happy to help any way that I can!

House Hack in NYC or Florida?

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