House Hacking in Manhattan

[Andrew Northcutt]

Hi everyone, 

I currently rent and live in Manhattan. I am looking to get into real estate investing and was mostly focused on out of state investing. However, it occurred to me that I could afford the purchase price of an apartment with an FHA loan.

There have been many discussions of this regarding queens, the Bronx, and Brooklyn, but haven't seen one about Manhattan. Has anyone / anyone you know pulled this off successfully? 

Also, how would I need to adjust my expenses from out of state/cheaper cost of living to Manhattan? For instance, I assumed 10% for PM, 1 month vacancy, ~7% for maintenance and repairs, etc. 

[Damon Bodine]

Hey @Andrew Northcutt .   

Manhattan can be tougher because of the housing stock.  A lot of times NYC house hacking  is doing a 2-3 family purchase.  Then doing a combination of strategies (airbnb rooms, long term rent by room, and then traditional long term lease in unit 2) to maximize the buildings income potential.   Manhattan a significant portion of the inventory is condo/coop.   In a condo of course you can rent rooms but the math ends becoming less favorable with the higher taxes/common charges.   Co-Op can be difficult because of rental restrictions.  

That said i've had some success with clients in Harlem. You may not be completely zeroing out expenses on a monthly basis  but doing significantly better with rent.  Additionally amortizing loan at a pretty good clip.    

A lot of times these properties are going to be priced beyond the FHA and conventional high balance loan limits. That said often need to opt for different products (for example 80-10-10 jumbo loan etc). Also depending on what and where you buy it can be useful to look for community bank first time home buyers loan programs. They're often going to be superior to FHA in rate, lower or no monthly MI, and occasionally closing costs credits).

PM cost is going to vary significantly based on what you're buying.  10% is not unreasonable. Vacancy and maintenance I generally budget   5% but will depend on what you end up purchasing.  

Hope this helps always happy to brainstorm if ever helpful.