New Investor Coming to NYC Looking to House Hack

[Joshua Morency]

Hi everyone,

I hope you are all doing well. I recently accepted a job in New York City and I am looking forward to moving in! That being said, I would ideally like to house hack but realize that this may be a significant challenge, however, I am determined to work through it. 

For house hacking, are private lenders interested in working with first time home-buyers, how much should I have in replacement reserves for NYC, what are some good areas/areas to avoid, etc? I appreciate any response and I will offer some background on myself below.

I am currently a college student set to graduate this May. I stumbled upon BiggerPockets last November and have been hooked ever since. Since then I have listened to hundreds of hours of the podcast, read several books, taken financial modeling courses (focused on multifamily), and been on hundreds of calls with alumni from my high school and college who work in CRE. Real estate investing is something that I am very passionate about and I would like to start by house hacking.

If you are, or know of anyone, who is involved in real estate in some way in NYC, I'd love to hop on a call to learn more. Thank you very much for your time!

Best,

Josh

[Abel Curiel]

Good afternoon @Joshua Morency!

Great to see that you're lining things up to jump on an opportunity when the time arrives.

Regarding private lenders working with first-time buyers (house-hackers in this scenario), the deal would likely need to be off-market at 40-60% of ARV... the bonus here would be if the deal was personally sourced by the first-time buyer. Meaning, you or your representative (wholesaler, agent, etc.) are direct to the seller. There would also need to be a clear exit strategy and significant upside to you occupying the property for a lender to partner with you vs. another investor.

For these reasons, I don't see a private lender being the best approach for your first deal if it is a househack deal. If you find a great deal to flip, private $ could make sense although that strategy is high risk for a first-time investor in NYC - unless you have a partner involved with experience. 

For the househacking strategy, you'd be better off saving up, getting work experience under your belt to satisfy mortgage lender requirements OR partnering with a co-signer/equity partner where you control half or the majority of decision making. I've had challenging experiences with equity partners myself and I know of many other horror stories on BP regarding this approach so proceed with caution if you proceed in this route at all.

Regarding locations to target, this will depend on your preference (i.e. proximity to NYC, private parking availability, etc) AND budget. My favorite submarkets for house hackers getting started in New York are:
- South Brooklyn: Canarsie, Flatbush, East Flatbush, Cypress Hills, City Line

- South Queens: Jamaica, Richmond Hill, Woodhaven, St. Albans, Cambria Heights

Brooklyn gives you better commute times to NYC & lower property taxes (in many instances). Queens gives you larger lot sizes, more access to parking, lower average purchase price.

Hope this helps... Best of luck to you during your last semester!

Abel