All Forum Posts by: Ahmed Saad

@Aaron Williamson, I'll try not to repeat the great advice you've already received. However, it really does sound like you have the hard stuff already covered between legal and architectural. I think your target areas are dynamite and prices realistic. You can snag yourself a 3 family in Ridgewood for that range easily. The areas @Abel Curiel mentioned are moving too. 

I think the missing piece of your puzzle is a superstar broker/agent. A really good one can point you in the direction of a good lender and contractor (if you need). You should have a good idea if you can swing a 1m loan between your income and that of the property. Make sure you're realistic. 

A direct answer to your question regarding financing is this: Make sure you have your past 2 years tax returns already prepared, 2 recent pay stubs, 2 years w2, and a concise statement of your debts. Having this ready before you talk to a loan rep will save you an awful amount of time. If you need a recommendation PM me. I am in the middle of closing 2 loans and the loan rep made things happen quickly and the rates were extremely competitive.

I have not personally done a project like this. However, I researched it for a project and it was extremely expensive. Between excavation, tests, DOB, engineer, architect etc etc.  I decided the space was not worth the cost. You may need to also prove the soil is not contaminated by doing environmental testing. Good luck if (when) the soil test comes back with some nonsense and DOB requires some remediation.

Here are some thoughts and questions:

1. Do you want the current owner to stay? In general, it is not the best practice to let the previous owner stay at the property for any reason.

2. I know there area and it IS a great deal.

3. NYC evictions are the worst! Try to buy the property predicated on it being delivered vacant. That will allow you to rehab without any problems with tenants in place. Unfortunately, that tends to hurt the cashflow so you'll need to have enough cash on hand to hold the property.

4. Roof and boiler for a 4 family will run you about 25K. However, if you get the property vacant and you have $, then what I recommend is what all the new flippers/renovators are doing. Remove the boiler and install split units that do heat and cool. Also, install electric hot water heaters that are hooked up to the tenants utilities. This will reduce your overhead AND it will allow you to attract better tenants. I know it's pricey, but to be honest if you're getting that price on the property it's worth it. You can rent it out to some hipsters that are never home. Also skip the property management there's nothing they will do that you can't for the amount of money they will charge.

5.  Are you thinking of living in the property. Here is why I'm asking. You cannot legally rent out the basement unit. If you tell the bank that, they will not lend. You can however renovate the building and AFTER inspections are done, then fix up the basement to live in it yourself. This is less than 'legal' but is common. 

6. 6.3% at Chase is BS. This being your first deal makes it a gamble but if you're really able to get the building at that price you can borrow hard money for the purchase and renovation. Like I said, it's a gamble but at the $350K it's worth it. You're probably looking at 8% interest. If you borrow a total of 450K you will have a completely turnkey property that will rent out easily. When you refinance at a reasonable rate of 3.25-3.75% the financial variance between borrowing $350K or $450K will not be significant. I'm going to tag @John Hickey in this as I have found him to be super knowledgeable and realistic when it comes to all this.

7. Lastly, I'd suggest you be a bit more conservative on your rental estimates. If it's in East Flatbush then that's better than Brownsville. If you're by the 3 train, that's better than not. However, I don't think a 1 bedroom will go for $1600 around here. 

8. Ok, now lastly: check for HPD and DOB violations. These can sneak up and screw you royally.

Most importantly, good luck! Let me know how this pans out, $350K for a 4 family (legal) is a great price. If you pass on the deal let me know!

The ideal way would be to find a 4 family. If you're able to do that, it's better to find one that has 4 2 bedroom apartments rather than 4 1 bedroom apartments.That will allow you to obtain a loan based on your personal income PLUS 3 of the 4 units. The loan would be at a better rate than an investment purchase. Depending on where you want to live, you could probably swing the numbers somewhere in the outer areas of Queens or Brooklyn. Don't expect to make it work in Astoria or Park Slope.

Get prequalified first as it will make your offer stronger.

Another option is to buy a rent stabilized building with one vacancy and owner-occupy it. You can find a deal on some of these now in most neighborhoods and the loan will be on the income of the building NOT your personal income. However, expect a lot more headaches (managing the tenants). Exiting will be harder if the rent laws remain in place. There are some investors who are hedging their bets and buying these properties now believing the rent laws will be over turned.

@Inemesit C. The real value of the property is not the house as much as the land. The cost for you to rehab the structure, pay the loan and live in this 1 family is high, if not prohibitive. This is all speculation of course without knowing the property at all. That said, selling it now will leave you with about 100K. If you do not deal with the income from the sale correctly, a large portion of the money will be taxed. AND THEN, you would have to deal with family and how ever much anyone thinks they may be entitled. This part is usually more stressful than dealing with the bank. 

Again, without knowing all the information and just going by your post, I think your best bet is to minimize your loan payments (by restructuring the debt), live in the property as-is for a few more years, then sell to a developer who can/will build a small multifamily property. Look to see if you're in an opportunity zone. 

You got a lot going on here! I think the first thing you absolutely have to do is get a true and total cost of money owed and what your monthly expenses will be. If you can pay that PLUS the costs of renovation then you can talk about staying vs leaving. If you can swing it, then start looking into some debt adjustment plans. Interest rates are low with traditional banks right now and this would probably be the best time for you to restructure the existing debt on the house and possibly take out equity to pay for repairs & renovations. Alternatively, you should look up 203(k) loans which will allow you to purchase the home from your family AND pay for renovations. Again, this will all depend on you reviewing your financial situation.

Finally, part of your zip code is in the East NY revitalization plan. If you're there then that's definitely a plus. Either way, your plan will only work if you decide to live there. I do not think renting out the house will yield the $ to be worth all the hassle and cost. Good luck!

Is this a 4 story property with an owner's triplex and 1 floor-through rental? If it's only 3 stories the ARV would be less. I'm sure you know the renovation would need to be very high-end and, perhaps most importantly, it would only be feasible for an end user to pay; not an investor. Given that point, and that we are entering the slow sales season, I think you should seriously evaluate your hold period. You will be waiting for the right person to buy it and that person who wants it also needs to be qualified to buy it. Often times they do not go hand-in-hand. Can financially hold the property, partner buyout, operating expenses, loan expenses, and paying construction costs simultaneously? Possibly for up to a year? All funs stuff to think about and analyze. I hope everything goes well.

Just confirming this is happening tomorrow. Looking forward to meeting people.

Good morning Michelle,

I think being able to obtain funding through a program affiliated with veterans will be a very beneficial. Make sure you take time to do plenty of research before you move forward. I am not particularly well-versed in the financing side of the business but look for a broker that is willing to take the time to walk you through your options and not pressure you. You want to work with someone with whom you feel comfortable BUT someone who gets stuff done! I missed out on a great rate once because the loan officer was too slow and I missed a deadline.

Next, about your deals:

1. Do not invest in a condo if you are not going to live in it. This is an easy one because you will lose money.

2. In the NYC Metro area it will be 99.9% impossible to buy something with 3% down. This is for 2 reasons. First, the property will not cashflow and you will be paying significant expenses out of pocket. Second, it will be a rare seller indeed who will choose your offer with 3% or 5% down instead of someone else who will put in 20-25% as they will have more skin in the game AND they appear to be more financially secure in that they can afford to pay that amount.

Now that I'm done being a negative Nancy, I think the multifamily option is the right track. The first option is to find a 4 family that you can afford AND that will cashflow without you living in it. Good luck! Any time you want to talk more, I'd be glad to help!

-Ahmed

I recommend you get a second opinion on the value of your property. The appreciation in 12 years for NYC real estate seems extra conservative unless there are mitigating factors. Also, I think you can negotiate the commission. Good luck!