All Forum Posts by: Ben Cohen

@Ben Cohen, It will be my pleasure! Will you update this thread when you make your purchase?

@Daniel Anshus, thanks for the offer. I live in Brooklyn Park but I’d like to buy in the west metro or further out, since I work in Medina. 

@Jessica Perrizo, thank you for the advice, and thank you so much for offering the connection! I’ll certainly be looking into a property manager for future properties. I would like to get his contact info from you.

I’m following this thread now. I’m thankful to get to watch you guys work through the numbers, @Ben Cohen and @Aaron Montague.
@Jessica Perrizo That is really valuable information. Are those federal or state programs and where can one find info on those tract designations? I’m in Minneapolis, saving up to do a multi-familyhouse hack.  

Ben, good luck finding the house hack that works for you, and thank you for posting. It’s been helpful for me as well. 

@Ben Cohen This is a wonderful post with such great comments and information from @Aaron Montague and @Andrew T. It sounds like you found a good house hack. Is it in the Weeksville area of Crown Heights by chance? I think I saw that one. I hope you get it! I wanted to chime in on the financing aspect of things. Have you spoken to Bank of America about their America's Home Grant Program which offers a grant of $7500 toward non-recurring closing costs. They also have an Affordable Loan program that offers loans with down payments as low as 3% without mortgage insurance. They also have a down payment program that offers 3% of the purchase price up to $10k to the borrower for a down payment. These are grants not loans. They are only applicable in low to moderate income areas and that is determined by the census tract. If your property is in Weeksville it would most likely be eligible. Some of these programs are based on the borrowers income but others are not. They are only based on location of the property. First Republic Bank has similar programs based on the census tract. They require some funds to be transferred to their bank though. But, if that was something you were up for doing, they have some great programs for avoiding the PMI as well.

Hi Ben,

Congrats! Sounds like a good deal. Our market is tough to crack so this is a good way to make it work - yours is similar to my house hack in Bed-Stuy. What neighborhood is it in?

Regarding the roof, sounds like they did a bad job fixing it up two years ago. The guys at Premier Roofing did a great job on mine for $4k and they’re a legitimate business - I recommend calling them. These rubber roofs can be pretty cheap.

Aaron is giving good advice. Your calculation for capex seems fair (furnace is low, more like $5k+) but as you said, I’d assume there will be some additional expense. You could treat it as miscellaneous or a once over for each bathroom at $5k each. 

Raising rents may be tough for the time being, but if you have faith in the market they will come back and by spring you should be able find tenants for slightly higher rents. It’s not uncommon to make tenants shovel their own spot- it’s such a rare amenity here that people won’t mind or expect it, but then there may be an issue of which tenant is responsible for what shoveling.

Keep in mind, the numbers in Brooklyn are often slimmer than elsewhere, And that’s for a reason. You have abnormal amounts of appreciation and rent increases.

Good luck on this! 

Andrew

@Ben Cohen

Now these numbers are starting to look like a rental property :)

That, and I realized your method of calculating Cap Ex is MUCH simpler than the one I've been using for 15 years, thanks for that!

Vacancy - Did you have this in there somewhere?

Remember this is a house hack.  So the goal is to lower your monthly payment in the near term.  If you are currently living for free, this probably isn't the world's greatest choice.  If you are paying 2k in rent now, this is a bit of a loser until you can bring these rents up as you are going to be out 80k and have not dropped your monthly payment at all.  Once the rents start going up you are going to see the benefits of the purchase.

To your direct questions:

How much do those(shoveling) run generally? Is it possible for one of the tenants to shovel the snow in exchange for lower rent? It depends on how much it snows.  We pay between $20 and $50 for a plow depending on the size of our driveways. You can certainly trade rent for shoveling though you are going to have REALLY unhappy tenants if their cars are still snowed in, now matter the reason.  Essentially you need to make sure it gets done.

 Question: Where would I factor in things like: touch ups in between tenants, flooring, plumbing, remodeling a bathroom/kitchen if I want to raise the rents between tenants?

In my mind a remodel is Cap Ex, touch up is a repair.  The exact definition is less important than having enough money around to do the task when necessary.  If you foresee 4 new bathrooms in the next 5 years, start putting aside money now.  Same with the kitchens.  Paint is always helpful for getting places rented though it generally does not need to be done every year.

Your loan: Have you shopped around to see if anyone will give you this loan with 5% down on a conventional mortgage? I did verify that an FHA loan actually goes this high in Kings Country, NY: $1,472,550 :) Besides saving you the FHA fee of $1000+ per month I think you can actually put slightly less down.

5% of your purchase price is 64k.  Add another 8k, though I'm not sure why it would be that much, and we are only at 72k for cash out at closing.  I think Bank of America has a 5% jumbo loan, maybe :)

Food for thought.