All Forum Posts by: Emily Gorski

Analysis attached. Ran the numbers a few times and the only way it was cash flowing was if all these stars aligned:

-rented out commercial space on first floor for $1500

- made 3rd floor apartment into an airbnb making $2000/mo after expenses

- bumped up rent on 2nd floor unit $50

-oh.. and offered $450k

Does anyone go about a deal making this many assumptions or should the property cash flow positive before tweaking numbers and hoping for commercial rent?

I saw a 2 apartment building with a commercial space on the 1st floor in the Roundout section of Kingston, NY.  Commercial space is going to be empty since they were paying a ridiculously cheap $450/mo for years (about 750 sq feet) and the apartments are both occupied by long time tenants on month- month leases. Each paying $850/month, both 1 Bed, 1 Bath but 3rd floor unit could be potentially converted to two small bedrooms. Large backyard- access from tenants building and commercial space. Asking 499k.  

I haven't spent a ton of time in this district of Kingston but was pleasantly surprised by the amount of retail, restaurants etc that have popped up in the past year.  From some research it seems like these apartments are a bit under priced.  For what it's worth I had a great feeling about the area.

I like the idea of long-term rentals, but the commercial space has thrown me for a loop. Another thought was to eventually convert the top floor unit into a two bedroom Airbnb.  (I own an Airbnb property in the Catskills, so I know the drill here.)

I am missing a few numbers to pull off a full analysis of this deal which I am working on getting now but wanted to throw out the question: Given I am a complete newbie at multi family does the commercial space sound too risky even if the numbers work out?

Thank you so much guys!

A few things come to mind after absorbing these responses.

1) Was it a bad move to put 2nd home in both of our names therefore further effecting Colin's DTI after the apartment purchase which is solely in his name in a 30yr fixed.

2) We are going to explore the HELOC options with Chase just get a better understanding of costs and amount available etc, but worried about the risk as we don't want to jeopardize the apt (our main home), with market so high and a dip in the economy likely in the next 2yrs etc.

3) @Jason Lee - We will ask accountant about this but believe his conservative view on this just like the HELOC is to fall back given Colin's DTI and percentage of assets weighted in real estate vs retirement solo-401k, IRA & Roth IRA.

We know we are both pretty green, just signed up for the BP Pro account and are excited to educate ourselves but know we have a lot of work to do. 

Thank you again for the help and advice.

Best,

Emily

Thanks for the fast responses Jaysen & Jason!

Jaysen: Colin here - My CPA is just conservative but he's against a HELOC and has pointed out a few things to me after closing on these two properties in 2018. I also had a convo with the people at Chase we did the two mortgages with, and both reminded me of some important things. 60% of my assets are in real estate at the moment, 26% in retirements accounts. If having assets balanced in different vehicles is part of the deal then my accountant argues I need to balance better and not so much weighted in real estate - diversify. He reminded me of the need to have a 6month cushion in savings as well of course, I am wondering if he will be the right accountant for me as I change my views on investing and passive income / financial independence, real estate, etc...yes I read Rich Dad Poor Dad and it opened my eyes. Our contacts at Chase gave us some stats after the second closing in June worth noting - that is my debt to income ratio was 49.677% at the time and generally 36% or lower is best. The $180K chunk going into a multi-family in one of the areas you mentioned or Hudson Valley, Buffalo or Union County NJ (Asbury Park / Rahway) seems like a logical next move.

Jason: To clarify I do have a solo 401k for my s-corp which I put $33K into for this year's year end bonus - my cpa explained this year maxing out to $54K is actually less tax advantageous as opposed to previous couple of years where I did make a max contribution. Of course he is also conservatively against touching my 401k : /

We've talked about HELOC and/or leveraging the solo 401k funds ($156K) with my CPA, family members and the people at Chase and everyone is against doing either because of the risks. So we were a bit taken a back by that as it seems to be our only option if we dont find lenders/investors. In terms of my retirement accounts the majority is in the 401k but I also have an IRA and ROTH IRA so when combined all three total $194K right now - my CPA argues dont touch that at all.

Hope that wasn't TMI and thank you so much for taking the time to chime in, Emily and I greatly appreciate your help!

Hi everyone- Emily and Colin here!

We closed on our apartment in South Slope, Brooklyn in March 2018. It was a condo conversion, so after a few years of lawyering up we negotiated 30% off the asking price of the unit. Since we have no immediate plans to vacate the space that we love and the mortgage was comparable to our rent (minus HOA fees) we figured it was a win-win. The property is in an up and coming, quickly gentrifying area. We purchased for $644k with 20% down and the property appraised at $870k. The mortgage is under Colin's name only. In June 2018, we had a unexpected opportunity to purchase an Airbnb rental property in the Catskills. It was a property we rented for the past 5 years, fell in love with it, the area and the owner. Our dream of having an upstate escape was finally coming true- but at it's price. We purchased for $297k with 20% down, the mortgage is in both of our names and is a 2nd home not an investment property w/ LLC etc. The cash flow per month varies by season, but we at least break even on costs annually and we get to enjoy it whenever we want! However this is not a passive endeavor whatsoever.

Fast forward to now where we are looking to move forward with some passive income streams through real estate.  Our interest is peaked in multi-family, but looking at everything. Needless to say from that purchases (and Colin maxing out his 401k for his S-corp each year) we are out of cash, but after attending a webinar on BP this week we heard all about ways to finance multi-family properties. (we are also signing up for BP Pro for sure!) 

Is there some way we can leverage this Bklyn apartment given its equity, through refinancing, HELOC or something? We don't know where to start.

Thanks!