All Forum Posts by: Brittney Lynn

Hello everyone,

I am at somewhat of a crossroads and was hoping to hear some practical advice from a more seasoned investor as to my next steps. I will keep it brief with as much information as necessarily however feel free to ask more if needed.

Currently, I owner occupy a duplex with great tenants. I am looking to both purchase a SF home for my family and a non owner occupied triplex investment.

Once I move out of my current duplex and rent out my half, the property will Cashflow with a healthy profit. The triplex i would eventually buy would have to cash flow from day one to make sense.

My question is now regarding my next steps. Should I be focusing on buying a home to raise a family or the investment property first?

I have enough liquidity for both however my concern is that a lender may not approve me for a SF should I buy the investment property first. Is there any rules of thumb, etc I should be following here? 

Thank you 

For example, in NYC there was a property that I was very interested in but after looking up the info on the NYC DOB there was a full vacate order on file as the building was deemed structurally unsound and has multiple violations of unsafe fire escape, leaning x degrees in some cases, etc. Fixing a structural issue is a much bigger problem than some more menial violations. 

So I guess I am spoiled than with NYC as they have this information online for free and instantly accessible. :(

Hey everyone

When I research houses and areas to invest in I typically will check out the city's department of buildings website to see if there are any violations/issues with the property to avoid wasting my time and finding out later on into the process. In the past, looking in NYC was no issue as they have an extremely helpful and detailed DOB website that lists any complaints, violations, Certificates of Occupany, etc. on every single property in the city. 

Now I am expanding my options to outside New York City to include parts of New Jersey. Specifically Jersey City, Hoboken, Newark and nearby surrounding areas. After spending about an hour searching I have come up empty handed to find this building information online as a research properties. I only come across links from the nj.gov website that direct me to the DOB physical address. No online system that can be searched. I would REALLY prefer not to have to head down to their office and research building records manually but feel I may be spoiled by the great NYC DOB website. 

Do any NJ investors have any insight here on if I'm simply (and hopefully!) looking in the wrong place or does such a website not exist for NJ?

Thanks guys! :)

@Eddie T. I dont think I would buy a condo/co-op unless it was in a high demand area in the outer-boros and was poised for appreciation. With the board approvals for everything these days it is too restrictive for me. Thanks for the heads up though!

You are correct in that the desirable neighboorhoods are overpriced from an investment prespective. IF anything, the area I am looking in MAY appreciate, but in my post just above this one I think this property is more of a home for myself than an investment property.

@jordan

@Jordan Thibodeau undefined - no one is pushing me out. I just want to buy my own place and start a family with my husband - something I really cant do living at home :x

@Mike D. If I was renting a comparable unit in the area my out of pocket cost per month for the rent would be ~$1500 for a 2 bedroom (this does not include renters insurance or utilities so I would figure that to be about $1600 all in. If I was to purchase a Multifamily my expenses after all my calculations including PITI, vacancy, capex, utilities, would be ~2000. For the extra $400 per month I can own, deduct certain expenses/depreciation on my taxes and after the years increase rents to offset this $400. The answer to me seems obvious given the high cost of living area of New York City.

Maybe I am looking at this property different because there is much more to consider than a sole investment property. It is in an area that must meet all of my personal criteria as a neighborhood. If it was solely for investment purposes I would be picking an area that is focused on cash flow and probably would not be living in the property.

Would it be safe to look at the property this way:

The tenants in the property will be subsidizing my housing cost. Instead of paying $4000/month for a SFH/condo in the area 'I' want to live in, my tenants will be paying $2000 and I will pay $2000. With the extra money that I save by not spending it on a mortgage I can use that for a real investment property in an area that cash flows.

Hi Everyone,

I thought positing my situation on the Investor Psychology forum may get some better responses than on the Deal Analysis forum. I am looking to get some insight from those that are more experienced or those that have gone through my situation in past – Hopefully in NYC!

Long story short: I live at home in New York (Long Island specifically) rent free now and have been saving for a place of my own. If I was to buy a condo/co-op in my ideal area in NYC it would end up being around the same price as a multifamily home in a great but not ideal area. Going the condo/co-op route, I would be paying all expenses out of pocket. With a multifamily house, living in one unit and renting the other two, my cost is essentially cut in half.

I read posts from other BP members in different parts of the county that go the owner occupied duplex/triplex route and have their tenants cover all expenses or breakeven but in NYC this is extremely difficult to find for a new investor without $600k in cash. The best deals I can find in the areas I am looking in would have me paying approximately $400 per month if I did not live in the home – aka negative cash flow. This negative $400 may be reduced if I can lower the purchase price of the home but for arguments sake I want to hear opinions on the situation as a whole within the NYC area.

My mindset is that – sure I am living at home rent free, but I need to get out and get my own place. Instead of paying $3700/month for a condo for myself, I purchase multifamily, collect rents, pay expenses and at the end of the month, only end up paying $2000/month. At the same time, I build equity in the house, have more space and have other amenities that I would not get should I go the condo route (off street parking/easy access to city parks). Over the years, rents can be raised and my mortgage insurance will drop off so my cash flow will then breakeven and eventually become positive.

I realize that as an investor this would be a bad deal, at least initially but I am viewing this as half investment and half my home. My second purchase would most likely be out of state (at least NYC) where you get cash flowing deals for less money but for deal number one and my first home I think I need to be realistic here.

I am looking for any insight that anyone has to offer on this subject. I have been stressing out over this for months and just want some advice on what you would do in this situation, what you may have done in the past or what the best thing to do here would be.

Thank you guys so much! J

@Michael Seeker

1- The listing price is $600k so I am planning on paying less if I do take this one to the next steps. I have an appointment this weekend with my agent to check out the property. Hopefully there are a number of issues that allow me to put in an offer for less than the asking because it this number it is not a great deal.

2- I need to buy as an owner occupant for two reasons. 1) I am living at home right now and need to get out and have my own space ASAP!! hahaha 2) the financing is contingent upon me living in the house. I will eventually move out into a nicer place for just me and no tenants but this one must have me living there.

3- Eventually when I start a family I will need more space. At that time, I anticipate moving upstairs into the 3 bedroom unit and renting out the 2 bedroom I would be living in. Further down the line, I would move out entirely and purchase a home for just myself - no tenants.

@Joel Owens

There is typically no rent control on these smaller buildings (less than 6 units in NYC) but I will be sure to ask! There is nothing stopping me from increasing rents aside from the market itself. This is a very family oriented area in the city that is safe, has easy access to subway/highways, not congested and oodles of green space/parkland. It is never a good idea to assume an area will appreciate but there are not many places like 'this' within NYC so I am confident it will be at least stable.

My assumption with the higher prices is that these sellers have been holding the propety a long time, saw the boom of the mid 2000s and think they can get a price point near these highs.

With regard to the living next to tenant issue: others have done it as their first investment property and I am not afraid to do so. You have to start somewhere and make the best of your situation.

Thanks

Alright so my first potential deal was somewhat of a dud. Would you guys mind taking a look at potential deal number two. This is one of the 'best' deal in this area on the surface. I say that based entirely on the layout of the house and price. I have an appointment with my broker to take a look at it this weekend.

Triplex House - listed at $600k (again, similar comps in the area have been selling for $550k or less)

Market rents are 3bd-1800, 2bd-1500, 1bd-1100

Mortgage will be with a credit union that allows me to put down 10%. I have enough for 20% but I want to keep a good chunk of my money in case of emergency/capital expenditures.

Principal, Interest, Taxes, Insurace:

At 10% my monthly payment is $3653

Principal & Interest + MI= 3010

Taxes:433

Ins:210

At 15% my monthly payment is a bit lower at $3422

CapEx is calculated at 7% of monthly rents (is that a good number to use?) at $308

Vacancy (NYC) is 3% of gross monthly rents at $132

Maintenance is 3% gross monthly rents at $132

Fuel/Water monthly cost is $542 based on owner records

Total non-PITI expenses of $1114/month

Total Expenses of $3422+1114 = 4536

I would be living in one of the units so essentially I would be paying $1636/month to live here assuming I live in the 2bedroom unit. With the monthly rents of 4400 this would leave me with a negative $136/month in cash flow. My plan is to aggressively pay down the mortgage to get rid of the MI which would save me $234 per month. At that point I would cash flow approximately $100/month. Raise rents to keep in pace with the market and in a few years be cashflowing a respectable amount for a small New York City landlord.

I know I know, that negative cash flow is not good but hear me out: I MUST live within NYC for work purposes and I MUST live in a house with a driveway/parking spot. These two things are premiums here. If I was to buy a 2 bedroom condo, it would go for $600k and no one would be helping to pay my rent - I would end up paying over $3000/month out of pocket with all the fees. With a multifamily I am essentially paying half of what I would which puts more money in my pocket for other things at the end of the day and eventually deal # 2 which will 100000% be outside of NYC. I do not have a million bucks to buy in NYC where I can find cash flowing deals from day one or deals that meet the 1% rule. If I was to buy in a shady area it would definitely be doable but they are very dangerous. The real area I want to buy in has run-down 2 family homes with no parking for 850-900k so these types of deals I think are the best that I can find. Maybe I should have posted this in the 'investor psychology' forum but this home is where I have to live too - if it was 100% investment it would be in an area where the numbers worked.

Sorry for the rant but it is just frustrating not being able to buy where I want, only finding 'good deals' in the sketchy parts of town and then finding these 'deals' where there is slightly negative cash flow.

A question to anyone out there who has done this in NYC recently. How did you make it work?

Thanks again for reading through my wall-o-text. Any responses no matter how truthful or grounding they may be will be extremely appreciated.

-Britt

@Ned Carey undefined That is a really really good point! Today I am just looking at properties online. Once I start working with an agent (in about 2 weeks) I can have a better understanding of true income and true expense for each building.

Another question. How big of a change would the role of financing play in this? I ask because I am currently getting pre-approved by a few lenders and the initial rates/monthly payments they quoted seem to all differ. If I go with one lender over another, I may end up saving ~$250-350 per month.

Hi @Francisco Ycaza

Was browsing through some older posts and saw you too were looking for a 3 family in NYC. Were the sellers able to agree on a $400k price?