All Forum Posts by: Eric Hajdu

@Leisy Bartumeut sorry to hear you had a bad contractor experience and are left in this position. Your options really depend on what debt you currently have on the property. If you don’t have a first mortgage, you’ll certainly have several ways to tap the equity, it will be more difficult if your looking for 2nd position debt or re-fi(not impossible). Please provide some more detail and I’d be happy to pass along some contacts in Bk.

Eric

Christian,

It really all depends on buildable sq. footage, once you know that, you could assign a price of about $350-$400 per square foot.  As I'm sure you know Prospect Heights is very desirable, but prices will vary widely depending on which street your on,etc.  Let's assume you could build 5000 sf., which would appeal to someone wanting a 1 or 2 fam, possibly 3 or 4 condos as well, I would think you could get close to $2mil. for the lot.  Once developed, it could be worth $1250-$1500 a foot.  Hope that helps.

Kiah,

I agree with @Kevin Paulk, I would find the neighborhood handyman, every area of NYC has known people that do the trash/light super duties for the surrounding blocks.  I know when I had someone coming twice a week to do trash on multi family, it was very reasonable, around $125 a month.  These people will gladly be on call for your tenants, you could have an arrangement, where you pay them each time they have to visit the property for an emergency, maybe $100 a call.  Also, they tend to know all the local vendors that people use, painters, electricians, plumbers, etc.  Best of luck!

Travis,

Congratulations on your purchase, could you please provide a bit more detail so I could attempt to offer more accurate input.  Are you planning on changing the structure or is all the work interior?  Is the project for resale or to be used as a long term hold rental? I am in the early stages of planning a gut reno to a house in Cobble Hill Brooklyn in which we will add about 2000sf, extending up and back, the loose figure we are using for our work is about $350 a sf, our structure will be 5000sf when completed.

This is my first project of this type as well, and I'm astonished by all the soft cost before you even start construction.  Not sure where your at in the process, but before you even begin you could blow through a $100k on architect, asbestos testing/remediation, boring/soil test, drafting of plans, numerous surveys, expediting, etc.  Going through the process helps you understand why real estate is so pricey in NYC, also I don't understand how developers do similar projects further out in the boroughs where margins aren't nearly as big.

Also, in terms of construction cost, luckily materials and labor have stabilized a bit, but the cost of capital to fund the work is going through the roof.  Not sure how you plan on funding your project, but the quotes we're getting for construction lending make you really think twice about moving forward.  My point being, I wouldn't worry as much about finding the lowest price contractor at this moment, but I would put a lot of energy into lining up reasonable debt to fund the project.  Best of luck, feel free to message me any time.

Eric

Brandon,

Congrats on your recent acquisition, I'm able to give some input/advice on a couple of your points as I recently went through a somewhat similar scenario while buying an occupied multi family in Brooklyn.

In regards to the below market tenants, I would absolutely wait until they vacate before listing, having tenants living there greatly reduces your exit price, as potential buyers worry they won't leave.  I would be sure to give the tenants ample notice of at least 60 days that you won't be renewing their leases.  You don't have to be super specific with them as to why, as far as they are concerned, you may want to renovate, move in, sell, etc.

If I knew the area of Brooklyn that the house was located in, I could give you more specific advice in regards to listing it, but in general you will want to have a listing agent that specializes in your area, and in NYC you have to have a real estate attorney to complete the transaction.  Expect to spend between 2-4k on attorney to represent you at the closing.

If your property is anywhere in North Brooklyn, I can give you some agent recommendations. I apologize, I don't have any referrals to pass on in the more southern areas, such as Coney Island, Bensonhurst, etc. 

Hope that is off some help, feel free to shoot me a message with any specific questions, good luck!

Maggie, I think a 2 bed condo is a great way to get started in NYC real estate, I just don't think it's a realistic tool for house hacking.  In regards to your budget, you could certainly find a multi fam in many BK areas for around $1mil, they won't be as developed as the neighborhoods you mentioned, but certainly have upside.

One final thought, if you do go the condo route, I would choose a more established area such as Ft. greene, Downtown Brooklyn, Park Slope, etc.  where you could find a tiny 2 bed for just slightly above your budget, but you would be able to get rent about 50% higher than the areas you mentioned.  Feel free to message me if you want any more specific info.  

@Maggie Blackburn

Your very smart to be attempting this at a young age, I would suggest considering a modest 3 family in lieu of a condo. I have owned several Brooklyn condos over the years and they are generally not very accommodating to the idea of owners renting out a part of their space. Also, you can’t control the monthly cost as much as you would think, there are always assessments, mait. increases, rapid property tax hikes, etc.

What is beneficial about the multi fam is you can practically do whatever you want and you can adjust how much of the space you keep for yourself as your needs change. At some point, maybe you start a family, and make a duplex, etc.

The best part is you have the option of turning the property into condos at some point down the road, which is where the real payoff happens. With rents being so elevated, I actually see many properties in bed stuy, bushwick, and other fringe areas where the numbers work really well.

Best of luck!

@Jesse Wexler

I’ve never used a broker on the buy side in Brooklyn, and never had an issue. Typically the sell side is paying a higher commission if the buyer is represented by a broker, so it might be to your advantage to go at it alone.

I know with a couple new construction Brooklyn units I’ve purchased in the past, the sales agent directly told me I’d saved by not having an agent who would be due a commission.

I think as a previous comment mentioned, you really want to invest in a great real estate lawyer anytime your buying or selling in NYC. You will be communicating with them intensely once you have an accepted offer all the way until the time you close. Best of luck!

@Dor Sagi

Congrats on your search, I can give a bit of input as I recently bought a multi family in cobble hill and have a few friends active in the Bushwick market.

You will have a tough time getting a 5 cap rate in Brooklyn, so you should have modest expectations as far as cash flow. You are really buying here for appreciation of the asset and a huge pool of willing qualified tenants.

In terms of monthly expenses, you will have the insurance policy, roughly $4k annual, common area electric- $150 monthly. I wouldn’t hire a mgmt co for 3 or 4 fam, there are tons of individuals who do the trash/light cleaning for small multi fams and it’s very reasonable, $100-$150 a month. These same people can do the snow cleaning as needed for an additional fee.

Feel free to reach out if you need anymore specific info. or referrals, best of luck!

@Hila Aroch

I recently sold two condos in Brooklyn that I used as rentals for years and with rents being so high, they traded at about the equivalent to a 5 cap, which is pretty good for NYC.

I have also bought and sold a couple new construction condos in Brooklyn, I would advise against this if you plan on renting it out. In new construction the common charges always jump dramatically in the first few years, eating into your profit. Also, there are always construction defects that need to be ironed out.

Consider buying in a class A established neighborhood in a building that has been around for 10 years plus with a strong reserve. Best of luck in your search!