All Forum Posts by: Matthew Saskin

 Brokers fees are a highly variable area, driven mostly by how "hot" a neighborhood is.  In prime neighborhoods (eg; all of Manhattan, Park Slope/Williamsburg/etc. in Brooklyn, and others) the standard is for tenants to pay without question.  In other up and coming/gentrifying areas, it's pretty variable as to whether the norm is tenant-pays or landlord-pays.  In the areas we invest in, I'd say we're just at the cusp of switching from landlord to tenant pays for the brokers fees - give it another 1-2 years and the areas will be solidly tenant pays.

Moral of the story, understand the dynamics of your specific target neighborhood so you can evaluate appropriately.

 Spot on.  There's nothing different about valuation in NYC than anywhere else.

In fact, depending on the neighborhood, due to a fairly homogenous housing stock (eg; stick construction 3 or 4 family row-houses), I'd argue it's easier to value some properties because they're all "the same".  In 5 years and multiple gut-renovated 3 and 4 family properties in the same neighborhoods I can tell you that the various costs associated are basically identical property-to-property. 

As with anything, it's about knowing the vagaries of the market.  No lawn maintenance to worry about in NYC, but make sure you get snow shoveled immediately or the city will fine you.  Same with making sure garbage or recycling are properly sorted, otherwise, you get a fine!  Property taxes are shockingly low in most areas of NYC (despite common belief), vacancy rates are also extremely low (I've averaged 100% occupancy across multiple properties in 5 years without even trying hard).  Depending on the neighborhood, brokers fees/commission for finding tenants can be high (1 month rent to 15% of annual rent, landlord pays) unless you're in an area that's "hot enough" to command tenant paid brokers fees.  And the list goes on...

However, that's only applicable to rent stabilized apartments.  Pretty simply response to that - don't invest in units that are under rent control or rent stabilization programs.

I've had a ton of success investing in MFH (3 and 4 family buildings) in very specific New York City neighborhoods - Bed Stuy, Bushwick, and Ridgewood in my case.

Investing in NYC is not really any different than in any other part of the country with the following exceptions:

-Cost of entry is very high.  My 3 and 4 family units all were between 600k and 1.3M to purchase

-The market is hyper-localized.  The different of a few blocks can mean the difference between fairly comparable rental units being able to command $2000/mo in rent vs. $3000/mo in rent, and if you don't know the areas well yourself, you run the risk of buying something one block too far over

-In return for high cost of entry and high rents, the returns are larger.  On my most recent purchase (1.2M at 25% down for a 3-family) I'm taking in gross rents of $8600/mo (which is below market rate due to signing initial leases mid-winter) but still have a monthly net profit (after all expenses including capital reserves) of roughly $2k, so an 8% return.  After re-leasing during peak rental months I expect gross rents of around $9400/mo, bumping annual return to 11.2% from that point forward.

I'm happy to answer any specific questions about NYC MFH based on my experience over the past 5 or so years.

-matthew

 Depends on your locale.  In NYC and in counties here in NC I can go to the registrar of deeds website and view liens against properties.  Not exactly how much they owe, but can at least find out the terms of the original mortgage they were issued, etc.

 Hah, not brutal, just expensive, but the returns (in terms of cash-flow and appreciation) justify it.  In general, we've been very selective with properties and only purchase in specific areas we know very well (mostly Bushwick, although we're open to Bed-Stuy and Ridgewood).  These areas all have a balance of acquisition price vs. the rents they command, and are all firmly on the upward trending "gentrification curve" to various degrees.

 Welcome Chad!  For what it's worth, we moved from NYC (lived in Brooklyn for 7 years) to the Raleigh area 3 years ago and don't regret a moment of it.  Feel free to message me if you want to talk more about it.  Incidentally, we are invested in both the NYC and NC markets as well.

CBC Innovis provides credit verification services, background checks, etc. for lenders.  If you're at the final stages of receiving a loan, expect to see a hard inquiry from them or another similar firm.  If you're not at the point of finalizing a loan however, I'd look into why there are hard inquiries.

Should also note, we only invest in properties (or groupings) that come with a rent roll above a certain amount.  That means while we bought triplexes (or larger) in NYC, the only reason we're in duplexes in NC at the moment is that we purchased 5 of them on a street as a package sale.

We don't invest in SFH's. Prefer the economies of scale given by MFH's (eg; single envelope for multiple units, etc.). Also, multi-family does not necessarily imply there are utility bills to pay.

We have a triplex in NYC where we pay gas (heat), water/sewer, and common area lights, another triplex where we pay only water (gas is metered per unit with separate boilers), and 5 duplexes in NC where we pay no utilities at all (Everything is metered for the individual unit)

 This is our move.  We have individual homeowners/landlords policies on all of our properties, and an umbrella policy covering everything above that.