All Forum Posts by: Tyler Brown

@William M., Yes, as long as it is a family member and the individual has lived in the apartment for at least the past two years.

Note that the primary tenant doesn't have to necessarily die, they could simply retire and decide to move to Florida, but if their son has been living with them for the past two years, he is now entitled to take over their lease.

So it's a big gamble.  It could pay off big time and you could find yourself living in a prime location of NYC for pennies on the dollar compared to what it would cost to buy a regular unit, or the guy could be alive and well for another 30 years.

@Lina Shum,

Depending on the location, the size of the unit, and the price, if the rent he pays more or less breaks even with your mortgage, I'd be tempted to go ahead with this.

I wouldn't be too concerned with repairs. Since its a coop inside with an HOA, you shouldn't have any of the major issues that someone with a single family home would have, such as having to replace a roof or digging up a leaking sewer line. You'll only be responsible for what's inside the actual unit itself, so maybe replacing a refrigerator or stove once in a blue moon or what have you. Things like that should be pretty minimal in the grand scheme.

That's assuming the HOA in question has good financials and an adequate reserve fund, so if they do suddenly find out they need a new roof, they don't have to hit the owners with a big assessment, but that's a whole topic by itself.

The real gamble is how long this guy is going to be around.  If he's 60 and has lived there forever, it's a good assumption that he isn't going to voluntarily move out any time soon.  He may very likely stay there until he dies, which could be 40 years from now, or it could be two weeks.  

Don't forget this story:

http://www.nytimes.com/1995/12/29/world/a-120-year...

Basically a 47 year old man agreed to pay a 90 year old woman the equivalent of about $500 a month for the rest of her life, in exchange, he would get her awesome apartment in the middle of Paris upon her death.

Well, she ended up living to be the oldest person in the world, and the man passed away at 77, never getting her apartment, and what's more, then man's widow must continue to send the woman these checks every month, and if she passes away, the man's children must keep them up!

Of course this isn't really a parallel situation and I don't envision anything like that happening to you, but its an amusing anecdote if nothing else.

It depends on a lot of factors.

One of the biggest is what is the age of the tenant, and do they have any immediate family members living with them?  In many cases, an immediate family member who has lived in the unit for the previous 24 months can assume the rent-controlled lease in the event the primary lease holder passes away.

Also, just to be clear, the unit is rent controlled, not rent stabilized?  There are few of the old school controlled units still around, but they do exist.

If its a 75 year old single person living by themselves, and you're reasonably sure that their rent will at least make you break even after all your expenses, I say go for it.  You could be in for a serious windfall when you eventually are able to take control of the unit, but you really have to be in it for the long game.

You could also explore the possibility of buying the tenant out of their lease.  Tenants in places like Central Park South have been bought out for over $100k plenty of times.

I'm looking to purchase rental property to buy & hold for positive cash flow.

Unfortunately I'm located in New York City, where anything remotely close here is far out of my budget, and regardless, this is not a landlord friendly location.

Specifically, I'm looking for MFHs (mostly duplexes) for around $40-$55k, which need minor, mostly cosmetic work, and can be rented for around $500-$700 per side.  The closest that I can find properties like this seems to be the Wilkes-Barre/Scranton area of Pennsylvania, which is about a 2 to 2.5 hour drive, which isn't terrible, but certainly not a commute I'd be making a regular basis.  I haven't ruled out other areas of the country as well (namely the south or midwest), but that would likely mean a plane ticket and hotel instead of a day car trip.

For those of you that invest even further away, what's your process like?  How many times do you physically view the home prior to purchase, if at all?  I've read about a few people that arrange for Skype walk-throughs of the properties and never even visit them in person.

How do you get a feel for the neighborhood?  I'd also be open to the greater Philadelphia area, and a quick search on realtor.com shows plenty of properties in this price range, but for all I know they're in places that the police are afraid to visit.

I'm guessing at least two in person visits would be necessary, one to view the property in person to make sure the photos are an accurate representation of the place, and then another for the closing process.  Although with things like conference calls and Skype sessions, perhaps that can be cut down to one visit, or even none at all.

Of course a thorough home inspection would be very important in a deal like this.

I'll be using a PM company once the home is purchased, so hopefully I'll be as hands off as possible. 

@Jean Bolger We live in Manhattan, so there's really no such thing as a SFH here unfortunately. My fiance is a school teacher, but at an inner city Bronx school where the students swear at the teachers, fight, and steal on a regular basis. Some of them literally live in homeless shelters.

She's pretty sick of the atmosphere there and is applying at schools in the suburbs.  My job is also close to the suburbs, so while I love living in the city, the suburbs would fit both our commutes fine and would arguably be a better place to raise a child.

I may hold off on the investment property for a little bit while we get everything in order with our own SFH, then once we're settled in there start saving up again for a down payment on a MFH.

@Account Closed, in theory I could pay cash for the property, however that would just about wipe out my savings account, and then I'd have nothing left for a down payment on our home.

I'm looking to make my foray into real estate by purchasing a MFH (probably a duplex) in a nearby state, about a two hour drive from where I live and where property values are much much lower.  The properties I'm looking at are around $40-$60k and, depending on the size and condition, the individual units should rent for around $500 to $750, so it should be cashflow positive.

My fiance and I both rent our current apartment and have no debt of any sort.  Depending on my overtime, we gross about $170k/year between the two of us.  Our credit scores are both 790+.

We also recently found out that we're pregnant (well, she's doing most of the work!), so we will likely be trying to move from our one bedroom apartment to an actual SFH in a year or less.

Unfortunately, an average sized home in a mediocre to decent area by us can easily cost $500k or more, not to mention property taxes well over $10k/year.

I just got off the phone with a credit union and got pre-approved for a loan for the investment property, however should I go to them for a mortgage on a second house in the future, they will not count any rental income until I've had that MFH for at least two years.

My concern is that if I go ahead with the purchase of an investment MFH now, and next year I go for a mortgage on a SFH for our primary residence, we will only be approved for a mortgage of $XXX, whereas if I had never purchased that MFH, we would be approved for $YYY, where YYY is significantly higher than XXX.

Depending on the exact purchase price, the mortgage on the MFH would likely only be for around $45k or so maximum, so with a correspondingly low monthly payment, I'm not sure if that's enough to really make a large difference in what I'd be approved for a year down the road, but I'd definitely like to know in advance rather than be surprised by it!

This seems like a good place to ask if anyone (@Mark Gallagher or @Kevin D. perhaps) has some suggestions on buy-and-hold investing for cash flow in a MFH in eastern Pennsylvania.

I live in New York City, and everything here of course is sky high expensive.  Most parts of eastern PA are about a 2 to 3 hour drive from me, but the prices and property taxes are much, much lower.

The two main areas I've been looking at are Wilkes-Barre/Scranton, and then further south in Allentown/Bethlehem.

The Wilkes-Barre area seems to have lower overall prices on duplexes and triplexes, which some going for $30k-$40k and needing only some minimal cosmetic work.  However the general economy of the Allentown area seems a bit stronger, but houses in the same condition there cost a good bit more.

I'd be hiring a property management company most likely, since I'm not local and this would be my first property, so this is going to be a big learning experience for me.

If anyone has any thoughts, I'd love to hear them!

Well, I'm certainly glad to hear it isn't too good to be true!

My biggest problem is my distance from the unit.  The eastern portion of Pennsylvania is about as close as I can find deals like this, and it's about a two hour drive from New York City, so while I don't mind going every now and then, this won't be a weekly or even monthly visit either, hopefully.

The second concern is that I am not a handyman by any stretch of the definition.  I can change a lightbulb, and that's about it.  This is why I'm looking at properties that are as turnkey as possible.  A fresh coat of paint, some new appliances, etc... are no big deal, but I'm not equipped to tackle any kind of renovation job, at least not for my first purchase.

And on to your third point about good management - I'm tempted to say that for a basic duplex or triplex I could manage it myself by doing online background checks of prospective tenants and hiring a local handyman when something needs repair, however for my first purchase I think its best if I go with a good local management company.

If anyone has any thoughts to add, I'm all ears!

It isn't common, but electric heat in NYC is starting to pop up more and more.

It ain't cheap.  My fiance used to live in Washington Heights and had electric heat.  She only turned it on once in a blue moon, like when it would be a legit health hazard not to, and even then in winter her ConEd bill would jump to $200 for her 1 bedroom.

The people in the unit below her (also a 1 bedroom) ran theirs constantly and had a ConEd bill of $800 or more.

I don't know where in the Bronx you are, but $1,700 for a 3 bedroom definitely sounds reasonable.  Maybe tenants will factor that in and it'll take some of the sting out of those high bills.