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October 6, 2008
The great experiment 2008
(Tried posting this with photos before but it didn't work.)
So this weekend I interviewed tenants for the garden apt of my new house. This is the last phase of the great experiment of 2008: "Can you live cheaper month to month in a four floor rowhouse than in a two bedroom coop"? The answer thankfully is shaping up to be a resounding "YES." My business is moving into the parlor and paying 1700 per month. The garden apt is getting rented out for a nice monthly rent (also 1700) and so we will be paying approx 750 fewer dollars per month to live in the new house (utilities included) than we were in the two bedroom coop we just sold.
Would love to show you guys some "before" photos but don't know how to do it here. Will post some "afters" when I have them in a few weeks (if I can figure out how to do it).
But the point is: the economics of owning a two family house can be very favorable when the circumstances are right.
Comments
Hey Wasder, if you want me to host some photos for you, contact me thru my profile.
Posted by: denton at October 6, 2008 10:18 AM
Right on. Thanks Denton. I have a website of my own I could put them up on but thought it would be cool to have them here.
Posted by: wasder at October 6, 2008 10:23 AM
I will ask Brownstoner to let me write up a reno blog about the house. I think it could add an interesting perspective here, both from an aesthetic sense (cause my wife is really smart) and from an economic sense.
Posted by: wasder at October 6, 2008 10:39 AM
Wasder- Totally agree. We took on a similar experiment recently in the Greenwood area on an old woodframe with an outbuilding and a driveway and it's working out pretty well.
We're carrrying our two family with a renter on the ground floor, we're not doing over the top finishes and renovations, and we're living with less outlay then when we lived in a 1.5 bedroom coop. Of course, we don't live on a fancy north slope block anymore, and our house and it's finishes look more like something out of 80s Brooklyn than 2008 Brookln. But we have more space than we will need for a while, and that itself feels like a huge luxury.
Posted by: Park Place at October 6, 2008 10:51 AM
We also recently bought and renovated a one-family wood frame house (could be converted to a 2-family fairly easily if things get really bad) and after all the dust settled - literally - it is costing us between 1K and 1.5K less per month (mostly because we were able to put down more equity from the sale of our 2 BR co-op and we don't have to pay exorbitant maintenance fees so neighbors can run the thermostat at 75 degrees in winter - oh and we left a fancy North Slope block for Windsor Terrace).
Scary times to be making such a switch, but I've been following your agonizing and agree that if and when it makes sense for you, it can be a wise financial choice to buy a house, even now. For us, with a family of four (and maybe five soon) a 1000 sq. foot 2 BR was just not going to cut it for the long haul. This house is a place we plan to be for 10, 15, maybe more years.
Posted by: WTbound at October 6, 2008 11:01 AM
Park Place and WT Bound. Thanks for responses. I too have traded a more prime block for a slightly off the beaten path (but still nicely located) home. We too are trying to stay within our modest renovation budget by living with the things that are livable now and only fixing the essentials. If you can get financing (and of course that's the big if now) there are ways to make your living space go up and your expenses go down.
Posted by: wasder at October 6, 2008 11:06 AM
While not living in Brooklyn we have owned a 2 family in Cambridge MA and it has let us put our children through school and makes it possible to not HAVE to work full time all the time to support our real estate. If you are careful and have good tenants it is a pleasureable source of fairly solid income. Places in Brooklyn and Cambridge will probably almost always be desireable.
Posted by: lauriec at October 6, 2008 11:28 AM
Wasder, good for you. I'm glad it's working out for you.
Posted by: lechacal at October 6, 2008 11:28 AM
hey wasder. if you want to send me the photos i can put them up on the main blog. lisa at brownstoner dot com.
Posted by: lisa at October 6, 2008 11:34 AM
Wasder, you did your homework, crunched the numbers, weighed the pros and cons, and consulted with your family, and with a bunch of strangers on a blog. You found a place you love, and you went for it. I think you will be fine, and will look back and wonder why you were even worried. The same goes for the other recent buyers here.
I think cautious spending, and living with things that are structurally fine and/or working, and phasing improvements in over time, while collecting rent, is the way to go. People who want you to fail are those who have never risked, or are just bitter, disappointed human beings in general.
I wish you, and the other recent homeowners happiness and much success.
Posted by: Montrose Morris at October 6, 2008 12:07 PM
Lisa--will do. Thanks.
What--how have I failed? Its all working out as planned. Like you said in your thread "I live where I buy."
Montrose--thanks. Agreed that cautious spending is the key. No need to tackle every project at one time. With the money I am saving compared to my co-op my plan is to sock a certain amount of it away in a "home improvement" savings account. In a year or two I will see where I am at with the ability to tackle my kitchen!
Lechacal--thanks as well. As you are a voice of reason here your words mean more to me than some.
Posted by: wasder at October 6, 2008 12:13 PM
I am glad to hear that this is working out for you. Although I did not buy at the top of the market, having rental income has been a good thing. I only had one tenant that wasn't so nice so overall its been a good experience for me especially now that I no longer have a mortgage.
Definitely go slow on the renovations. I had to redo both kitchens when I first bought my house and I went right to the Home Depot to the horror of my neighbors. That was 12 years ago. I am now taking bids for an upscale kitchen reno and the cash prices are great for this right now. I am giving my old Home Depot cabinets, which are still in great condition, to friend. Enjoy.
Posted by: Just Wondering at October 6, 2008 12:34 PM
Keep in mind nearly all improvements to your office floor can be paid by your business (as long as you're not putting in a wetbar and hottub). Schedule E as a loss.
We've been doing something similar with a second co-op apartment for several years, and it's worked out fine.
Keep paying yourself. Congrats on your new home.
Posted by: buttermilk channel at October 6, 2008 12:35 PM
Glad to hear it's all working out Wasder!
Posted by: I_haz_TWO_toilets at October 6, 2008 12:37 PM
Just Wondering---The kitchen in the owner's duplex is the thing most in need of renovation but we are going to wait. It is still functional if not our dream kitchen, so we are going to live for a year or two with it while trying to save up for this next phase. We technically have two tenants since I am my own tenant but in effect we control three out of the four floors of the house. The rental income pays more than 60% of the mortgage right off the bat!
I haz--hey there. Good to see you. Yep its working out. So exciting. I spent most of the weekend there, interviewing tenants and checking out the renovations.
buttermilk--good points. I chose to not go the write off route but instead just treat my business as a rent paying tenant. I guess the difference is writing it off and getting a big refund in April or getting the money up front in rent. I chose for the first year to go this second route to make my monthly nut as manageable as possible. Will investigate the financial implications at the end of the year and see if I want to try the other concept the next year.
Posted by: wasder at October 6, 2008 12:57 PM
Ditto montrose's comments. Great idea to live with the kitchen for a while before renovating it (although perhaps not exactly a choice). You will have a much better idea of how you want to use the space when you are ready.
Posted by: slopefarm at October 6, 2008 1:16 PM
We're going to do a couple of posts on this on the home page...
Posted by: brownstoner at October 6, 2008 1:43 PM
I'm still rooting for you wasder!
Posted by: cobblehiller at October 6, 2008 2:16 PM
thanks cobblehiller. I think I have it under control now. a few white knuckle moments to be sure but now that the pieces are falling into place it feels like a good move.
Posted by: wasder at October 6, 2008 2:21 PM
It's a 'white-knuckle' time 'moment/time' - You're not alone. I agree with MM and others that you really need to live in a place for awhile to figure out what you want to do with, say, the kitchen, for instance. Watch the light in the room, see how you move through it, etc. Will love to see your photos!
Posted by: cobblehiller at October 6, 2008 3:06 PM
Congrats, wasder. I look forward to seeing it featured on the home page.
Posted by: Biff Champion at October 6, 2008 3:08 PM
Hi Wasder,
I was looking forward to meeting you on the 16th but it now looks as though I won’t be able to make it. You are in a very similar position to me.
I also moved from an apartment in Manhattan to CH and my wife and I had our first child less than 2 year ago.
We bought a brownstone (2005) close to the top. We live in half and have renovated the other half to rent out. I let the renters who were in the building when I bought stay and I did not raise their rent, happy just to have their help paying the mortgage. But the renovated apartments rent for a lot more than the unrenovated ones.
I love the area, I love the house, I have a huge back yard for my daughter and the tenants are great people that I am delighted to share the house with.
Buying at anytime can be a winning choice so long as you do your homework...like you did. It is not all about money (in fact for me it was mostly about being able to get outside, additional space and a quieter area) but almost by accident the trade from the UWS to CH saves me loads every month.
Posted by: Aussie at October 6, 2008 3:53 PM
Aussie--sorry I won't get to meet you on the 16th! Bummer. I always enjoy what you have to say. I think that with the market being what it is right now people have to get creative about how to afford a bigger place to live and there is a lot of opportunities in two family houses if you choose the property carefully. So I thought maybe my situation would be edifying for others. Hope to catch up with you sometime.
Biff! thanks. See you next week.
Posted by: wasder at October 6, 2008 4:04 PM
wasder, I'll be off and on the blog until next week, so try to keep the outing fresh in everyone's mind. Will see you for sure on the 16th.
Posted by: Biff Champion at October 6, 2008 4:07 PM
Biff--could you next week put on the forum a post with date/time/location? I will do the rest in re keeping it in people's minds....
Posted by: wasder at October 6, 2008 4:22 PM
wasder, good idea. I'll try to remember, but please remind me if I forget.
Posted by: Biff Champion at October 6, 2008 5:47 PM
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