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May 13, 2009
Townhouse in Williamsburg
http://www.mlsli.com/unidetailsredo.CFM?MLNum=2041708&typeprop=1&start=1&rpp=10&phm=1
I am a first time buyer and hope to get advice on this townhouse in Williamsburg.
I'm an architect and planning to renovate the property, live there, and rent the lower unit. What should I expect for insurance and
other costs associated with renting?
Does this look like a wise investment?
Comments
My best guess is the price of this building will either drop or stay flat for the foreseeable future. How many bedrooms in the unit(s) you expect to rent out? You can get very high rents in Williamsburg -- although the many condos coming on the market soon might change that (not sure).
How is the foundation, electric, plumbing, boiler, roof, etc.?
How does it compare to other houses in the area in cost (per square foot)?
Our own calculations for a three-story, two-family house is expect to pay about $1,000 a month -- that includes heat, water, garbage, minor repairs, insurance, PMI, and $200 per month in taxes.
If you want to stay there for the long haul, it might be worth it if it's very affordable for you and/or somehow cheaper or bigger or better than what you have now renting. But I wouldn't expect it to go up in value soon.
BTW, I have seen quite a few foreclosures in Bushwick and Bed Stuy for $250,000 to $350,000 that might interest an architect. (Flippers are buying them.) They often need fairly extensive work (such as whole new plumbing systems because of vandalism) and would take perhaps six months to a year to fix.
Posted by: mopar at May 13, 2009 3:20 PM
As a fellow architect/landlord I can not believe you have not done your homework and are asking some blog if you should buy potentially the greatest investment of your lifetime.
Here is an outline:
Determine upfront costs
Closing etc.:$26,000 incl laywers taxes etc.
Percentage down: $200,000
Reserve: $5000-10,000 (a H20 boiler costs $3500 min)
Determine operating costs:
Outgoing Mortgage= depending on rate, you are looking at about $5400 including mortgage insurance and tax
Heating/cooling- get bills from broker. (are the utils divided by unit or not?)
Determine income:
Do comps on rentals in the area that are in the same condition. (keep in mind you need to pay income tax on your rental income). Again are the utilities all divided or do you pay electric/heat for the tenant?
I hope you have already done your homework regarding existing conditions and what renovating costs. If not, you have no idea what you are getting yourself into.
Posted by: OTIS at May 14, 2009 4:28 PM
By investment, are you planning to make money off it, or live there for a while? Either way, I'm not your man, however, I will say that you should check the block and neighborhood carefully. This is on Metropolitan, which is a busy through street and truck route. A lot of great stuff nearby, but busy out front. Also, this is a lot older than 1920 and most likely wood frame beneath the vinyl. Vinyl can hide a lot of damage, which doesn't mean walk away, just buyer beware. OTOH, if it is wood frame it can be fixed - you just want to factor it in.
Posted by: WBer at May 14, 2009 8:58 PM
Mopar: Where do you find foreclosed-upon houses that are available for sale? NYT? thanks, Z.
Posted by: zuleika at May 15, 2009 12:03 AM
Thanks for the comments.
The the foundation seems to be in good condition electricity updated in 2008, plumbing & gas also in OK shape.
My concern is that the utility is not divided by units, if I divide them how much cost should I expect? I am planning on renting out 1 unit out of 2.
Wber, you were right, it's wood frame. I believe any additions above the exiting structure is going to be difficult.
Posted by: egg at May 15, 2009 3:43 AM
If it is a legal two family the electric and cooking gas should be on separate meters for each unit. If the heat is one boiler, it is not a big deal, it just means the landlord pays the heat and passes the cost on through the rent. This section of Metropolitan (south side) is not especially noisy. I knew someone who lived right around here - probably same block. (The bedroom was in the back.)
The point is, prices in Williamsburg are already high and so unlikely to increase a lot in the foreseeable future. But that's OK if the numbers work for you and you just want to live there.
Zuleika, just look on StreetEasy or Realtor.com in the zip codes you want. The very low-priced properties are foreclosures and short sales. There are also real estate firms that deal only in foreclosed properties. Tom Marco is one, and they have quite a few listings in Bushwick. You can buy the houses like normal, you don't have to deal with an auction process.
Posted by: mopar at May 15, 2009 9:13 AM
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