Is it foolish to count on rental income?
We’ve been thinking to buy a coop in Ditmas Park, Sunset Park, or a similar nabe. Lately, though, I’ve noticed a couple of 2-family houses that, if we were to rent out half the house, would leave us paying only slightly more on a mortgage than we’d be paying in mortgage + maintenance in a…
We’ve been thinking to buy a coop in Ditmas Park, Sunset Park, or a similar nabe. Lately, though, I’ve noticed a couple of 2-family houses that, if we were to rent out half the house, would leave us paying only slightly more on a mortgage than we’d be paying in mortgage + maintenance in a much smaller coop. I love the idea of having our own house that we could expand into as our family and (hopefully!) income grow. But I’m wondering whether it’s smart to count on rental income – because it would be a helluva stretch to afford without it. Assuming that the rental is in decent shape, is this common? Do people generally figure they’ll be able to rent out the apartment to afford their mortgage? Or is that hideously ill-advised?
Go for it !
We bought a 3 family in Sunset Park ( 47th st & 6th Ave ). It’s been 6 years and I have not had any trouble with tenants. Rental income is great! , I say go for it!
Also it is better to look for a two family that can be delivered vacant. Buying with existing tenants can add difficulties that have been discussed many times on this board. I have a three-family and had existing tenants inheriting the tenuous relationship they had with the previous owner.
It’s ideal to start off fresh with tenants of your own choosing.
2:55,there are month to month agreements but the eviction process is never easy, especially with lengthy with court proceedings etc. as I mentioned above NYC laws favor the tenant, It can also get even more complicated if there are children living there also, there are many variables to consider,
if a tenant wants to move, you cant really stop them. I support doing a lease that gives you an out w/ 2 mos notice.
I have heard that if you offer a month to month agreement as opposed to a year long lease – it is easier to get rid of dead beat tenants. Of course you’re taking a risk of unexpectantly losing tenants – but if you find good tenants who consider you a good landlord – the risk lessens.
Budget in everything, not just the mortgage, as you weigh this decision. Because renovations and maintenance on a house are very costly. Even in houses that are in good condition. The houses that are a bargain will be expensive to renovate. Get a quote for homeowners insurance, because that is another $3,000 to $5,000 a year. Get a thorough inspection that tells you which mechanicals need updating. If the heat or hot water go out, your tenant gets to stay in a hotel you pay for, while you fix the heat this Winter.
I agree with 1:45 – there is a risk. The laws totally favor tenants and if you end up with a deadbeat it will take a minimum of 6 months to evict. Be careful, check references, credit history, employment and rent below market to allow yourself to pick someone you feel you can trust. Just do what Dubya does, look ’em in the eye and feel their soul.
Just one other point of view. As with any investment there are risks invloved and while the commenters above have had wonderful experiences with tenants there are those who are going through hell as we speak trying to collect rents, I own a live in a one family because I did not want to rely on renters to pay my mortgage, but own two multi family homes that I rent out, this way I know I will always have a place to live based on my income alone,
just remember to have enough in your cash reserve for those vacancy periods and if your tenant decides to slack off on paying you rent, I don’t want to discourage you but landlords often get shafted with NYC laws, at the end of the day it is a good investment as long as you can support the risks, good luck,