Time to tap this knowledge pool…

Since we have decided to rent in Brownstone Brooklyn (couldn’t afford to buy the space that we need) we still have our “house fund” sitting in the bank. This past tax season has proven that 3 kids just don’t provide enough deductions so we are thinking of buying something to rent out.

My questions are many, including:
– is this a good idea at all?
– with a budget of no more than 325K, where should we be looking?
– should we bother looking at studios or are 1BRs that much better of an investment?
– Anyone want to sell their place but still want to live there? (hey, you never know!)

Many thanks in advance for your 2 cents.


What's Your Take? Leave a Comment

  1. With a budget of only 325k, I would consider any investment that broke even or netted 200-300 a best case scenario. unforunately to make money in real estate, you need money.

    Being an investment property owner myself, I can speak from personal knowledge that generally speaking, an investment property needs to have at least 3 units to net a profit. The reason being the second, third, or fourth units come at a marginally lower amount. I.e. a 1 family costing 500k, 2 family costing 750k, 3 family costing 900k. The expenses stay relatively the same for all three properties while the rental income triples. Along this line of reasoning, a one br can never really turn a profit since you still need to pay taxes, heat, hot water, mtg, etc.

    I believe condos can be bought in east williamsburg for 300k or so. A new construction 1 br should rent out for 1500-1800 and assuming you down 20%, you come close to breaking even. Good luck!

  2. A three family needing no repairs will cost at least $500,000 in any neighborhood in Brooklyn, including East New York.

    OP can afford a studio or one bedroom in Manhattan, Jackson Heights, etc. I would say go for it if you think prices will appreciate 40 percent or more in three years. But I highly doubt that is the case.

    What about Wine Lover’s idea of a proper two bedroom pre-war apartment in Kensington, to live in? You can also find post-war two bedrooms for that price in the non-landmarked areas of Jackson Heights. Those are decent areas with decent schools.

  3. “…unless something really really good comes up…”
    If you can buy something for 10x rent roll then go for it.

    The daveinbedstuy offer is a horrible investment idea at 20 x RR. If you wanted to live there in a couple of years when he moves out or when you don’t renew his lease it might be a good deal at 15 x RR.

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