Is anybody investing in nyc or are the prices to high and to much competition .i’m lookin to fix and flip is that a good idea need some advice just started my corporation and got pre approved thru 3 banks also have a good handyman and lawyers lined up and ready to go is there anything i should be aware off
also what do you think of the name
thanks
b
You’re using your own money? And getting pre-approved by 3 banks, means you have 3 hits on your credit before you’ve found a deal.
Where in New York? NYC and Buffalo might as well be in different worlds, when you’re talking about NY you should specify where you’re talking about since there are so many different markets there with completely different dynamics.
Rich is right in new york city you need very deep pockets and have the possibility of having the local liberals tell you how much rent you can charge. In western new york you get a great positive cashflow but you need to know the area VERY well. I kow if a california investor that bought a property for 10k in a bad neighborhood, hired a “property manager” didnt collect the rent and got letters from the housing authority to do all kinds of repairs or else get fined. To make a long story short he had to get rid of the property for FREE to anyone that would fix the problems it had.
the outter skirts of new york citywestchester,long island, staten island
Good luck out there, finding cashflowing properties is not going to be easy. Prices are way out of line and you’ll need to a damn large down payment to get a cashflow on most of them.
Well, I firmly believe that you can flip in any market. But, in a tight market you need to deligent about checking prospects multiple times per day (MLS, etc) and be prepared to move quick.
Personally, I wouldn’t have gotten pre-approved with a bank (looky-loos lower your FICO score) and I also wouldn’t have used anything that is tied to my personal credit. We only use hard money. The cost of that money is higher but, A) we have deferred payments for 6 months and B) it won’t adversly affect our credit if a deal tanks.
thank you bobbi
as for using a hard money lender i see that the fees, etc r pretty high what are the standard fees and whats the most i should be paying for the these fees (points,closing cost%,intrest rate and any other fees)with a credit score around 660 …so i can base my math on
Hard money is rarely tied to your credit score. It’s tied to the deal. They want to know that the deal is profitable.
The typical HML will do between 65% and 70%. Here in Southern California (because of the cost of real estate) you’ll find that many will do 75% and a few will even do 80%. This means that your After Repair Value (ARV or LTV) - they will loan you 75% of that figure. You want 75% of that figure less any repair costs and quiet costs, to be your purchase amount.
Example: ARV of $400,000
Hard money will loan you $300,000
You need repair and quiet cost budget of $50,000
So, your purchase price would be $250,000
Hard money runs higher for percentage, usually between 12% and 15% (based on the people I’ve talked to) with typically at least 3 points at closing. The HML that I use defers the payments for 6 months.
You need to convince the HML that the deal works which means putting together a report that shows recent comps, what you plan on doing to the property, what you plan on asking for when you sell it, how you plan on doing the work, and what your marketing plan is for your sale. We also include our life experiences into the report to show that we have management experience.
I own rentals in Queens, and Nassau County.
The market here goes in cycles, with bottoms in the mid 70’s, and the early 90’s. I was a bit young in the mid 70’s, though I bought a few properties in the early 80’s before things peaked in 1986, and again in 92, 93 when the market bottomed out.
We’re currently at another peak. The New York Times just reported in the last few days that prices in Brooklyn and Manhattan shot up again, despite the downward trend nationwide, with prices in Jan '07 13% higher than Jan '06. Amazing!!
You’re right, unless you put 50% or more down, properties will not cash flow here . And I believe it’s risky to think you can buy something on the cheap to flip.
I bought a propery around 1981 for 150K, and it zoomed to 360K in 1986, the last peak. How do I know it’s 360K?? Some flipper bought the identical property next to mine for that price, and tried to flip it for 399K. He waited, and waited, and waited till 1990, when he sold it for 300K, and negative cashflowing every month. Heard he lost over 100K.
The next guy that bought it for 300K was another flipper. Not only did he fail to get his price, he lost money every month as well. and got rid of it around 1993 for 275K.
Having been around the last market peak, do you think I’ll be dumb enough to speculate on a flip at the market peak??
In the last couple of years in Bayside, instead on paying 70% ARV for wrecks to rehab, builders had overpaid for them to tear down. Give you an example.
A contractor friend was preparing for retirement, and was going to sell the home he lived in, which he never had time to fix up, that he bought for 25K years back. A neighbor heard this and offered him 430K on the spot. He was excited that something he paid 25K for is now worth so much.
Instead of being overjoyed, his wife and daughter insisted that he see a broker and find out what it’s worth. The broker listed the place for 500K, and my friend thought it was overpriced!!
To his surpise, a bidding war broke out, and the top two guys offered 535K and 550K. He went for 535K as the guy would close in two weeks ALL CASH. But the deal was, he had to move at the end of two weeks.
Why pay so much??
Because in my neighborhhod, the land is worth more than the house. Builders been buying SFH homes here, in this case for 535K, spend a million to build 3 attached 2 familes on the lot, and selling them now for 950K each!! How much do you think they made on it??
Sure beats trying to snooker a homeowner, pay him 70% ARV, and sell it at market, or flip it. Who needs that if you could make over a million overpaying the homeowner besides.
So you say, why not tie up a wreck and flip it to a builder?? Unfortunately, unless the seller is dumb, stupid, and haven’t heard of the HOT market, he’s two steps ahead of you, and already priced it with a broker or builder. But if he is in fact that stupid, would have a wife or daughter whos’ not, hollering at him as did my freind.
No cash flow in those areas unless you want to put down a crazy amount of money, not worth it. Appreciation in those areas is slated to be n the negative range over the next couple years according to fortune mag
I have a friend near Bayside, I’ve heard all about the the overpriced homes in that area. I think the prices out there are already way to high, I doubt the market can support much more. Flipping would be nuts, I can see the same thing happening that happened in SoCal…coming soon to a LI city near you.
Rich In CT,
I live within 1/4 mile of Bayside in a much better area and I can tell you its been very stable and prices are not going down at all…Never mind the fact the homes are selling fairly well still…I bought my home 3 years ago for 600k and I thought that was high…The same home across the street just sold late last year for 789k…Now another family down the block bought the same type of home,knocked it down to the ground and put a brick fortress in its place…I do agree its toppy here but the area Bayside/Whitestone/Malba/Flushing North is prime as can be for a queens neighborhood…Yes it’s impossible to cashflow (no one buys here for that anyway) anything but you cant ask for a better area in Queens…We are minutes from all the bridges and the LIRR is only a 20 minute ride into Penn station,District 25 schools are one of the best in the city and the influx of Koreans/Chinese have driven home prices out of the park…They buy smart but they pay high prices…Center Hall colonials go for 1-1.2 million all day long in Flushing North and dont go into Malba,you can pay upwards of 2-4 million easily for a Mansion…Whitestone you can pay 800k for a ranch but like I said the areas are rock solid…Whitestone is all old school Italians (literally who dont speak good english),the homes are meticulous…
As for flipping I wouldn’t touch that in this area…Staten Island is a different story…I have heard good things about the area being up and coming…But I’m not familar with it…Long Island has some opps but it’s tough to flip in LI…Too many LI residents that used to say how they would never move to Queens are buying here now…They are strangled with ridiculous property taxes,so now Queens is looking like paradise…An 800k home in Queens taxes are no more $3500 per year…Pretty comical considering I just bought a 70k home upstate and the taxes are the same…LOL…NY is something…
One area that is attracting attention from a very aggressive local builder is Rosedale Queens NY…Its used to be a decent area years ago…But now builders are attacking the area because of fairly priced homes and favorable zoning laws that enable builders to build 2 homes on 1 lot or convert SFH’s to 2 families…
To add to what Rookie said, in 1993, the last market bottom, I bought my 2 family home in Bayside for 227K, an REO sold at an auction. At market, the property would’ve sold for 290K at the time. The bank provided a 90% mortgage to boot at around 200K, with PITI of $1,600 in 1993.
When I went to the auction, I was not thinking of moving into this house.
This property, if rented out in 1993, would command $1,500 for the owners 3BR/2Ba unit, $750 for the 2BR downstaris. plus another $600 for an additional basement unit. An income of $2,850 and a PITI of $1,600. At market bottoms, property really cash flows here.
What I did at the time was I kept a 3 family I owned in Rego Park, the one I bought in 1982 for 150K, where I lived in one unit, and rented out all 3 units after moving out, cashflowing $1,500/month back in 1993.
If you look at the numebrs, I almost live for free moving to Bayside.
Some fella bought an identical property 2 doors down from me in Bayside, the REO I bought at 227K in 1993, for 310K in 1994. I know this as he rang my doorbell on the day he made the offer, and aksed me if it was a fair price. Told him it’s a good price. This same fella sold the 2 family at 850K last fall.
I think he did very well indeed.
If one buys at market bottoms, one can do well. One can also do well with long term buy and holds, particularly if one buys at market bottoms.
As I mentioned in my last post, I saw a few who lost their shirts trying flips at market tops.
I forgot to mention this part of the story about the house the fella bought for 310K in 1994, and sold last fall at 850K.
After I bought my house at the auction, I proceeded to rent out the units. One agent I met renting told me that the builder tried to get 399K for the house in 1987, when the house was completed at the last market peak, but when the highest offers came in only at 360K, got mortgages on all four houses he built, and decided to wait a year.
Within a year, prices collapsed.
Another broker came by, said he saw me at the auction, told his client, who was going to pay cash, that my bid price of 210K was too high!!. Note that the auction company added 17K in fees making the purchase 227K. Here I was patting myself on the back for getting the place for so little!!
A few month later, I saw this same broker putting signs out on this house two doors down from me. Apparently all four houses in a row are in foreclosure, each by a different bank. Told me his client approached the bank, paid 150K cash for the place, and now flipping it for 250K!! He based his asking on what I paid at the auction, plus a few months appreciation. Then he said “didn’t I tell you you overpaid”??
I recall someone bought it for around 225K, so this flipper still did very well, made 50% on his money in a few months. Guess what?? Another flipper bought it!! Sold it to the guy who rang my doorbell for 310K.
Remember the story I told about the TWO flippers that bought properties at the MARKET peak starting in 1986, and both sold at a lost, and both suffering negative cash flow, losing their shirts??
If there is a flip side to the story, two flipper done well at the last market bottom here in Bayside.
Is there a lesson to be learned here?? There is no logic to prices at market tops!! People pay whatever to get get whatever. Yes, you might make a few bucks FLIPPING to a BIGGER FOOL. The risk is you’ll lose “when the music stops”.
There is no logic to market bottoms either. People simply would not buy. I’ve been to auctions, every week in 1992-1993, and at some, I was the only buyer showing up! The difference here is all you have to do is wait a little, and the prices would move to more logical levels in short order.
thanks frank chin for the gem… my first area to invest was s.i i think im gonna stick to that area if something does come up around queens ill still jump on it if it makes sense
I just wanted to thank everyone for there opions and help :beer
Any thoughts on Rochester, and Syracuse
I posted a similar question in another section of this board before I found this thread.
How is the New York market now? Is anyone doing rehabs in or around the Hudson valley, NYC suburbs?
There is almost always a good rehab market nearly everywhere, Hudson valley is no different. Find a junker that no one else wants and make it sparkle, then sell below market value for a fast sale. It’s not rocket science.