Am I Crazy Or Can I Do This???
OK, here is another possible deal. This one in Queens NYC (Fresh meadows)
Single family house on a lot 25X122.
FSBO Purchase price of $437,000
3 or 4BR (need to check) with 2 baths.
Full Kitchen & full basement.
This home looks below market in a good area of Queens. It would be used strictly as investment property.
Assuming I rent out the entire house at $2,500 a month with tenant paying heat,
I figure that I can put $40,000 (around 10%) down at a rate of around 6.25%, I can just about break even (assuming property taxes are no higher than $2,000 per year). But CF would improve after 3 years as I gain more equity in the property.
Based on my financials would I get a mortgage for this property?? FICO of 640, yearly income of $45,000, but 10% down???
Please advise...
Nick in my opinon that is not a good deal. I would suggest you factor in vacancys , insurance and repairs. I also believe your thought that yearly taxes in NYC on a 400K + house will be quite a bit higher than 2K a year.
Not that it will, but what if the market collapses and your property value goes down? The profit is made on the buy not sale. I wouldn't count on appreciation to turn a bad deal into a good one.
scr2001,
Someone from Las Vegas giving this advice. I know an investor in Las Vegas who is hoping his buyers do not re-finance, one of his houses went up $40K in a short time and that is only one of them.
Appreciation rate is around 2% per month right now, the last down market I saw in Las Vegas was in 1963, but one investor I know bought all the properties he could 40-50 ot them. When the market hit the upswing well you get the picture cash out time big time.
John $Cash$ Locke
IMHO You are crazy. The property purchase price is 400k + and your rents are only 2500? You will LOSE MONEY from day one. Run as fast as you can from this one.
Remember the 1% rule, for a 450k house your rents need to be 4500 AT LEAST.
[addsig]
telemon,
I don't think NickL is crazy. He is desperate because you can't find a deal like you would find anywhere inland. The New York market is so much up and hot that NickL rightfully believes that what he found is in fact a great deal, which we know is not. 1% rule might apply in OH, but in NY... but I wish it does for at list a week or two
Having lived in NYC my entire life, it is virtually impossible to try to find a decent deal there. And the 1% situation is a total fantasy in NYC--will never happen! The goal is to try to buy in areas that are not affluent--like Fresh Meadows is. You need to identify areas that are solid middle class or in a positive transition. Examples of those in the Queens area of NYC would be: Queens Village, Corona, sections of Long Island City, parts of Jamaica, etc. You may not consider living in those areas yourself--but many people do and will! I also think in those neighborhoods, if you could find 2 or 3 family homes you'd be much better off. I think it will be very hard to try to make money on a one family in NYC.
Have you thought about branching out a bit? I've lived in NJ for the last two years and there are a number of neighborhoods in solid transition--Newark, as an example is one of them. Lots and lots of developers snapping up homes (in the $150,000 range!!!) and fixing them up and selling or renting. It's only a 35 or 40 minute car ride from Fresh Meadows on a good day. Look at what happened in Jersey City--only a few years ago it was a total dump and now so many homes have been redeveloped that the place is a wonderful place to be.
Not easy doing REI in the tri-state area as it's one of the most expensive places in the country (and the planet) to live. Just be creative and reach those tentacles out a little further.....
Glen Oaks and North Floral Park (No. of Jericho Tnpk/Jamaica Ave.) are also good spots. STAY OUT OF NASSAU though! Taxes have doubled in some locations due to Suozzi's reassessments.