Looking to buy in Prospect Heights/ Crown Heights, not familiar with area

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Looking to buy in Prospect Heights/ Crown Heights, not familiar with area

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maxwellimus
what am I, new?
Joined: Apr '12
Posts: 3

Hi Everyone.

Now before I start explaining my situation, I am a first time home buyer and I'm dipping my feet into the market. Being that I have minimal funds, my budget is set that I can only afford a studio/one bedroom in bed-stuy, clinton, prospect heights, crown heights, and other areas.

Now, I have a few listings I'm interested in especially the one between classon and franklin on st marks ave. Also a studio in prime pro heights at prospect pl and vanderbilt.

My question is how safe is st marks between classon and frankllin? Is there potential for growth? What worries me is the surround buildings look very warehousy, and a new affordable apartment across the street really doesn't seem to help increase value.

Would it be better off to get a studio in PH?

My goal is to live there for a 3-5 years and rent them out afterwards. I would like to retain them for longer.

I am a single professional engineer with a medium sized dog. I've spent my time living around manhattan so I'm not really familar with PH/CH, but I'm excited for the change!

# Posted 1 yr ago
whynot_31
Former Lurker
Joined: Mar '06
Posts: 16,379

St Marks between Classon and Franklin is about to have a very large building built on the site of the daycare that is across the street (and a little east) of Compare.

The area is about to become much less warehousey....

For better or worse, the change on Nostrand is going to make the change on Franklin look minor.

# Posted 1 yr ago
eastbloc
comprador bourgeois
Joined: Jul '09
Posts: 923

I know you think all you can afford is a studio or 1BR, but I highly recommend looking at multifamily properties, especially if you're planning to rent it out in the future.

Multifamily properties only require 3.5% down for FHA loans, and the rental income generated by the units you're not living in offsets the qualifications you need to get the loan. They also generate far more rental income. A single-unit co-op or condo will likely barely break even after costs (in the best case) when you go to rent it out, and the wear and tear on the apartment are very likely to pull you into the red overall in the long term.

I'd let the multi-family hunt take me further east into Crown Heights as far as Kingston Ave. I would NOT go further east than that. I'd also look in Crown Heights South, especially in the Franklin/Bedford/Rogers areas. Here you have the same great proximity to the 2/3/4/5/S trains as well as all of the new businesses and restaurants on Franklin Ave, but the prices haven't quite crept up there at the same rate.

Example:

http://www.trulia.com/property/1049676013-824-Saint-Johns-Pl-Brooklyn-NY-11216

Three-family house. The 9-beds is probably a stretch, but the rentals here can easily command $1800-2200 depending on the condition. You put down 3.5% -- $21k -- and you'll need another $20k for closing. Including PMI and taxes, your monthly payment will be somewhere south of $4000. Now you're right on the verge of having your housing covered by your tenants, if not over it. And you've put down less money than you would need to buy a $300,000 condo with 10% down. And you own land. You have a back yard. Your doggy is happy.

Now, that particular house has been on the market for some time. I haven't seen it, but I'm guessing there's probably a reason for it. It's just an example, and even if a house needs work, there are ways around that, such as an FHA 203k loan, where the bank gives you the money to pay off the buyer as well as a sum towards renovation.

I'm not a broker, banker or a contractor, just someone who was in the same position as you -- long-time Manhattan resident shopping for a condo -- when I stumbled upon the possibility of doing something that I didn't imagine was possible. I also happen to be someone who has owned a single-unit condo in the past and rented it out, and I can tell you that's NOT something I will ever do again -- the margins are far too low to justify the risk.

# Posted 1 yr ago
maxwellimus
what am I, new?
Joined: Apr '12
Posts: 3

Eastbloc, multiple familes would def be the way to go if my main goal is purely for profit. What I'm lacking is that $4,000k monthly payment. And getting families to rent and having that covered every month is a big task and a lot of financial stress that I don't have enough saved to buffer.

I looked into FHA but I dont want to be charged the premium on my mortgage and also a higher PMI, I feel like that's just throwing out a lot of money.

My main goal is to settle down, have a consistent "rent"/payment, and when I outgrow it, I'd rent it out. Perhaps when I start saving more, buying and renting out a multifamily property would be a better idea.

I started looking at my capitalization rate and with the asking prices and rents I can command in CH, my cap is at 6%, higher than the ave interest rate of 4%. I think there's potential there, but obviously, I've never done it before. My main goal for renting is to keep the property longer for it to gain value to make a profit on the sell, not making a profit on the rents.

Is my thinking wrong?

# Posted 1 yr ago
eastbloc
comprador bourgeois
Joined: Jul '09
Posts: 923

What's your monthly budget? If you rent one unit, the $4k goes down to $2k. If you rent two units, the $4k goes to $0k. A three-fam is ideal, since even if you have a problem with a tenant or the place goes vacant for a few months, you have some fault tolerance built-in.

Also, you don't need to find families to rent. Shares are very popular around here, and young professionals with solid rental histories will readily sign multi-year leases.

Have reliable friends? Rent to them for under market. You won't clear as much, but you'll have less to worry about, and you'll have a nice atmosphere at home (this is what we do).

Finally, condos are relatively overpriced compared to townhomes. Don't ask me why -- probably because people have anxiety about home ownership and the $4000 price tag that goes with it, but those concerns are largely unfounded.

If you do decide to go with a single-unit, based on my experience I'd advise selling as soon as you're ready to move. Don't hold on to the property, unless the market is absolutely raging upwards and you think you'll lose big if you sell at that point (or conversely you're massively underwater). Just sell and put the equity into whatever you buy next. In an owner-occupied multi-fam, you at least have an eye on the place.

# Posted 1 yr ago
maxwellimus
what am I, new?
Joined: Apr '12
Posts: 3

Hey Guys,

Just wanted to give you an update. So I went to visit the condo and I don't really think it's for me. But what I found was that I didn't really enjoy the atmosphere around Franklin street. I don't know, it really wasn't for me. I was def the only asian guy on the 2 train after atlantic ave. Franklin was an awesome street in the middle stretch of my walk to St Marks.

I also checked out Compare Foods and it looks great! But I walked on st marks to washington and felt a little sketched out. It just didn't feel diverse at all and very deserted.

I think the best word i can describe that area is "spotty" walk down a street and you go through nice, bad, nice, bad, nice. It's very sporadic.

I think my condo search will now probably be west of washington st.

Thanks for the help guys!

# Posted 1 yr ago
whynot_31
Former Lurker
Joined: Mar '06
Posts: 16,379

Thanks for the update.

yup, the streets to the west of Washington Avenue are definitely more residential than those east of it. There have been a lot of new residential buildings built over the past few years, but unsightly car repair shops and warehouses are still pretty common east of Washington.

Enjoy Vanderbilt Ave!

For better or worse, the change on Nostrand is going to make the change on Franklin look minor.

# Posted 1 yr ago
PragmaticGuy
above average
Joined: Apr '11
Posts: 426

The fact is, those unsightly car repair shops and warehouses were in the neighborhood long before most of the people who post to this board. Not every place can be a trendy eatery or bar. And they wouldn't be there if there was no business for them.

# Posted 1 yr ago
whynot_31
Former Lurker
Joined: Mar '06
Posts: 16,379

PG-

Everything you say is true ...but they seem to be a dying off.

A lot of them seem to be cashing in, or getting priced out of the neighborhood. Soon, we may not be able to find a welder locally.

For better or worse, the change on Nostrand is going to make the change on Franklin look minor.

# Posted 1 yr ago
cremate
getting it
Joined: Jul '11
Posts: 181

West of Underhill up and came... east is still up and coming... (hopefully).

I still would not live in CHeights, no offense to those who choose to/do.

If you want a cheaper place and want its value to increase, you're going to have to buy in a more sketchy area. Personally I would look at Clinton Hill, or even Sunset Park.

# Posted 1 yr ago
PragmaticGuy
above average
Joined: Apr '11
Posts: 426

Holy moly....since when is Clinton Hill cheap?? I have a bunch of clients down there whose houses I insure and most of them are worth damn near $1,000,000. If you can find cheap property in that area buy all you can because you'll end up being VERY wealthy.

# Posted 1 yr ago
PragmaticGuy
above average
Joined: Apr '11
Posts: 426

WhyNot...if you need a good welder try across from CitiField. They have so many crappy and I do mean crappy auto repair places that the city is trying to eminent domain all of them out of there so that they can put up luxury housing and such. No mater if literally a thousand jobs are lost because I'm sure that's about how many people work over there.

# Posted 1 yr ago
whynot_31
Former Lurker
Joined: Mar '06
Posts: 16,379

There are a lot of big developments coming to the area between Franklin and Washington, so I'd be surprised if the city needed to resort to hijinks it is presently engaging in near CitiField.

...the market won't need much help.

For example, in a few years, it would not surprise me if Monsey bus company relocated and sold their land to a developer.

For better or worse, the change on Nostrand is going to make the change on Franklin look minor.

# Posted 1 yr ago
eastbloc
comprador bourgeois
Joined: Jul '09
Posts: 923

To each their own, of course, but Western Crown Heights is way nicer than Sunset Park. We have friends who live in Sunset Park who are very jealous.

Clinton Hill has nice housing stock, but it's substantially more expensive and from what I can tell renewal isn't coming there any faster than down here. We have better trains and better restaurants, too.

# Posted 1 yr ago
whynot_31
Former Lurker
Joined: Mar '06
Posts: 16,379

..those who live in Sunset park might lose or gain a little on their investment over the next few years, but I tend to believe our gains (or losses) will be much larger.

Part of the appeal of living in a rapidly changing neighborhood is the ability to make (or lose) lots of money base on what happens in the near future.

...for the most part, those who have bought in PH and western CH before 2007 have done quite well.

For better or worse, the change on Nostrand is going to make the change on Franklin look minor.

# Posted 1 yr ago