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

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.

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.

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!

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.

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.

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.

..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.