Bedford Stuyvesant Townhouse Update
At the Urban Digs "bar night" two weeks ago, a few people asked me how my house in Bed Stuy turned out. Thanks for asking!
If you'd like to catch up on how / why I decided to invest my money in a two family house in Brooklyn instead of a one bedroom condo in Manhattan, please check out a few of my earlier posts:
A Broker's Search - Where To Buy
A Broker's Search Has Ended - Sort of
My Townhouse in Bed Stuy
Townhouse Renovation Tips
I am really happy to report that although it wasn't easy, my purchase on MacDonough Street in Bedford Stuyvesant, Brooklyn, turned out really well! Of course, none of my projections worked out as the "best case scenario" but none of them were "worse" than the "worst case scenario," either. I did my research & my numbers turned out to be almost "spot on."
I had hoped to have the construction finished by early December, but it was finished in mid December (NYC DOB permit issues set the work back by almost 2 weeks). I rented out the 3rd floor apartment for a Dec 15th move in, but had some trouble renting out the "owner's duplex" in the middle of the holiday season (which I was afraid would happen). The 2nd apt was rented out for a January 15th lease start.
I thought I would get about $1500 for the 1.5 bedroom and about $2550 for the owner's duplex, and my projections were very close. I offered a small credit for my tenants to postmark their rent by the 25th of the month before the rent is due. So far, my tenants have all sent in their rent early. I asked my tenants to sign leases that expire in the summer so that I don't have to worry about renting an apt out in the middle of the holiday season again. Summer rents are higher also, so my cash flow should continue to increase over time.
All in, I am covering the mortgage, taxes, homeowners insurance, heat & hot water expenses with the rent roll and I am slightly cash flow positive. Rates have actually come down since I purchased, so I will be working on a re-fi soon. As soon as I have paid off the $75K home equity line of credit on the house, I will be making more cash flow.
The project took time and money, though. I had hoped to spend $110K on the construction, but budgeted $130K "just in case." After 2 new kitchens, one new bath, two upgraded baths, painting, floors, new windows, upgraded electrical, two structural changes, a new closet, etc... When everything was said and done, I spent $135K. Part of that was my fault, though - I decided to add a washer dryer in the basement. In addition to adding the water line, there were additional expenses to convert the 110 power to 220 in order to support today's washer-dryers.
Of course, the heat stopped working in half of the house about 2 weeks after my tenants moved in. I tried to find someone through the grapevine to fix the problem because I prefer using vendors who are referred to me. Despite recommendations from other homeowners and brokers, it took me 2 weeks to find someone reliable to diagnose & fix the problem. The job was too small for my contractor's HVAC guys. One vendor that was recommended to me didn't do forced air gas heat. One vendor only did oil heat. One vendor kept saying he would go over and check it out and then never made it to the house, or arrived at the wrong time & the tenants weren't home. I offered to reimburse my tenants for space heaters. Finally, I Googled "boiler repair & Brooklyn" and just started calling numbers off of the internet. $1100 and half of a day later, the problem was fixed.
Buying a townhouse, renovating it, and getting it to cash flow is certainly not a "get rich quick" scheme, at least not in NYC. But if you are undertaking this kind of project as a 10 year (or in my case, longer) plan, I am confident that it will be more than worth your while.
Of course buying a one bedroom condo in a new development would have been a lot easier! But (so far!) my townhouse in Bed Stuy has been a hell of a lot more interesting. As a complete real estate addict (some would say "nerd"), I have to admit that it has been really fun.
My next adventure? I'm currently studying up on foreclosures:)
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