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I'm currently contemplating buying a property in the Bronx, not too far from Morrisania. It's not the best neighborhood, I know, but I'm approaching this as something that might be a good investment. Let me provide you all with some of the details.
The property is a gut-renovated 3 family house and is very spacious. It's going for a little under 450,000. Initially, I told the seller that I was reluctant buying a t3 family house because I'm afraid of what would happen should one of apartments be sitting empty for an extended period of time. I make a modest salary and can't weather having two out of three apartments sitting empty for too long--the mortgage, simply put, would be too much for me and lead me into the hole.
The seller, however, allayed my fear by telling me that he would be manage my properties for the first seven months and ensured me that two of the apartments will have tenants by closing. When asked how he planned to go about this, he stated that he has some "good" Section 8 tenants lined up. (Please note that I am not one to stereotype Section 8 tenants as some of them are actually decent, honest people).
What do you all think? Does this sound too good to be true?
There are two separate issues.
1) Is the property a good investment ? Maybe.
2) Should a landlord let someone else(particularly someone with a vested interest of unloading the property) pick their tenants ? Definitely not !
I am sure this deal sounds tempting but it could result in endless problems.You have to be capable of and responsible for picking your own tenants or you shouldn't be a landlord. It's why many people won't buy tenanted properties unless they are delivered vacant at closing.
Thanks for responding, Bludog2. The house is actually empty and completely gut renovated. The broker told me that he could manage my property for the first six months. One other thing you should know it's that he's a builder, not a landlord. However, his company manages the properties they sell for the first six months to allay the fears of the buyers. He also mentioned that I could meet the tenants he's screened.
Does it still sound fishy? And yes, it looks to be a decent investment. Should both of the top floors be rented, my share of the mortgage would be less than $700.
The problem, not with the good, decent people who get Section 8, is that you have to abide by certain regulations once you are in that program. And, if you get a bad Section 8 tenant, it's not as easy to evict said tenant as it can be for a non- regulated tenant, which can add to your legal costs. Also, don't forget to include a large insurance policy in carrying costs to protect your financial assets in the event of a lawsuit, related to the property. You need a good deal of coverage over the minimum required by the bank.
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Is it a legal three-family, registered with the city as a 3-family (not just the builder's word)? I have seen far too many posts on this board of people buying houses they thought were 3-family and then getting reported to the city as having an illegal apartment in the basement.
I would not advise on you getting a mortgage you cannot carry on your own. Because nothing is guarantee, no tenant none. If you income can totally carry the mortgage should you not have a tenant go for it because than the tenants will be a bonus and later on should anything happen tenant stops paying or you lose a tenant you wont have that kind of stress on yourself. It can be tough, I have a legal two family home and rent one floor to our great tenant, it is awesome and we get to claim everything at the end of year. My husband and I have the peace of mind also that if he leaves or stops paying we can carry the morgage. It is a good investment though if you can afford it. I definitely would not recommend having anyone choose your tenant for you and do thorough back ground checks. Also city employees are best tenants because if they default you can contact the city and their job and you'll get your money back.
..... Also city employees are best tenants because if they default you can contact the city and their job and you'll get your money back.
Veve,I don't know where you got this impression but it is not at all true.A city employee in this regard is no different than anyone else.If you take a non paying tenant to court and get a judgement against them you can take a further step and have their paycheck garnished but you can do that to anyone once you have a judgement. You absolutely cannot just pick up the phone or write a letter and get the city to give you the money.
It's fine for the OP to purchase a 2 or 3 family and count on rents to help pay the mortgage.Millions of people do it and it is accepted practice.Yes,there are possible pitfalls but that's true no matter what.
What is important is that the OP assume total control over the tenant selection process and make his own decision.It's ok for the broker/manager to find people but the OP must have the final word and be very careful in the selection process.... much more than just meeting them and thinking they are nice people or whatever.
I agree with whoever pointed out that section 8 tenants are much harder to get rid of if there is a problem so that should be taken into consideration.
Veve,I don't know where you got this impression but it is not at all true.A city employee in this regard is no different than anyone else.If you take a non paying tenant to court and get a judgement against them you can take a further step and have their paycheck garnished but you can do that to anyone once you have a judgement. You absolutely cannot just pick up the phone or write a letter and get the city to give you the money.
It's fine for the OP to purchase a 2 or 3 family and count on rents to help pay the mortgage.Millions of people do it and it is accepted practice.Yes,there are possible pitfalls but that's true no matter what.
What is important is that the OP assume total control over the tenant selection process and make his own decision.It's ok for the broker/manager to find people but the OP must have the final word and be very careful in the selection process.... much more than just meeting them and thinking they are nice people or whatever.
I agree with whoever pointed out that section 8 tenants are much harder to get rid of if there is a problem so that should be taken into consideration.
I had close experience with city employee situation. My sister in law had police oficer renting from her, he didnt pay for 8 months and than left. She contacted his job, provided the legal lease and they send her the money owed. My understanding is they deduct it from their paycheck. I also know of women else who had a city employee and was able to do the same thing. I can't really look it up now but if you look it up you'll find that employer can and will cut check for the owner of the home but only if they work for the city.
I had close experience with city employee situation. My sister in law had police oficer renting from her, he didnt pay for 8 months and than left. She contacted his job, provided the legal lease and they send her the money owed. My understanding is they deduct it from their paycheck. I also know of women else who had a city employee and was able to do the same thing. I can't really look it up now but if you look it up you'll find that employer can and will cut check for the owner of the home but only if they work for the city.
No, this isnt' true. ANY employer will allow garnishment of wages on a debt.
I had close experience with city employee situation. My sister in law had police oficer renting from her, he didnt pay for 8 months and than left. She contacted his job, provided the legal lease and they send her the money owed. My understanding is they deduct it from their paycheck. I also know of women else who had a city employee and was able to do the same thing. I can't really look it up now but if you look it up you'll find that employer can and will cut check for the owner of the home but only if they work for the city.
While I appreciate that the above is your understanding of what happened, either they failed to tell you about the judgement part or you did not understand the process completely.
What we are talking about is called wage garnishment.There is a legal process leading up to it and rules about it's enforcement.You must start with a debt collection lawsuit.Here is a link that explains it in detail.
http://www.nedap.org/hotline/garnish.html
In addition to the necessity of first obtaining a judgement there are restrictions about what percentage of the person's income can be taken every week.You cannot get all the money at once and nobody just cuts you a check for the entire amount.
You really should understand the process because you are making false assumptions and may be unpleasantly surprised some day when you find out otherwise.
And again,you can do this with anyone who owes you money( rent or otherwise) and not just city employees.
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