The following details the path that led to the purchase of my first multi-family property: Let’s start with the reason we decided to buy instead of continuing to rent. At the time, my wife and I were living comfortably, in a 1200sqft 2bd/2ba apartment, in Westchester, New York. The rent was about $1,200 and we were able to easily afford it since, I was a teacher at the time and my wife was a nurse. Things were running smoothly, until our landlord announced that she was getting older and considering selling the apartment, which was a coop. She offered a “Sweet Deal” to us first and if we accepted we would only be paying about $1,300 a month “All in” for the mortgage, taxes and maintenance (Only $100 dollars more than what we were paying for rent). We thought long and hard and we were going to accept, but then we did a little research to see how much the maintenance fee rose each year on average. We were not happy with what we found, as the maintenance fee was more than the mortgage, steadily rising, and out of our control. At that point, we let the landlord know that we would be seeking a different option and the clock began to tick as the landlord began to seek a suitable buyer.
Our search began with finding an agent that understood what we wanted. We failed miserably at that, as we truly did not know what we wanted at that point. I will fast forward a bit, for the sake of brevity (And to save some nuances for the book of course…) to the point when our agent showed us a beautiful 1500sqft 2bd/2ba coop apartment that we loved. The apartment was being sold for a great price ($135,000 if I remember correctly) and the owners loved my wife and I during the showing. In addition, their mom was sick and they needed to sell quickly to pay some hospital bills. Thus we jumped on the opportunity that we felt would not only help the sellers out of a tuff predicament, but also deliver us a fantastic place to live.
Once we made an offer, it was accepted right away. The sellers were willing to allow us to use a 6% sellers concession, which would cover all of the closing costs and all we needed to close was about a $27,000 dollar down payment and about three months of mortgage “Show Money (AKA Reserves - That we did not have to take out or pay, but instead use to show proof that we had access to the money if something went wrong).” Next the bank did a little work on their end and then they sent an appraiser to the property. The value turned out to be more than the sales prices (Including the concession), which meant that we would be starting off with some equity that we could borrow against, if we chose to do so. After the appraiser the bank did some more background work (Also detailed in the upcoming book, wink wink) and then they were ready to close, but since it was a coop purchase we needed board approval.
We set up the meeting with the board and when we arrived, we were greeted and taken to what looked like an old interrogation room, in the basement. Minutes later, about ten of our “Would-be Neighbors” walked in and sat around the rectangular table. They began to take turns shooting out random conversation starters and during that time, I found out that I went to the same High School as one of the interviewer’s sons. The tone was light at first, but then I noticed a shift in the questioning. The questions became more intrusive. They began to ask things like “Do you have a license, Do you have a car, Why don’t you drive to work, Why did it take so long for you and your wife to get married? Etc. (I put etc. because I still get a bit irritated when I think of the line of questioning that we went through that day).” After that day there was about a month and a half wait, in which every other day, we were told that the board has not made a decision as of yet. Apparently, what we did not know before we entered this process was that even if you are a teacher, your wife is a nurse, you can easily afford the property with reserves left over and the owners want to sell to you, you still have to be approved by a board that can hold your down payment money in escrow until they decide if they want to let the deal go through or not. After a month and a half of “Internal Debate” the board killed the deal and was not required by New York State Law, to provide a reason for the denial. Our money was refunded and we were back at square one. We began to notice that even though we did not close due to no fault of our own, our agent had a little less time for us. We then switched agents and found someone who did have time. The new agent happened to be an investor herself and after we discussed what had occurred, our timeline, and what we were looking for moving forward; she presented us with a new option. She asked if we would be interested in living rent/mortgage free instead of just purchasing something that would lower your monthly rent/mortgage payment by a couple hundred dollars. My wife and I looked at each other and then looked back at the agent and slowly nodded in agreement. I have to admit that I thought she was crazy but whatever she was about to introduce us to could not be worse than the experience that we had just endured. During the next few weeks our newly found “Investor Agent” would introduce us to the power of Multi-Family Property.