Please welcome Justine of Live with Plum! She’s here to share her deep real estate expertise. Enjoy!
I am Justine and I am the Founder of Live With Plum, the homebuying guide for the modern women.
I started Live With Plum after going through my own real estate journey and seeing how few resources there were for homebuyers, especially first-time home owners.
Also, as a single millennial woman of color, there weren’t many stories that looked like mine even though we are a substantial and growing segment of homeowners in America.
I had purchased 4 apartments in New York City by age 30 while working full-time and learned quite a few lessons along the way. Today I want to tell you more about my own home buying journey with a focus on my first transaction and the most recent transaction. My thought process has changed quite a bit since I started!
Through my story, I hope you will takeaway some lessons in real estate investing.
First apartment purchase: Gramercy studio
The first apartment I bought was at 25, just after I graduated from business school. I was eager to lay down some roots as I had spent my early 20s traveling extensively.
After weeks of exhaustive research, I finally found a tiny 300 sqft studio in Gramercy.
My thought process for this purchase was more like a primary resident. But I also took note of the investment opportunity.
Over the years, I’ve come to see how most people, when prioritizing the criteria of their search, purchase only with an eye to live but don’t fully consider the investment side of it. I chose my unit because I wanted to live in it and also could see the rental value.
Size: Studio, 300 square feet
Tiny, tiny apartment but because I was living in it, I prioritized the location over the size. This was definitely a starter apartment for one person.
Because this was my primary residence to start, I wanted a neighborhood that had all the conveniences and entertainment nearby. Gramercy fit that bill as an already established neighborhood but was also one of the most expensive neighborhoods on a per square foot basis in NYC.
Building: Cooperative building
Cooperatives are quite unique to NYC and basically means the building has a lot of power over what homeowners can and cannot do. Most cooperatives have strict sublet policies but I managed to find one with liberal policies.
Fourth apartment purchase: South Bronx 3 bedroom
After completing 3 successful transactions, I was ready to take on more risks. I purchased my largest and most recent property in 2019, which was a 3-bedroom apartment in the South Bronx.
Size: 3 bedroom, 1200 square feet
As I progressed on my journey, I started to purchase bigger apartments as I realized that a studio would have limited appreciation potential in the end, just due to the size limits.
Also, living in a larger apartment allowed me to house hack, which basically means that while I live in this apartment, I decided to rent out 2 of the 3 bedrooms to create additional sources of income.
At the end, the rent (market rate) from my 2 tenants covered the mortgage and homeowner association fees for the apartment, so I ended up living for free. I probably will not continue having roommates in the longer term as I get older and want more privacy, but this is a good way of living within your means in an high cost of living city.
Location: South Bronx
Area-wise, I saw that established neighborhoods meant a more limited appreciation potential therefore I started purchasing in rising neighborhoods instead.
Building: Condominium building
While cooperative buildings are cheaper than condo buildings, there was a limited supply of buildings that allowed for subletting. Also, any renovation work done in a cooperative building required a lot more approvals than in a condo building. From an investment perspective, condominiums made a lot more sense for a passive investor.
What I’ve learned as a real estate investor.
Reflecting back on my journey, I am proud of the work I put in. I absolutely believe that a successful investor is the product of experience and the willingness to test things out. My biggest learnings and advice are:
- Size: Larger apartments and multi-families allow you to house hack, which is a great way to build up equity on a smaller budget.
- Location: Either pick the worst unit in the best district if you can renovate, or pick an up and coming neighborhood.
- Building: Look for building policies that align with your intent. If you need to invest, then do a ton of research and diligence on building policies.
Have you invested in real estate? Share your experiences in the comments below!