Lap, let's run the numbers here. I will be conservative all the way.

You will purchase this place for 900k. It will really cost you about 945k with closing costs.
Income:

Your rents should be around 1800 for the 3 bedrooms, and around 1500 for the two. God bless you if you get more, and you probably will, but lets be conservative here. That totals 5100/month.

More than likely, you can get at least 150/month for each garage, maybe more. But figure 150. We only ask 125 for our extra garage in nearby North Flushing, and we have had it full for years. But I have seen Bayside ads on Craiglist go for 200+, so you might be able to get that much, but lets be conservative with 150 for each. That is 150 *2 *12 = 3600/yr for the garages.

5100*12= 61200, assuming that your properties are fully rented and everyone pays always on time, (HAH!) + 3600 for the garages yield 64,800 pre-depreciation income.

Expenses:
Your real estate taxes on that will be what? around 4800? That too might be a bit high, but probably not by much. And your insurance will be at least 100/month, unless you choose not to insure since you are self financing. But I am assuming that you would be not willing to risk 900k on the hope that no-one ever smokes in your property.

Repairs? Don't know, but I am assuming that this is not new construction, which means maybe 200/mo set aside??? So figure 2400/yr,and if nothing happens, hallelujia.

Is there a common electric bill? Doubtfully in a 3 family, nor is there communal heat, but you probably will foot the water bill- probably at least 100/month. This means your water expenses will be around 1200/yr.

Taxes + Insurance + Repair fund + Water = 4800+1200+2400 + 1200 = 9600
Pre Depreciation Income - Preinterest Expenses: 64800-9600= 55200

Before looking at depreciation, your immediate return is 55,200/945,000 or about 5.841%. Not bad, but not terribly exciting either.

Assuming that you can depreciate the property as an active investor at 80% land value over a 33 year period means that your depreciation is based on 720,000. I am assuming that you are in around a 35% tax bracket, which means that you get to depreciate100/33 or 3.03030303% per year, which amounts to $21818. At a 35% marginal tax rate, this would amount to $7637 in tax savings, effectively increasing the return from 6.1% to a newer return. Lets figure that one out:
Income - Expenses: 64800+ 7637-9600= 62836. This gives a better yield, because 62836/945,000 is 6.64%. That is at least respectable, but remember if you sell, you will pay a 'recapture tax' on this depreciation, and can only avoid it by rolling your gain into a bigger deal, or dying, and leaving the property to your heirs.

However.....

We haven't figured in the cost of the borrowed money that you intend to put into this deal. I am assuming that you are doing a standard 80% down deal, in order to avoid PMI, and put the rest of the money in yourself. This means that essentially you will need to come to the table with around 225k, and you will borrow the rest. Of the 225k, about 45k will go to closing costs, leaving 180 as a down payment, and thus a mortgage of 720k. You will be borrowing this against your own house, and assuming you have the income to support it, AND leaving aside closing fees for the moment, this will cost you $4985/month at a jumbo rate of 7.4% (Bankrate).

4985/mo * 12 = 59820, which of course is an expense. Granted, you will be able to deduct the interest, or about 53000, which means that you will save about 18567 in taxes the first year, but it also means that you will lose about 59820 - 18567 = $41253 in the after tax benefit scenario on this home mortage deal. Ok, lets do the final income and expenses:
Income: Rents + Garage Rents + Depreciation: 61200 +3600+7637= 72437
Expenses: Taxes + Insurance + Repair fund + Water + Home Mortgage: 4800+1200+2400 + 1200 +59820 =69420.
Income - Expenses: +3017. A positive cash flow of about 250/month, assuming everything goes right.

I guess the only question really is are you willing to spend 225k for a return of 3017? That is a 1.34% rate, around what the banks offer now anyways. However, you get the power of leverage, and if you have a high income, you get needed tax breaks. Also, you get the inflation protection that a house offers, but a savings account does not. Another last consideration is if you have paid off your current primary home mortgage, are you willing to risk it all to create residual long term income. Honestly, I have risked my own home now a few times to fund big bet investments, and by and large they have/are working out, but I don't think that I will do it again, and furthermore, I was, and still am, fortunately lucky.

So before you make this move, you have to decide what the answer to these questions are for yourself.

Good Luck,
Antolin

Mr. Lee I live 1/8 mile from Bayside and I can provide you information on investment properties in the 11364 zip code. Please send me an email or call me.

henry@henrycunalata.com
917-497-0729

Rents in that area I would suspect would not be much over 2000 to 2500 per month per unit. When looking at income generating properties, you should always make sure the monthly income is at least on percent of the purchase price. In this case 7500 per month estimated gross income would only support a purchase price of about $750,000.

I suggest you hire a Realtor to represent your interests in negotiating based on local comparable sales and who can also run rental comps for you to see if the value is there before you invest.

I can be contacted off line.

I suggest you get a Realtor to represent your interests, who can get local sales comps you can use to negotiate in your favor and who can run comps on local rentals for you.