First Time Buyer - Duplex House
Hello everyone,
My partner and I are new to the real estate scene and are currently in the process of submitting an offer to a multi-property in Essex County, New Jersey. The house looks in good condition and is listed as 'sold as is'. While I have some basic knowledge, any advice or tips for the purchase process would be greatly appreciated.
Asking price: $460,000
Mortgage Type: FHA / Fixed Rate / 30 Years / 3.5%
Unit 1: Primary ($1700)
Unit 2: Tenant ($2000)
Hello Jean:
Make sure to review the rent control laws in the city. In addition, get copies of the tenant leases or even expired leases if the tenants are month-to-month as those terms carry over. Get written proof of rent payments for the units, and you could try to get tenant estoppels. This is a guide I created for steps after the closing - but it may also shed some guidance on proceeding in that direction.
"As-is" does not have any clear specific meaning (in fact, if you look at Paragraph 16 of the standard NJ contract you will see every sale with a Realtor is listed as that). Although some may disagree, I believe it only means seller is not agreeing in advance to any repair - though you should be careful because people interpret it different ways. I always add the following in attorney review just in case people think it is a waiver: "Any references to "as-is" or "informational purposes" in the Contract or any riders shall neither void nor limit any rights relating to inspection contingencies, including Paragraph 16 of the Contract, and final walk-through." I wrote about this here - https://www.earlwhite.law/sell-house-as-is-new-jersey/#selli...
If you had any specific questions - feel free to share.
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Attorney
- Law Firm of Earl P. White
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You can't buy an as-is property with an FHA loan because FHA loans have their own inspections which can not be waived. Also, you should NEVER, EVER be buying a property as-is as a new investor. If you are in Essex Co, that 460k will go for way higher, depending on the town.
Step back, why do you want your first investment to be the biggest risk any investor can take by accepting the property and all of it's faults without having the right to make repair requests?
3700 rent is current, what it the expected rent? Are both units occupied? If so, you can't use an FHA because they are owner-occupied only. Even if the tenants are month-to-month, you would want one unit vacant as you only have 60 days to occupy or your loan could be terminated for non-compliance.
Every market right now is different, and some markets are tough to get into without waiving certain contingencies.
That being said, buying a home as-is has its risks. An FHA mortgage contingency gives you some outs and ability to negotiate and even back out of the agreement.
Definitely look up local rent control laws and understand what you are getting into. How old is the property? When was the preoprty redone? Was it fully redone, or just lipstick on a pig? Some of these things are tough to understand being a beginner.
Do you trust your agent, and do they have experience buying their own investments? What kind of investments do they own. A good agent will educate you and show you the good from the bad.
Hope this helps
Hi @Jean Carlos Pichardo FHA is tough in all of NJ. Most listing agents train their clients to avoid FHA offers because of the extras that come with. Good news is low money down conventional mortgages are easy to come across. A matter of fact I have one lender that offers a low money down lown and NO PMI which is wild.
Regarding property itself, very tough to comment without know town and property. I will let you know there are towns with extreme land lording laws in Essex county while there are towns with far more favorable laws. My wife and I have collected every rent check for over a decade now, one of the reasons behind this is by avoid those less desirable areas.
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Real Estate Agent New Jersey (#1326442)
- https://shawnmcenteer.exprealty.com/