Starting Investment Portfolio in Newark NJ
Most Popular Reply
Lender · NJ NY PA CT GA FL, Puerto Rico · Member since 2015 · 212 posts · 111 votes
4yHello @Omar Ynoa
Welcome to real estate! Have you gone through pre-approval yet? 3 family in those areas can be easily as high as 700k, you would want to establish a budget. If you were to use FHA financing you would need to be careful with higher prices & higher taxes, 75% of market rents must cover proposed mortgage payment; We typically run max FHA scenarios and provide with all sorts of calculators; If you were to go with 2 Family you will have more financing options as a first time home buyer where we can potentially use 4-4.25% rate and no mortgage insurance, the difference in monthly payment can easily be $500+ which will help you with your Returns/cash flow... the bottom line structuring financing is step 1. Feel free to reach out with any questions.
10 Replies
- Lender · NJ NY PA CT GA FL, Puerto Rico · Member since 2015 · 212 posts · 111 votes4y
Hello @Omar Ynoa
Welcome to real estate! Have you gone through pre-approval yet? 3 family in those areas can be easily as high as 700k, you would want to establish a budget. If you were to use FHA financing you would need to be careful with higher prices & higher taxes, 75% of market rents must cover proposed mortgage payment; We typically run max FHA scenarios and provide with all sorts of calculators; If you were to go with 2 Family you will have more financing options as a first time home buyer where we can potentially use 4-4.25% rate and no mortgage insurance, the difference in monthly payment can easily be $500+ which will help you with your Returns/cash flow... the bottom line structuring financing is step 1. Feel free to reach out with any questions.
- Member since 2021 · 6 posts · 6 votes4y
Quote from @Anastasia G.:
Hello @Omar Ynoa
Welcome to real estate! Have you gone through pre-approval yet? 3 family in those areas can be easily as high as 700k, you would want to establish a budget. If you were to use FHA financing you would need to be careful with higher prices & higher taxes, 75% of market rents must cover proposed mortgage payment; We typically run max FHA scenarios and provide with all sorts of calculators; If you were to go with 2 Family you will have more financing options as a first time home buyer where we can potentially use 4-4.25% rate and no mortgage insurance, the difference in monthly payment can easily be $500+ which will help you with your Returns/cash flow... the bottom line structuring financing is step 1. Feel free to reach out with any questions.
Hey @Anastasia G. thank you so much for the response, I gladly appreciate the help in this new journey. Right now I'm looking to purchase a fully-gut renovated 3 family home for 675K using a FHA at 3.5% down. Taxes for the home are about 8.4K and looking at a monthly mortgage of 5.4K (principle, interest, taxes, mortgage insurance). I'm hoping that once the appraiser views the home it can appraise for less so that I can work with the seller to balance out the difference or to lower the principle to help lower payments. With the amount of rooms per each unit and what it provides I was thinking to put each unit for 2.3K (3 bd, 1.5 baths, living room, kitchen, washer and dyer) which would be about 85% of mortgage payment. Based on the purchase of the property (without utilities) I still expect to pay $800 out of pocket but granted that is much less than what I am paying for rent in a apartment. Overall I think its a great opportunity especially if I am considering to move out of one unit after a year to have all 3 units rented.
What do you think about this opportunity? If you were in this position how would you go about the situation? - 4yShawn McenteerBusiness MemberRealtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
Hi @Omar Ynoa I think Newark is very difficult city to invest in. Its not easy for landlords. I find a lot more opportunity in surrounding towns in Essex County. Newark can look great on paper but long term not easy, especially with the rules and regulations the city has in place to "protect" tenants.
House Hacking New Jersey563 Reviews - Member since 2021 · 6 posts · 6 votes4yHey Shawn! Thank you for the reply, I did not know this and this is really helpful information. How difficult could it be acquiring and removing tenants in Newark ?
Quote from @Shawn Mcenteer:
Hi @Omar Ynoa I think Newark is very difficult city to invest in. Its not easy for landlords. I find a lot more opportunity in surrounding towns in Essex County. Newark can look great on paper but long term not easy, especially with the rules and regulations the city has in place to "protect" tenants.
- 4yShawn McenteerBusiness MemberRealtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
@Omar Ynoa the process can be very long, long enough I don't want to find out haha. All seriousness I think in most cases Newark may look good on paper but neighboring towns will out produce big time long term. With that being said every property is different
House Hacking New Jersey563 Reviews - Member since 2018 · 125 posts · 21 votes4y
Quote from @Shawn Mcenteer:
Hi @Omar Ynoa I think Newark is very difficult city to invest in. Its not easy for landlords. I find a lot more opportunity in surrounding towns in Essex County. Newark can look great on paper but long term not easy, especially with the rules and regulations the city has in place to "protect" tenants.
I would like to second this opinion very strongly. Don't you even dare considering starting to invest in Newark without first spending sometime learning about programs like ERAP. Learn about things like the homeless homeowners who have tenants in their houses living for free for multiple years while the city prevents you from doing anything about it. Newark is very tenant friendly. The last thing you want is to start your investment career materializing all of your worst nightmares.
for the record I like you was very intrigued by the deals and opportunities in Newark but thanks to this community they stared me away from it and now I understand 100% why.
I ended up investing in a different community that had an excellent opportunity that was too good to pass on but unfortunately the area I invested in is similar to Newark so I'm now experiencing what people warned me about.
in short I was led to believe that typical evictions were pending on two of my tenants and it was just a matter of a couple of months before they'd be out. Owner concealed from me the fact that the tenants had not paid in over a year. My attorney didn't do his job and neither did the seller's attorney. Now I have an over $6,000 mortgage and only one tenant paying less than $2,000.
I've been struggling for well over a month to simply find an attorney who's willing to do their job and I have now settled with trying to pick a horrible attorney that's not as bad as the others because it's that bad. 30 minutes of reading has made me more knowledgeable about the government programs that are taking over people's homes then every single attorney that I've spoken to. This tells me in the last year they've pretty much all been ripping off homeowners pretending to work their eviction cases while basically sitting on their butts cashing our checks.
start your investment career in a normal market and if you find yourself good at it then and only then consider investing in these pro tenant areas. Also just because there's a high risk doesn't mean that everybody has a bad time so there will be people who tell you they're doing great in Newark or wherever. That is anecdotal. The fact of the matter is every new investor intent-friendly errors are under extreme levels of risk for multiple reasons. Whether you luck out or not is irrelevant. The risk exists for all of us and the risks are pretty severe.
- Contractor · Morris County, NJ · Member since 2020 · 186 posts · 91 votes4y
@Omar Ynoa I highly suggest that you connect with a local market expert that can give you more info specifically to Newark. Lastly, I would suggest that you attend local meet-ups and walk around Newark so you familiarize yourself with the areas you're looking to purchase. @Darcy Reynolds is a great resource, she's a local realtor, I highly recommend her.
- Member since 2021 · 6 posts · 6 votes4y
Quote from @Sebastian Hernandez:
@Omar Ynoa I highly suggest that you connect with a local market expert that can give you more info specifically to Newark. Lastly, I would suggest that you attend local meet-ups and walk around Newark so you familiarize yourself with the areas you're looking to purchase. @Darcy Reynolds is a great resource, she's a local realtor, I highly recommend her.
Thank you for the referral! I’ll contact Darcy Reynolds as possible!
I notice under your title in BP it states contractor, is it possible we can view this property I’m currently under contract? The property is located in Newark NJ.
- Contractor · Morris County, NJ · Member since 2020 · 186 posts · 91 votes3y
great connecting off-line Omar
- Real Estate Agent · NJ · Member since 2020 · 40 posts · 26 votes3y
Quote from @Sebastian Hernandez:
@Omar Ynoa I highly suggest that you connect with a local market expert that can give you more info specifically to Newark. Lastly, I would suggest that you attend local meet-ups and walk around Newark so you familiarize yourself with the areas you're looking to purchase. is a great resource, she's a local realtor, I highly recommend her.
Thank you for the connect @Sebastian Hernandez! I look forward to meeting with Omar to discuss his investing goals in more detail.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.