Diary of my first step: Jersey City NJ Multi-Family- No experience, no idea what i'm doing, no regrets

62 Replies

Hello everyone, 

Complete noob here. I started investing in a set it and forget it type stock/index portfolio and it has done well. Had to do a lot of research.

Now I am jumping in real estate, going for that multiple streams of income, I'll probably make a lot of stupid errors, hope some of you find it amusing, but just want to help others. 

Biggest theme I have seen is across any endeavor is just get started, probably the hardest step and now time to get on moving~

Initial strategy was to buy a MF house, but after realizing the places we want to live are costly, decided the new strategy will be to buy our primary condo, then leverage the equity in that to buy a second house as a multi-family. 

Journey started roughly two weeks ago, after months of looking on zillow. We came across a beautiful 1 bed 2 bath for 355k, until we realized after the first showing that it's a duplex split between a basement and ground floor, where the toilets were flooded from hurricane sandy hence the new tile flooring. Real estate lady was using mind games to get us to buy a pricier house, i just nodded my head and played stupid.

Decided to go with the mortgage person that works with her, got a pre-approval without sending any documents? Weird, anyway, continuing to work with her to see what rate she can get me. 

Checked out another house but not really a fan of this mom-like lady who clearly is green-eyed and money hungry, talking about her greedy associates. You are who you hang out with, so decided to definitely not work with her. Nor was she investor friendly.

Came across another guy on this site, he showed us the first place that was a 1 bedroom, 1bath from 249k, and was honest! Also he's investor friendly, prompt with messages, and so glad I found him. He's also a 29 year old dude, so that is cool.  A property manager as well, so I felt safe with the guy. 

He recommended an attorney and mortgage guy, so now I just finished submitting all the paperwork( so much freakin paperwork. all my bank statements, 2 years of W-2, IRS, passport photo, driver's license photo, i was a bit slow with this and took me over a week). waiting to hear back, see what my max on my pre-approval is. 

We will be looking at another house, the next one we was was a foreclosure at 76k near journal square! So sad that I didn't have the funds, looked like a great investment but not the best first opportunity. 

Main goal is to now find a multifamily house, probably near market price with no major rehab, just to get the swing of things. Kind of a boring post, but just wanted to catch you guys up to it. Will start to post pics on this next multi-fam that we see.

Good luck with your house hunting as you found out Jersey City has diverse opportunities as well as wide price swings.  Good to see you evaluating every move; the mortgage process is demanding and time consuming, good you are getting pre-qualified before spinning your wheels.  Keep us informed of your progress.

@sunny_sun

I'm from right up in Hoboken and just starting to get involved in this myself.  I think I was looking at the same house around Journal Square, it looks pretty rough and like its gonna need a lot of rehab, but probably a good price for the area especially considering the future appreciation it will be seeing over the next 10 or so years.  

Thanks @Mark Gallagher ! having the BP Community definitely helps, but ultimately i know it'll come down to my own judgement, hopefully help others make better informed decisions, especially around this area. 

Definitely will @John Moore , next will be closing and working with contractors, I'm afraid i'll be making a few sacrifices on cashflow, as this market seems to be about the fix and flip or appreciation game. 

Haha, hey did we bump into each other at the house @Mike Swiss ? Did you check out the weird dungeon/torture room? 

Mayor of Jersey City bought a house in the heights area right off of Ogen, hope some more changes are brought about. 

Originally posted by @Sunny Suh :

Hello everyone, 

Complete noob here. I started investing in a set it and forget it type stock/index portfolio and it has done well. Had to do a lot of research.

Now I am jumping in real estate, going for that multiple streams of income, I'll probably make a lot of stupid errors, hope some of you find it amusing, but just want to help others. 

Biggest theme I have seen is across any endeavor is just get started, probably the hardest step and now time to get on moving~

Initial strategy was to buy a MF house, but after realizing the places we want to live are costly, decided the new strategy will be to buy our primary condo, then leverage the equity in that to buy a second house as a multi-family. 

Journey started roughly two weeks ago, after months of looking on zillow. We came across a beautiful 1 bed 2 bath for 355k, until we realized after the first showing that it's a duplex split between a basement and ground floor, where the toilets were flooded from hurricane sandy hence the new tile flooring. Real estate lady was using mind games to get us to buy a pricier house, i just nodded my head and played stupid.

Decided to go with the mortgage person that works with her, got a pre-approval without sending any documents? Weird, anyway, continuing to work with her to see what rate she can get me. 

Checked out another house but not really a fan of this mom-like lady who clearly is green-eyed and money hungry, talking about her greedy associates. You are who you hang out with, so decided to definitely not work with her. Nor was she investor friendly.

Came across another guy on this site, he showed us the first place that was a 1 bedroom, 1bath from 249k, and was honest! Also he's investor friendly, prompt with messages, and so glad I found him. He's also a 29 year old dude, so that is cool.  A property manager as well, so I felt safe with the guy. 

He recommended an attorney and mortgage guy, so now I just finished submitting all the paperwork( so much freakin paperwork. all my bank statements, 2 years of W-2, IRS, passport photo, driver's license photo, i was a bit slow with this and took me over a week). waiting to hear back, see what my max on my pre-approval is. 

We will be looking at another house, the next one we was was a foreclosure at 76k near journal square! So sad that I didn't have the funds, looked like a great investment but not the best first opportunity. 

Main goal is to now find a multifamily house, probably near market price with no major rehab, just to get the swing of things. Kind of a boring post, but just wanted to catch you guys up to it. Will start to post pics on this next multi-fam that we see.

 Good luck with house hunting. i think I know the 76k house in Journal square. i am kinda new to this game as well...I feel It is very hard to get into foreclosure deals in jersey city. 

Good luck! Hiring investor friendly help is the right way to go. Some agents have never purchased or help others purchase multifamily and they don't know how to switch gears and run numbers.

Sounds like you're in good hands.

@Diana Tian

 Hey Diana, foreclosure deals can be tricky, I'd recommend finding someone who has a relationship with the banks that own foreclosure properties, as they'd be more willing to fill you in on what they know. sometimes, they get like work done to hide certain things from potential buyers. i have been reading that people who buy foreclosures usually do so knowing that 1 out of 5 will lose money, and those are the odds of a professional. high risk, it may not be best for the first time around.

@Mark Hafeli Thanks Mark! Yea, not sure if he's really a numbers guy, but i'll be runinng everything myself or trying to get a better understanding of how others think. Just got off the phone with the first mortgage lady, and she's trying to convince me that ARM is the way to go.... loll

Day 2

A bit annoying with these mortgage documents and paperwork for the underwriters.

Gathered all the documents, thought I was in the clear but now they want more, having to do with my student loans. Also have a car under my name that my father uses and pays off, being that his credit is poor. Using weichert, where the lady never seems to be in the office but at least she is reachable on her personal cell. Using a young guy at getarate.com, pretty prompt, let's see how flexible they are. 

My real estate guy has me get lists from the MLS, took out a few that have issues with tenants. Hopefully look at houses tomorrow and take some pics for you guys.

After speaking to the getarate.com guy, my plan of buying a condo first in a nice neighborhood and then buying the second as a multifamily has been squashed because he explained it's a bit harder to do. Plus, I have to wait another 2 years, or else I will be claimed as an investor and need to at least put up about 25%. 

So, onwards with the idea of a multi-family first, and then either a single family or another multifamily!

Good luck @Sunny Suh ! I live and invest in Union City (city north of Jersey City) but have looked at properties in JC as well. I own two 2-family homes and am in the process of buying a third. Happy to grab coffee or the like at some point down the road!

Hey guys, i realize it might be better if I close the deal and then continue from there. 

Just to update, I found a house, 2 family, but there's a bunch of mouse **** on the floor in the ground unit.... looks like shoddy construction, they definitely cut corners, and the layout is a mess. But the price is good so what the hell. The numbers add up, wife is happy with the future rent roll. 

Put in the offer but I found another house which looks nicer and i'll have more detailed updates later after i close on one. 

@John Errico @Nick Intrieri @Louis Smith @Mike Swiss

 looking to get coffee at mod cup this sunday early afternoon around 11?? let me know what you guys think

Sunny Suh I am in a similar situation as you are in. I am interested in multi family properties around Hudson county. Was hoping to live there and rent out the other units. Gave up on that idea once I looked at some properties in hoboken and downtown jersey city and couldn't make the numbers work. Market is so competitive. Am now considering just buying a condo for myself to live in JC and also looking for multi family properties to invest in, in neighborhoods outside of Hob and downtown JC which hopefully have better returns. Noticed that some of the members on this forum were trying to get together for coffee. Happy to join you guys to discuss some of this stuff further. I am new to real estate investing but I do invest in stocks for a living in case anyone needs advice in that department.

Sounds like you are learning things and making progress.  

Banks can wear you out with their documentation requests.  They ask for the same things over and over.  

I think your new plan to buy  the duplex first is a much better working plan for you.  

Also your decision not to get involved in a major renovation is  a good one.    For your first purchase keep it simple and as uncomplicated as you can get.  

Join a real estate group and or a Real Estate Meet Up group and that should bring you up to speed.   BP is also the place for you to be. 

Keep  us up dated and document your Real Estate Journey and education so we can learn and support you.  

Good Luck!!  You are moving in the right direction

hey Account Closed, i had the same idea once i saw deals were not easy. then again, nothing good is easy. my advice to you is don't go it alone, but try to minimize yourself getting cheated... next piece of advice is this: don't buy just a condo yourself, and then expect to buy investment property. your next property, if it's within 2 years, will be considered an investment property, and you will have to put down 20-25%, otherwise wait 2 years. i don't know your situation and life story, but also, it would be much easier to find lenders going from a 2 family to 1 family, than a 1 family to 2 family. 

as for stocks, i'm into the long game, so Vanguard ETFs, indexes are the way i go. warren buffett has a bet going on with a hedge fund manager; 1 million dollars to the charity of choice if the s&p 500 outperform the top 3 hedge funds of anyone's choosing over 10 years. someone took him on that bet but warren buffett is winning. 

thanks @Barbara G. !!! running into a lot of setbacks lately. 

We passed attorney review, my home inspector didn't check the roof so i'm paying extra on a $550 inspection. quoted $400 for a roof inspection that should take 20 minutes, something just didn't smell right so i went away from my recommendation and chose a local guy for $125. 

We just had an oil tank sweep and found one under the driveway..... roof i'll find out today to see what surprises are in store for me there. this will not be an easy first property, but jersey city heights is up and coming, may be worth the risk. more detail to follow once it closes. 

if it closes, haha. ah, the fun of real estate investing. 

Tell us about the duplex you re buying.  How much is it and are there tenants in it and what is the rent for each apartment.  Is this the house where the mice lived?  Does it meet the 1% rule and the 50% rule and are you going to live in one apartment?

Did you know how old the roof is?  How old is the house?  Is $450 the going price for aa duplex inspection and why wasn't the roof included?    Did you ask the sellers if the roof was ever redone?  A roof lasts at least 20 years.   Did you look all around the perimeter of the roof, at the edges that you could see?  I suppose you also looked in the attic and up to the roof of the attic to see if there were any wet spots/stains.  

Are you doing any renovation and if so what amount have you budgeted for the renovation. 

Keep us updated and if you can keep a BP diary of this sale and renovation that would reslly be good.  Have you met your BP friend's for coffee/?   That sounds like a good idea.