I wanted to follow up on a post I did a while back about the South Jersey Market. I went over what towns in South Jersey are best for which strategy, Buy and Hold, Flip, BRRRR, Etc. Now I would like to go through what to expect during a typical investment in South Jersey.
When you are looking to flip a house in south jersey you have three options, the ARV market of 150k-200k(First Time Home Buyer), the ARV Market of 200k-300k(Mid Level Blue Collar, and the 300k and Up market ("Luxury"). Each one has its benefits and strategies, it's ups and downs. So lets dive in...
150k-200k - This market is on fire in South Jersey. There is high demand among First time home buyers for rehabbed homes. Since this is the typical mortgage they can be approved for its very competitive, which makes you more money. The other side is that its highly competitive among investors to acquire these properties. Each property has multiple offers and the Banks that are selling the properties know this, so they are less likely to accept anything less than the highest the market allows. The strategy that I find works best is to get a good real estate agent and wholesaler to help you find as many deals to put offers in on as you can.
200k-300k- This market is also moving very quickly. There are less towns that fall into this category and there are less investors that can afford to get into the project without lending. Less of these opportunities come up as well. But the buyers that can afford here are no less prominent, so when an opportunity arrives its gobbled up. The banks are still the same in mentality with this market but there is an easier solution to being competitive. CASH, being able to offer cash has been a good way to win out the bid on these properties.
300k and up- The "Luxury" Market in South Jersey is a harder market to get into. You need to really know what sells and what the days on market are and you need to definitely have connections with a real estate agent that know buyers in that range or have some yourself. It would definitely be good to do a lot of research on an area before stepping into one of these projects. That being said there are definitely less of these options that come up but also less investors that deal in this area. These projects can take 6 months to a year to get done.
So now lets go through the typical process:
1. We Find the deal, either through an agent, wholesaler, or mailer we've done.
2. We go to see the property to do our scope of work. (This is where most investors are beat out. You need to get into the property quick and get your offer in quick.)
3. Now we put in your offer. When doing an offer the ways you can beat out the competition besides just being the highest is to offer to close quickly, 2 weeks is standard, or offer all cash, offer to have no contingencies (Inspections, Etc). You need to get your offer in as fast as you can. Usually the bank will come back and say there are multiple offers and they want highest and best. NEVER OFFER MORE THAN YOUR MAXIMUM ALLOWABLE OFFER! There will always be another property. (Ways to be able to offer more is to develop ways to lower your cost on the project ie, cheaper contractors, cheaper materials, etc)
4. Once you beat out the competition and get the property the fun begins. you have two weeks usually to get everything done. From official quotes from you contractors to any inspections that you did want done. You also need to get a title agency to close the property. If you have an off market deal you still need to get a lawyer to draw up the contracts, a title agency to close the property and a conditional certificate of occupancy (depending on the town)
5. Now you close the property. You show up pay everything you are required and hope nothing was missed.
6. Start construction right away. As the demo work begins you have to be ready for something to come up that you might not have seen because it was behind a wall. The typical hiccups you run into is copper missing that you didn't see, (it's usually completely gone anyway) knob and tube wiring, termite damage, water damage, and mold.
7. Once you are putting on your finishing touches you are going to start looking at selling the property. So you want to pull your comps again and see where the market is for your price.
8. we list your property and will usually (if priced right) get offers within the first week.
9. We accept an offer and then go to closing. Sometime things come up when the home buyer gets an inspection and the apprasials and certificate of occupancy goes through. Most of the buyers have no excess cash so you have to be willing to fix some things to get to closing.
10. Get paid!
I hope this is helpful and if you have experiences to add and questions or thoughts please add them. I will go through a Hold deal in my next post.
William Lees Jr
I'm new to the investing world here in NJ as well as new to Bigger Pockets. As someone looking to invest in the central jersey/south jersey region, this was a great first post for me to read. Very informative. I hope to find many more posts like this on here to help me get started. Thanks again.
@William Lees where are you located? We are currently in the market as a brokerage and also buying investments as Principals. I would like to connect with you!
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