Trouble finding deals - Northern NJ

Multi-Family and Apartment Investing
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Trouble finding deals - Northern NJ

Matthew Smocovich
Member since 2018 · 18 posts · 3 votes

Hi BP,

Newbie here trying to house-hack his way into real estate investing. For background, my lease is up in July and I’d ideally like to have a property purchased and in my possession at that time. Does the timing seem doable?

I’m fully qualified for a mortgage and have a realtor that I’m working with, specifically in the Hudson County and Bergen County areas outside NYC.

I’ve been analyzing at least 15 deals a day, with cash flows consistently in the negatives. Usually within -$500 to -$1000.

Levers: 5% vacancy, 3% capital inv, 3% util, 3% leasing costs, 8% property management, and another 3% to account for PMI.

Purchase price is ideally within the range of $300-$400k.

I can’t figure out if I’m going about this in the wrong way so any advice would be much appreciated!!

Thank you,

Matt Smocovich

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David Smith
Rental Property Investor · NJ/PA · Member since 2016 · 555 posts · 149 votes
7y

$300-$400k Is too low for Hudson county.  2 family at least $500k. 4 family 750k. 

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  • Steve O.Pro Member
    Rental Property Investor · West Caldwell, NJ · Member since 2019 · 104 posts · 65 votes
    7y

         The area is so hot that imo   it will be hard to not only find deals but get a good roi.  Unless your willing to go into the “bad” parts of JC.   

    1Reply
  • Matthew Smocovich
    OP
    Member since 2018 · 18 posts · 3 votes
    7y

    @Steve Orluski

    Thanks Steve. Yes, definitely realizing it’s a hot market after all these last couple of weeks. Any advice on how to move forward?

    0Reply
  • Eugene M.
    Rental Property Investor · Fayetteville, AK · Member since 2019 · 40 posts · 41 votes
    7y

    @Matthew Smocovich Totally understand, I'm not there now but I grew up and spent most of my life in northern NJ. 

    Take a step back and look at your goals and the "why" that drives you (you may have already done that). If it's for the cash flow or just to break into it low cost, maybe expensive house hacking isn't for you. Maybe a cheaper mid-western market with some cash flow works better for you.

    If you're really set on the NJ house hacking market, get creative. Are you taking advantage of economies of scale? (Possibly getting a triplex or 4-unit a little farther from X for a similar purchase price). Are you living alone - can you rent out a room or suite for a roommate? Convert a garage or basement? Airbnb? 

    At the end of the day, if you're negative on cash flow but still saving a ton compared to average renting this isn't a bad thing - you're still saving more cash for reserves & future investing, capitalizing on potential tax savings, getting better appreciation than many other areas, building equity faster, etc.

    2Reply
  • Matthew Smocovich
    OP
    Member since 2018 · 18 posts · 3 votes
    7y

    @Eugene M. Thanks for the response. My "why" has a couple of reasons; breaking into RE at a lost cost and saving my income rather than spending on NYC rents. I currently live and work in NYC, thus the reason i'm looking for a property in the near vicinity.

    Most of the places I've been looking at are within a 1 hour commute (something i'd ideally like to maintain). Also, i'll most likely being living alone, so the rent a room/basement/airbnb are great options that i'll take into consideration.

    What you're saying makes a lot of sense. Thanks for the input, really appreciate the help and support here! 

    1Reply
  • Eugene M.
    Rental Property Investor · Fayetteville, AK · Member since 2019 · 40 posts · 41 votes
    7y

    @Matthew Smocovich Apologies for not being able to give specific market advice - it's been a few years since I've looked at anything in northern jersey. Not sure what commute times look like on the edge of CT or anywhere else outside where you're currently looking but that might be worth a few minutes if you haven't scoped it yet.

    Don't quit, getting a good deal might take some more time. And a little bit in negative cash flow compared to your current rent in NYC is probably a big difference! Let us know how it goes!

    1Reply
  • Matthew Smocovich
    OP
    Member since 2018 · 18 posts · 3 votes
    7y

    @Eugene Molisso no worries and will do. Hopefully I can send an update with some positive news in the next month or 2!

    0Reply
  • Eric Del Gizzo
    Investor · NY Metro · Member since 2018 · 16 posts · 6 votes
    7y

    @Matthew Smocovich You should look along the NJ train lines. Ive been looking in Lyndhurst and Rutherford and there has been some viable multi-families coming on to the market. These two towns have trains that go to Seacaucus station which goes directly to Penn Station from there. I would say around 35min from one of those towns into Penn station. Also from there you can take train to Hoboken then hop on the path to get to WTC. I believe the odds are not in our favor for cash flowing multi families in the popular areas of JC and Hoboken in that price range, but I think the numbers are better if you go a little deeper west staying on the train lines. Good luck!

    2Reply
  • Oleg Shalumov
    Rental Property Investor · Teaneck, NJ · Member since 2016 · 567 posts · 291 votes
    7y

    @Matthew Smocovich I would say that getting a 4-plex in the area of UnionCity/WestNewYork would be ideal for you, but those areas are already very high and you would probably not be able to have down payment even for FHA loan.

    Harrison, I think, would be something I would have looked into. Prices are still manageable but I know the area being targeted by flippers and investors. See if you can find a 4-plexus in the area you can afford.  

    1Reply
  • David Smith
    Rental Property Investor · NJ/PA · Member since 2016 · 555 posts · 149 votes
    7y

    $300-$400k Is too low for Hudson county.  2 family at least $500k. 4 family 750k. 

    3Reply
  • Matthew Smocovich
    OP
    Member since 2018 · 18 posts · 3 votes
    7y

    @Eric Del Gizzo makes sense. Seems like we might have to go outside our preferred area of interests. Thanks for your input, good luck to you!

    0Reply
  • Chase Louderback
    Real Estate Agent · Luray, VA · Member since 2016 · 460 posts · 293 votes
    7y

    @Matthew Smocovich if you find an area you like and the current on market properties seems to be appealing/relatively close to your desired purchase price then maybe consider doing some marketing direct to owners.  It may take a little longer than your projected timeline, but you can get a better deal if you are direct to seller. 

    Finally, if you are finding a deal where you are net negative ~$500/mo then that may not be a bad deal for your market.  You'll have to figure out what makes sense for you.

    0Reply
  • David Wrenn
    Specialist · Member since 2019 · 49 posts · 26 votes
    7y

    @Matthew Smocovich I know great meet ups and networking events in the area. If you want to meet up for coffee or at a meet up and I can introduce to some of the local big boys. If you want to grab a coffee and bounce some ideas off each other as I’m relatively new to wholesaling/flipping but have been in real estate in JC since 2005. Let me know I’m all about networking.

    1Reply
  • Matthew Smocovich
    OP
    Member since 2018 · 18 posts · 3 votes
    7y

    @Oleg Shalumov thanks for the input. That definitely makes sense. Not sure that I’ll have the cash to fund a 4plex but doesn’t hurt to try!

    0Reply
  • Matthew Smocovich
    OP
    Member since 2018 · 18 posts · 3 votes
    7y

    @Ethan Smith I agree. The $300-$400 range is producing a lot of properties in need of lengthy TLC projects.

    0Reply
  • Matthew Smocovich
    OP
    Member since 2018 · 18 posts · 3 votes
    7y

    @Chase Louderback that’s great advice. I never thought to take the direct mailing route. Thanks for the input.

    Also, I agree and need to take that into consideration. I think based on the market, the negative $500 range could still be a decent deal, especially since it’s still putting me in a better position to save than continuing to rent in NYC.

    1Reply
  • Matthew Smocovich
    OP
    Member since 2018 · 18 posts · 3 votes
    7y

    @David Wrenn definitely! I’ve been slacking in the networking department.

    0Reply
  • Nicholas Sheridan, Jr.
    Investor · Denver, CO · Member since 2016 · 181 posts · 242 votes
    7y

    @Matthew Smocovich The growth in the Jersey City/Hoboken area over the last couple years is absolutely insane. Personally, I think its at the top of its bubble with all of the new skyscrapers shooting up every month. There is even an area near the Liberty Park lightrail station where 3 new apartment buildings went up right next to an abandon disgusting building (which it doesn't appear that the building will be destroyed before they try and fill the new apartments). To give you honest advice the only way to be cash positive in these areas is to build massive 30-40 story apartment buildings. Its a cool area and everyone wants to live there but at this point I am not sure that you can find anything good unless you go across 78 - which of course is a dump. Maybe look more towards Hoboken (still overpriced) or even west? Goodluck!

    1Reply
  • David Smith
    Rental Property Investor · NJ/PA · Member since 2016 · 555 posts · 149 votes
    7y

    There are some 2 family on MLS selling $200K in decent areas. It will take $50-100K to fix. monthly rent maybe $2000-$2500. OK deals for some.. but not worth it for me.

    0Reply
  • Jonathan Valdes
    Rental Property Investor · Saddle Brook, NJ · Member since 2017 · 82 posts · 36 votes
    7y

    @Matthew Smocovich Nothern NJ is the way to go. Esp for people who like to walk around theor neighborhood. as you already have seen, the prices are nuts!!. I have seen a few deals on the MLS, but they require TLC. It is about creativity. I have also looked into Bloomfield in Essex County and some towns near Rt80 in Morris County. I saw a 3 family in Bloomfield for under $430k. I was just scared because I was trying to do a FHA and I love Northen Bergen County.

    1Reply
  • Angel Arr
    Bloomfield, NJ · Member since 2017 · 17 posts · 13 votes
    7y

    @Matthew Smocovich I’ve had the same issue. Now I’m looking in Allentown PA. 90 min drive from Bloomfield Nj.

    1Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    7y
    Originally posted by @Matthew Smocovich:

    Levers: 5% vacancy, 3% capital inv, 3% util, 3% leasing costs, 8% property management, and another 3% to account for PMI.

    Matt North Jersey can be profitable but in many cases requires work and a more hands on approach. What stands out to me is your property management, what is stopping you from being the PM? 3% PMI can be short term. Finally are you willing to put work into a property, possibly do some of the work yourself?

    973-975-3895
    House Hacking New Jersey563 Reviews
    WebsiteView Page
    1Reply
  • Matthew Smocovich
    OP
    Member since 2018 · 18 posts · 3 votes
    7y

    @Angel Arr interesting. Keep me updated on how it goes.

    0Reply
  • Amy Beth
    Rental Property Investor · Edison, NJ · Member since 2016 · 753 posts · 565 votes
    7y

    @Matthew Smocovich If you are house hacking I would not hire a PM. I would use cozy to collect rent and self manage. You could use an agent to find s tenant and then manage it yourself after the leaker signing as an alternative if you do not want to find the tenant yourself. It would save you the monthly management charge.

    1Reply
  • Matthew Smocovich
    OP
    Member since 2018 · 18 posts · 3 votes
    7y

    @Shawn M. I plan on managing myself, just including the 8% as a conservative measure. Maybe it’s best to remove and not be so conservative?

    0Reply
  • Matthew Smocovich
    OP
    Member since 2018 · 18 posts · 3 votes
    7y

    @Amy Beth thanks Amy. I plan on managing myself, just used as a conservative measure. Having said that, I’ll look to exclude the 8% in my future models.

    0Reply
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