First time buyer-searching for multi family house hack NJ - help

Multi-Family and Apartment Investing
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First time buyer-searching for multi family house hack NJ - help

Justin Sofman
Member since 2020 · 18 posts · 12 votes

Hey BiggerPockets community! Here's the scenario: I just got my Real Estate license purely to educate myself and use for investment purposes. I listen to BiggerPockets podcast, run numbers, read, search various sites for properties, and am taking steps to action what I've learned. My goal is to put 5% down with an FHA on a multi family house hack. Hoping to renovate and boost ARV.

That being said, I'm a novice.  I'm finding that it's super competitive in northern NJ, namely, in Hudson County.  As soon as a multi family is listed, it's under contract.  I'm hoping to get some tips to increase win probability.  

-How can I target off market multi family properties so I can contact them to see if they want to sell.  Is there a database/list?  Do I have to pay for that? 

-Is this market too hot to compete as a first time (investor) home buyer?  Interest rates are bringing the big dogs over from NYC and they're snatching up the multi fams where the #s make sense w/ cash or a big down payment.  If you've run #s on NJ properties, it's tough to make them make sense from an investment standpoint.

-How can I compete?  I need a property within commuter distance to mid-town Manhattan for my job. 

Any insight is greatly appreciated!!  

Thanks, 

-Justin

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Christian Estrella
New to Real Estate · NYC · Member since 2019 · 44 posts · 18 votes
5y

I had to switch my market, I was looking in the Elizabeth area and pre-covid the competition was hot, a lot of properties were going for best and highest. Also, a lot of cash buyers kill the competition. I went from NJ to CT and found a much nicer property in a better area than what i found in NJ. Don't get discouraged, i went the FHA route and still found a great deal. Keep looking, make offers, and learn how to leverage that real estate license!

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  • Account Closed
    Lender · Fairfield, CT · Member since 2018 · 183 posts · 82 votes
    5y

    Hey @Justin Sofman

    For FHA you are better off putting down the minimum of 3.5% and saving the extra 1.5% for reserves or any work that will need to be done. If you have any financing questions, please let me know. I am helping a couple house hack in that area.

    0Reply
  • Justin Sofman
    OP
    Member since 2020 · 18 posts · 12 votes
    5y

    @Gaetano Ciambriello Hey, thanks for the reply. What is the reasoning behind that? Haven’t heard that.

    Thanks,

    Justin

    0Reply
  • Account Closed
    Lender · Fairfield, CT · Member since 2018 · 183 posts · 82 votes
    5y

    If you look at the difference in your monthly payment between 3.5% down and 5% down, it is $32 per month at $500k purchase price. You would be better off taking that extra $7,500 and buying down the interest rate, keeping it as reserves or making capital improvements/rehab to the property after purchasing.

    0Reply
  • Justin Sofman
    OP
    Member since 2020 · 18 posts · 12 votes
    5y

    @Gaetano Ciambriello good call. When you break it down like that it makes perfect sense.

    0Reply
  • Nick Riccio
    Lender · Boston, MA · Member since 2018 · 171 posts · 137 votes
    5y

    @Justin Sofman I've gone through similar challenges here in Boston, and most of my clients are dealing with the same challenges.

    My advice is to look for the properties that the "big dogs" aren't interested in. Find a model, and stick to it. 

    1. I found a way over priced duplex (most large investors don't want duplexes) and added a ton of value in the basement (3 beds 1 bath and about $600K in equity).

    2. Maybe consider leveraging a renovation product (FHA 203K) - to get into a property that most homeowners can't take on.

    Hope this helps - best of luck!

    0Reply
  • Jeffrey Donis
    Investor · Durham, NC · Member since 2020 · 1k+ posts · 691 votes
    5y
    Originally posted by @Justin Sofman:

    Hey BiggerPockets community! Here's the scenario: I just got my Real Estate license purely to educate myself and use for investment purposes. I listen to BiggerPockets podcast, run numbers, read, search various sites for properties, and am taking steps to action what I've learned. My goal is to put 5% down with an FHA on a multi family house hack. Hoping to renovate and boost ARV.

    That being said, I'm a novice.  I'm finding that it's super competitive in northern NJ, namely, in Hudson County.  As soon as a multi family is listed, it's under contract.  I'm hoping to get some tips to increase win probability.  

    -How can I target off market multi family properties so I can contact them to see if they want to sell.  Is there a database/list?  Do I have to pay for that? 

    -Is this market too hot to compete as a first time (investor) home buyer?  Interest rates are bringing the big dogs over from NYC and they're snatching up the multi fams where the #s make sense w/ cash or a big down payment.  If you've run #s on NJ properties, it's tough to make them make sense from an investment standpoint.

    -How can I compete?  I need a property within commuter distance to mid-town Manhattan for my job. 

    Any insight is greatly appreciated!!  

    Thanks, 

    -Justin

    Hey Justin!

    1- You could pull a list of data from reonomy.com. You could then market to this list by various marketing strategies (direct mail, cold calling, SMS texting, etc).

    2- I am not in the NJ market however you could focus on two markets rather than just one. Maybe
    choose another 

    3- Real estate is a numbers game so the more properties you go after the more likely it is that you will get one at the price you are looking for.

    Hope that helps! Wish you the best.

    0Reply
  • Jason N.
    Specialist · Denver · Member since 2021 · 159 posts · 101 votes
    5y

    To add to Jeffrey's comment; in addition to Reonomy, you could check out costar for your multifamily property search. You could even check the typical places like listsource, propelio, propertyradar etc to see if they have any duplexes or other multifamily homes. Sourcing your own deals before they get to the market is a great way to get in front of the bigger guys.

    2Reply
  • David Smith
    Rental Property Investor · NJ/PA · Member since 2016 · 555 posts · 149 votes
    5y

    How hot is the nj market ? Good time to sell?

    0Reply
  • Justin Sofman
    OP
    Member since 2020 · 18 posts · 12 votes
    5y

    @Nick Riccio - FHA 203k loan is the plan. Thanks for the tip.

    @Jeffrey Donis - reonomy.com, got it!  That's what I was looking for.  Will incorporate this into my lead gen strategy.  RE is a #s game for sure and must keep that in mind when facing multiple rejections. Thank you. 

    @Jason N. - Great stuff, thank you. Will check these places out. As a novice I would prefer to find something on the MLS but am realizing this may not be an options if I want the #s to work. Off market may in fact be where I find the deal.

    @David Smith - As mentioned, I'm new to the game but from what I'm being told, it's pretty pretty hot.  Good time to sell, yes.  Was interested in a duplex for $435k and it was bid up to $475k.  

    Thanks all!

    -Justin

    1Reply
  • Paul S.
    Real Estate Agent · Allentown, NJ · Member since 2014 · 39 posts · 44 votes
    5y

    NJ is insanely hard right now. In my area, the best multi-family properties get scooped up for all cash, a person with a low down payment mortgage doesn't have a shot. Stop listening to podcasts, they are all people from out of state or people who bought at much lower prices after the 2008 crash. Shoot me a message and I can give you a few tips regarding your license use trying to find deals. 

    1Reply
  • Jeffrey Donis
    Investor · Durham, NC · Member since 2020 · 1k+ posts · 691 votes
    5y
    Originally posted by @Justin Sofman:

    @Nick Riccio - FHA 203k loan is the plan. Thanks for the tip.

    @Jeffrey Donis - reonomy.com, got it!  That's what I was looking for.  Will incorporate this into my lead gen strategy.  RE is a #s game for sure and must keep that in mind when facing multiple rejections. Thank you. 

    @Jason N. - Great stuff, thank you. Will check these places out. As a novice I would prefer to find something on the MLS but am realizing this may not be an options if I want the #s to work. Off market may in fact be where I find the deal.

    @David Smith - As mentioned, I'm new to the game but from what I'm being told, it's pretty pretty hot.  Good time to sell, yes.  Was interested in a duplex for $435k and it was bid up to $475k.  

    Thanks all!

    -Justin

     Best of luck! Let me know if there is anything I can do to help.

    0Reply
  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    5y

    You aren't going to win many bids with 3.5% or 5% FHA down in Hudson and if you do, it probably won't be approved for repairs by FHA. Northern NJ is hot x99 now and prices are inflated because people are overpaying with FHA loans and overpaying with all loans right now on multis. You have about 48 hours to snag a multi and you need to go way over asking in Hudson. The best buys need more work than a new investor or house hacker who wants to live there is comfortable with, but not enough for a flipper or contractor to want to take in and in that scenario, there is risk. To win you need to waive things - inspection, appraisal. I would take a peek at Philly instead, but if you need help in NJ, we have two NJ Zooms a week. Just look in the forums for Zen and the Art of Real Estate Investing- TUE 8pm, FRI noon.

    [email protected]Podcast Guest on Show #667
    Zen and the Art of Real Estate Investing59 Reviews
    WebsiteView Page
    3Reply
  • Christian Estrella
    New to Real Estate · NYC · Member since 2019 · 44 posts · 18 votes
    5y

    I had to switch my market, I was looking in the Elizabeth area and pre-covid the competition was hot, a lot of properties were going for best and highest. Also, a lot of cash buyers kill the competition. I went from NJ to CT and found a much nicer property in a better area than what i found in NJ. Don't get discouraged, i went the FHA route and still found a great deal. Keep looking, make offers, and learn how to leverage that real estate license!

    3Reply
  • Justin Sofman
    OP
    Member since 2020 · 18 posts · 12 votes
    5y

    @Jonathan Greene Hey, thanks for the tips. Good stuff. Interesting that you say Philly because as of today I became interested in Lehigh county in PA. Noticed that the numbers work very well. Properties with the 1% rule seem easy ish to come by. I also took a look at Philly and it seems to be the same. Any familiarity with Lehigh county? Heard Bethlehem in that county is a pretty solid place to live. What’s your take on why Philly is a good place to look?

    3Reply
  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    5y

    @Justin Sofman yes, we are playing around there too. We have an investor who is closing in Pottstown also so we are all over Pennsylvania because the taxes are low and there are way more deals and we can still drive there.

    [email protected]Podcast Guest on Show #667
    Zen and the Art of Real Estate Investing59 Reviews
    WebsiteView Page
    0Reply
  • Justin Sofman
    OP
    Member since 2020 · 18 posts · 12 votes
    5y

    @Jonathan Greene you said it with that last sentence! Gotta work with what we’ve got.

    1Reply
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