First investment property Northern New Jersey

6 Replies

Hello! My names Tanner and I'm 20 years old. I've been reading and reading, listening to podcasts, watching the market for an investment rental. That's all great, but it means nothing if you don't pull the trigger! And sometimes that's the scariest part (especially with everything happening right now). I have money saved up to invest but i don't know what would be the best strategy for buying. Does anyone have any stories about their first deal?

I would buy the undervalued property, do some renovations, and once it has equity on it, I will sell it or another option I would buy the property with $100-500 positive cash flow. A good interest rate also matters in this case.

@Tanner Sommese Hey Tanner. My first rental I acquired/funded thru a cash out refi on my personal home, very boring I know, but it took action and helped move the ball down the field for me. My most recent deal involved learning a bit more, coaching, and partnering/joint venturing with a group of highly skilled and experienced individuals. This is the route I am going 200% down and would be more than happy to share further details with you. Shoot me a message

"To know and not do, is to not know" -- one of my favorite quotes from Neo–Confucian philosopher Wang Yangming

Before I bought my first rental, I read Rich Dad Poor Dad, The Millionaire Real Estate Investor, Build A Rental Property Empire, BRRRR, The Book on Rental Property Investing— numerous books. Not to mention I read all the articles, forums & blogs; I stopped with the music, listened to the podcasts, watched YouTube videos, you name it. Google was my best friend… But it came to a point after reading I believe my 6th or 7th REI book and learning nothing new where I realized the only way to truly learn was from the experience aka the school of hard knocks or getting out and buying my first property. I had paralysis analysis, as I am sure you heard of. Fortunately, thanks to my realization and mentor who gave me a good push, I did just that. And briefly put, I got just what I was looking for. After a whole lot of showings, analyzing properties and putting offer after offer in throughout Hudson County, I landed a deal and closed on my first investment property in March 2020. I house-hacked and full-gut rehabbed a 1920s built two-family in Bayonne, NJ using an FHA 203k loan.

You want a story? I can probably write a book for you from the experience. From gutting the place right before peak COVID and the lockdowns and having to push through the extensive full-gut reno… To finally finishing the 6+ month long rehab and having to click the reset and start over (two weeks out from renting the place) thanks to severe smoke/soot damage from a neighbor’s house fire. Sure— manure happens or the “balloon went up” during unprecedented times and I had my setback from things out of my control. But not only did it all work out in the end with the investment/rehab, but I got 2-for-1 experience with my first-house hack, forced over 150k+ worth of equity and learned 10x as much as I did from any podcast, forum, blog or real estate investing book I read prior.

Don’t worry about what the markets doing. If you are young or at least have time by your side and plan to hold for 7+ years, what’s happing with prices doesn’t mean much. Look at the data, history will tell us that— there has only been four true real estate crashes going back to the early 1800s. There’s your strategy, find a distressed, buy & hold 1-4Fam that needs a little work so you can add some equity and cushion for peace of mind. The more work needed, the better I learned— as cash investors tend to avoid them (they want quick returns, money in money out) and traditional homeowners we know stay away.

Ask yourself “what’s the worst that can happen” and get over it (remember everything you want is on the other side of fear). Then go and learn by doing— and by learning from other people’s failures/experiences along the way. Leverage that so you are two-steps ahead and truly know what to expect investing. 

@Tanner Sommese Keep at it.  The best strategy is the one you are committed to.  For myself I fell in love with house hacking, it has produce amazing returns and has been a life changing adventure.  

Hey, Tanner. I bought my 2-family house hack a little over 3 years ago and it has been very good to me. We took our time looking for it with an amazing realtor, and even wound up backing out of a previous deal and losing a bit of money on inspections/FHA consultant fee. Things will come up during the buying process, and in this current market, you will likely get outbid on a lot of deals. My biggest piece of advice would be to remain calm and emotionally detached. If you keep looking, you will eventually find your place.

Another bit of advice I would give is that NJ is a different animal than much of the country. The taxes here are high, especially where I live in Essex County, and that throws off a lot of numbers. You might not be able to find the "perfect deal" - because there is no such thing as the "perfect deal." If there was, someone else with more resources and experience would've snapped it up already. Take the rules of thumb with a grain of salt, and make sure it's a great, or at least a pretty good, deal.

The last thing I will suggest is to make sure you're comfortable with what you're buying. A lot of people on here buy places that need total gut jobs and are okay with being very highly leveraged. You don't have to be these other people. If you are comfortable with a total gut job, then go for it, and just know that you will have to put in a lot of effort and work. But there are also places that might only need a bit of cosmetic work that the numbers will still work out if you want to take a slightly slower and simpler approach.

Good luck out there, it's a crazy market to make your debut in. Feel free to shoot me a DM if you want to talk more!

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