New landlord controversy in new jersey

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New landlord controversy in new jersey

Yangyang Jin
Member since 2022 · 52 posts · 25 votes

I have this posted ina different category but didn't get any anwers. Trying my luck here. I have come to find it very controversial for investors who would like to buy under valued asset, renovate, and raise rent, on the other hand, when we acquire properties, usually there are tenants living in these units already. In New Jersey, Landlord does not just have the right to vacate the tenants to move out in 45 days, there need to be good causes. And price under market is not a cause. I am curious to learn how other investors in New Jersey handle this?

On the other hand, though I would like to vacate current tenants to increase rent tremendously, I also came to learn some tenants have been living there for over 10 years, have family and young children, paying rent on time. You would want to help them somehow. Vacate them is not the best way to help people either. How do you view this?

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Quote from @Yangyang Jin:

This is why it's important to choose an area with fair laws. If you can't terminate the lease or raise the rent to market levels, then you're buying a losing asset.

I would invest in an area that allows owners to charge a fair market rate for their rentals.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Yangyang Jin:

    This is why it's important to choose an area with fair laws. If you can't terminate the lease or raise the rent to market levels, then you're buying a losing asset.

    I would invest in an area that allows owners to charge a fair market rate for their rentals.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    3Reply
  • Lindsay Op de Coul
    Chicago suburbs · Member since 2021 · 98 posts · 52 votes
    3y

    A way people handle this in NJ is to increase the rents and force people out (depending on what the laws in the city/county allow - some have restrictions on how much you can increase), or you can offer cash for keys. If you also want to take care of the families living there and don't want to force them out, have a conversation with them.  Let them know you have to increase rents, but you want to take care of them and see if you can increase rent within their means.  These are just a few things I have seen our investors in NJ do.

    It all depends on what your intentions are and what outcomes you are looking to produce.

    Also, those things may be easier said than done or may not be so black and white when you go to do them.  If you want someone to chat with and bounce ideas off of / get some advice, just let me know.  I can connect you with an investor or one of our property managers who has dealt with these situations before.  We are happy to help!

    3Reply
  • Joseph Guzzardi Jr
    Rental Property Investor · Member since 2019 · 411 posts · 148 votes
    3y

    @Yangyang Jin if this is a concern then buy vacant properties. I usually prefer atleast 1 unit vacant in a multi 2-4 unit so I know I can get a strong rent. I also ensure that the rent isn't incredibly low where if I increase up to the allowable max it won't ruin the deal. Buying at the right price can ease the concerns as well.

    1Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Yangyang Jin:

    In New Jersey, Landlord does not just have the right to vacate the tenants to move out in 45 days, there need to be good causes.

    So the obvious question here is.....why are you even looking at New Jersey when you start off knowing that you will be facing a landlord non-friendly state right from day one...? This makes no sense....

    1Reply
  • Yangyang Jin
    OP
    Member since 2022 · 52 posts · 25 votes
    3y
    Quote from @Bruce Woodruff:
    Quote from @Yangyang Jin:

    In New Jersey, Landlord does not just have the right to vacate the tenants to move out in 45 days, there need to be good causes.

    So the obvious question here is.....why are you even looking at New Jersey when you start off knowing that you will be facing a landlord non-friendly state right from day one...? This makes no sense....


     Because I am in New Jersey and started single family rental assets a few years ago, i guess naturally I would want to start in NJ where I live and familiar with. It's not until recently I realized that NJ is a pro tenant state. I wonder how the NJ landlord dealing with this? There must be NJ investors....?

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Yangyang Jin:
    Quote from @Bruce Woodruff:
    Quote from @Yangyang Jin:

    In New Jersey, Landlord does not just have the right to vacate the tenants to move out in 45 days, there need to be good causes.

    So the obvious question here is.....why are you even looking at New Jersey when you start off knowing that you will be facing a landlord non-friendly state right from day one...? This makes no sense....


     Because I am in New Jersey and started single family rental assets a few years ago, i guess naturally I would want to start in NJ where I live and familiar with. It's not until recently I realized that NJ is a pro tenant state. I wonder how the NJ landlord dealing with this? There must be NJ investors....?


    I sympathize...but still you gotta admit it sounds strange. It's like going into a battle with a huge wrestler....

    I know the NJ landlords will always say, 'aw it never happens'. But we get posts from you New Jersey landlords ALL THE TIME......

    0Reply
  • Yangyang Jin
    OP
    Member since 2022 · 52 posts · 25 votes
    3y
    Quote from @Joseph Guzzardi Jr:

    @Yangyang Jin if this is a concern then buy vacant properties. I usually prefer atleast 1 unit vacant in a multi 2-4 unit so I know I can get a strong rent. I also ensure that the rent isn't incredibly low where if I increase up to the allowable max it won't ruin the deal. Buying at the right price can ease the concerns as well.


     The reason I am asking is because I came across two really well built and well priced 2 unit multi-families. Among the available inventories in central Jersey, these two are fairly new in ages, good layout, spacious, in an affluent town where the potential rent can be very nice. But all 4 units have tenants occupying, and seems like they all have been living there for more than 10 years. And I learned the rent was never increased in the past 10 years. Though the seller mentions that on the lease, it states the new landlord can give the current tenants 45 days to vacate when they take over. But an attorney who is familiar with NJ rental laws, says that should not be the case. New landlord can not vacate current tenants simply because they need to renovate. I am curious to learn if anybody has experiences similar situation before?

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Yangyang Jin:

    But all 4 units have tenants occupying, and seems like they all have been living there for more than 10 years. And I learned the rent was never increased in the past 10 years.

    You asked for advice.....RUN.

    1Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    3y

    @Yangyang Jin if you are purchasing small multis 4 units or less,  owner occupying laws  will swing in your favor making tenant removal a bit smoother for you.    

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  • Kevin Sobilo
    Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
    3y

    @Yangyang Jin, ignore @Bruce Woodruff and listen to @Lindsay Op de Coul. She gave some solid advice.

    Just because NJ is a tenant friendly state doesn't mean there isn't opportunity. Actually BECAUSE its a tenant friendly state could be an opportunity. Every problem like this to overcome is an opportunity. Other investors looking at a deal like this will have the same concerns and reservations. If you can find ways to deal with the problem, you can negotiate a better deal because others won't jump to take on the problem and you can benefit from it.

    Value-add opportunities don't just come from physical distress and hiring a contractor. Any issue holding a seller down that you can solve is an opportunity. Look at it that way and you'll be on the right track I think. 

    3Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    3y

    @Kevin Sobilo I absolutely agree with you.  We tweak NJ to meet our needs.   At the end of the day regardless of the state and its laws you can always find advantages others over look.  In NJ our advantage has been finding distress properties and renovating them into luxury rentals attracting high end tenants.  long story short every land lord horror story you hear almost never applies to luxury tenants, proof in point my wife and I are over 300 consecutive months without missing a single months rent across our properties.  On top of this our vacancy rate are less than 1% with very little cap X and massive amounts off appreciation.  

    973-975-3895
    House Hacking New Jersey563 Reviews
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    1Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    3y
    Quote from @Yangyang Jin:
    Quote from @Joseph Guzzardi Jr:

    @Yangyang Jin if this is a concern then buy vacant properties. I usually prefer atleast 1 unit vacant in a multi 2-4 unit so I know I can get a strong rent. I also ensure that the rent isn't incredibly low where if I increase up to the allowable max it won't ruin the deal. Buying at the right price can ease the concerns as well.


     The reason I am asking is because I came across two really well built and well priced 2 unit multi-families. Among the available inventories in central Jersey, these two are fairly new in ages, good layout, spacious, in an affluent town where the potential rent can be very nice. But all 4 units have tenants occupying, and seems like they all have been living there for more than 10 years. And I learned the rent was never increased in the past 10 years. Though the seller mentions that on the lease, it states the new landlord can give the current tenants 45 days to vacate when they take over. But an attorney who is familiar with NJ rental laws, says that should not be the case. New landlord can not vacate current tenants simply because they need to renovate. I am curious to learn if anybody has experiences similar situation before?


     This is a perfect situation where owner occupying laws will play in your favor.   My experience with acquiring tenants has always been favorable for us but at the end of the day you can trust what the previous landlord did in terms of filling the unit.  We have taken on some tenants that would 100% never pass our screening and have always had success with getting them out prior to 60 days but once again this one does require a bit of luck even though in my opinion most tenants will leave on request that absolutely does not mean all will do so.

    973-975-3895
    House Hacking New Jersey563 Reviews
    WebsiteView Page
    1Reply
  • Vanessa RegaladoPro Member
    Property Manager · NJ · Member since 2019 · 129 posts · 37 votes
    3y

    @Yangyang Jin In New Jersey you can only remove a tenant by cause; non payment of their rent, violation of the lease, etc. You can also do cash for keys but it gets challenging when tenants have been there for 10 years with no increase and they are paying low rents vs market rents. Call the township where the property is located and find out if there are rent increase restrictions, rent control etc If there are none, then you are legally allowed to increase the rents to market value. The other issue is coming into an agreement with your tenants and if they are able to afford the new increase. Good luck to you! 

    [email protected]201-232-5381
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