So we have a 4 family Citibank REO under contract. It is two detached duplexes(upstairs/downstairs units) on one 5000sqft lot. Each of the 4 units, are 3 bedroom and 1 bath. It is not in a floodzone, two blocks from a nice park, two blocks from a bustop that takes you into the city in 38 minutes. Less than 1 mile away from a train station. It is in a really nice part of Garfield and is the ugly house on a block. Above Picture, is for the Rear House Above Picture, is for Front House. Bottom Right (1S) building is what was an illegal 5th studio unit, now considered a bonus room. This will be my Wife and my first Real Estate Purchase, we have been living at home just saving money. When we first saw the property we were very excited because it was the first property that seemed to easily meet our goal in finding a property that when fully occupied would give $1000/month cashflow. • PurchasePrice: $480,000 • Taxes: $10,700 • Rent: $1500/unit After our downpayment we have about $45,000 leftover, we were hoping to spend $25,000 in beautifying the property. However we just had a home inspection and there were some things that were found that we weren't expecting that need to be addressed: • Main Waterline into the house is Lead Pipe • Asbestos Insulation on some pipes in basement • Possible puddles in basement maybe due to water seepage, although I think it was due to dripping hot water heater • Small leak in main sewer pipe • We had an oil tank scan done; appears there is a decommisioned tank in the ground; the bank said they would take care of excavation prior to closing • There is a illegal 5th unit; now considered a bonus room - it also has a seperate basement. There is significant water damage in the basement, and the subfloor has been reinforced but the old original wood has a lot of mold on it. We are thinking of either putting a new floor in it or knocking it down and making more room for parking. • Some Cracks on outside Masonry • Some signs of termites • Missing Flashing around house Anyway after the home inspection, we were both really down - it seems like there is just so much to deal with... there is tremendous income potential with the property, but being new investors I don't know if we can handle some of these major issues. We were hoping to save some money so that we could seperate the heating, currently there are a total of three gas meters, wanted to install a 4th and install furnace/hotwater-heater/reroute plumbing to seperate the heat. Currently one unit shared in each house. Any advice out there or thoughts; especially interested in what other North New Jersey investors have to say. Here are some more pictures of the property; Inside is a little outdated but in decent shape:

Just wanted to update this post, going the BRRR method: So we closed on our first real estate purchase (Four Family Home) a year ago - Yesterday. We just closed on our cash-out refinance and were able to pull out $66,930. We also lowered the interest rate from 4% to 3.5% So we purchased our house for: $430,000We put 10% down, so Loan of: $387,000Our appraisal came in at: $550,000 ($120k more than we bought it for) So the Equity we have in the Property is: $550,000-$387,000 = $163,000 so $163,000/$550,000 = 29.63% Equity So we went from 10% equity to 30%. And we went from a 4% Mortgage Interest rate to a 3.5% rate. On 9/29/2016 we finally closed on our refinance. Total Closing costs were a lot lower than expected at $1,646. We ended up pulling out just under $67,000 for our Cash out Refinance. This amount is almost dollar for dollar what we put into the propety. $43k for our 10% downpayment, and ~$25k for renovations. And the real beauty here is that after pulling out all this cash we still have a higher equity position in the house than when we first purchased the house.

The rent you have in mind is right on the money. You can rent out 3 bed 1 bath in Garfield for $1500 and for $1250 you would have A LOT of takers. Asbestos insulation is not a problem if you know how to remove it yourself. It's not that difficult. Oil tank is your biggest issue. IF the bank pays for the removal that's off your list of problems. You mentioned a lead water pipe going into the house. I know for a fact that A LOT of the water mains in Passaic County are from lead. Passaic Valley Water Comission adds special chemicals to the water to solve that problem. Find out more about that lead water pipe. My guess is, if the PVWC can have lead mains, you shouldn't have a problem with a lead pipe going into the house. Overall the property looks great. Also since it's a REO it's typical for the bank to sell as-is and refuse to fix anything. We're closing on a REO in Somerset County now and in our case the attorney review phase of the process pretty much did not exist. The banks attorneys made it clear that the bank refuses to fix ANYTHING so we should not even bother with any requests as they will just send us back a standard response of basically "take it as is or goodbye"

get estimate on repairs present them to bank,abestos flood damage mold is someting that scares banks and they will credit you,look at this as an opportunity you can actually make money on repairs and they dont have to be done at once

@Alex W. they are just just under $11k a year. Which really is not too bad for a 12 bedroom, 4 bath, 5000sqft property. The low taxes in Garfield NJ was one of the main reasons we were focusing on finding a property in that area. I feel the high taxes in NJ generally kill a lot of deals in terms of Cashflow. I believe the taxes in Garfield are subsidized by the state, see above image from my tax bill. Does anyone know more about that? *Anyway I will update this post soon, with some before and after shots, but I am happy to say that we are now fully occupied at our property.

@Henry L., $1500 is the low side of average. The average rent seems to be around $1650 for a 3bedroom 1 bath, seeing some as high as $1900, and the lowest I've found is $1325. But even if we only manage to rent out the units at $1250 a month, we are still meeting our cashflow goals. The property was on the MLS, but it was a REO firstlook property, so the bank was only taking bids from Non-investors, people that would owner occupy the property for the first 15 days. I think that is the only way we were able to get it. We put a bid on another quadplex(8bedroom, 4 bath) only 3 blocks away, and we big $26,000 over asking. And two investors put full cash offers over ours. @Carrie Giordano and Account Closed, yea I'm not too sure they are willing to do repairs or give credits. Our lawyer tried putting a lot of contingencies, and they just came back with as-is, we won't do anything. However when we had the oil tank scan done, the bank was willing to receive quotes for getting it removed and seem to be handling that. So I guess all we can do is try... If they say no though, I don't know if we are willing to risk going forward with all these problems in the way.

Hi @Sunny -- Very inspiring story, heard you guys speaking in the recent podcast, thank you so much for sharing your story. My husband and I are currently looking for multi families in the NYC area, but it seems to be hard to find a lender that allows you to put 20% down on a jumbo loan. Thanks for sharing Trustco, we are looking into them now. Would you recommend your mortgage banker there?

Fantastic! Thanks for sharing! I'm going to remember this story when I feel like I can't handle this business anymore.

Today we finally closed on the house! It's been a long journey, five months since we initially put in our offer, two years since we started searching for homes, three years since we started researching REI, and seven years since I first had the goal to purchase My first home by the age of 25. Just wanted to thank everyone who has helped me so far and helped answer a lot of my questions. The biggerpockets community has truly been essential for me throughout this process. I wanted to give a big thank-you to @Ahmad Hijazi who suggested the bank we ended up getting our mortgage through. Trustco was great just like he said. They allowed us to put 10% down on a quadplex with no PMI, and we got a great rate at 3.99% - with pretty low closing costs. The total closing costs were just under $10k, on a $430,000 home I think we did pretty well. Big thanks to @Marcin Ferenc who came to look over the property with us once we were under contract. And now the real work begins... by the way anyone have a Mason in bergen county they would recommend?

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Garfield NJ - 12bdrm Quadplex - 1st Home purchase - biting more than we can chew?

Sunny Burns

Rental Property Investor · Mine Hill, NJ · Member since 2014 · 229 posts · 396 votes

So we have a 4 family Citibank REO under contract. It is two detached duplexes(upstairs/downstairs units) on one 5000sqft lot. Each of the 4 units, are 3 bedroom and 1 bath. It is not in a floodzone, two blocks from a nice park, two blocks from a bustop that takes you into the city in 38 minutes. Less than 1 mile away from a train station. It is in a really nice part of Garfield and is the ugly house on a block.

Above Picture, is for the Rear House

Above Picture, is for Front House. Bottom Right (1S) building is what was an illegal 5th studio unit, now considered a bonus room.

This will be my Wife and my first Real Estate Purchase, we have been living at home just saving money. When we first saw the property we were very excited because it was the first property that seemed to easily meet our goal in finding a property that when fully occupied would give $1000/month cashflow.

PurchasePrice: $480,000
Taxes: $10,700
Rent: $1500/unit

After our downpayment we have about $45,000 leftover, we were hoping to spend $25,000 in beautifying the property. However we just had a home inspection and there were some things that were found that we weren't expecting that need to be addressed:

Main Waterline into the house is Lead Pipe
Asbestos Insulation on some pipes in basement
Possible puddles in basement maybe due to water seepage, although I think it was due to dripping hot water heater
Small leak in main sewer pipe
We had an oil tank scan done; appears there is a decommisioned tank in the ground; the bank said they would take care of excavation prior to closing
There is a illegal 5th unit; now considered a bonus room - it also has a seperate basement. There is significant water damage in the basement, and the subfloor has been reinforced but the old original wood has a lot of mold on it. We are thinking of either putting a new floor in it or knocking it down and making more room for parking.
Some Cracks on outside Masonry
Some signs of termites
Missing Flashing around house

Anyway after the home inspection, we were both really down - it seems like there is just so much to deal with... there is tremendous income potential with the property, but being new investors I don't know if we can handle some of these major issues. We were hoping to save some money so that we could seperate the heating, currently there are a total of three gas meters, wanted to install a 4th and install furnace/hotwater-heater/reroute plumbing to seperate the heat. Currently one unit shared in each house. Any advice out there or thoughts; especially interested in what other North New Jersey investors have to say.

Here are some more pictures of the property; Inside is a little outdated but in decent shape:

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Garfield NJ - 12bdrm Quadplex - 1st Home purchase - biting more than we can chew?

Garfield NJ - 12bdrm Quadplex - 1st Home purchase - biting more than we can chew?

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