Introduction, Newbie from Jersey City, NJ

22 Replies

Hello BP community, 

My name's Terence (Terry) Eng I'm a software engineer by day and I'm looking to join the ranks of the many successful BP members in this Real Estate game. I've stumbled upon BP about 7 months ago and started taking in all the basics and information that I can.

I started with the UBG, started listening to the podcasts (about 2/3 of them so far) and lurking on the forums searching for topics of interest that I wanted to focus on or information that I didn't know. Picked up a few books and read through, "Building Wealth One House at a Time" by John Shaub, "The Book on Investing in Real Estate with No (and Low) Money Down: Real Life Strategies for Investing in Real Estate Using Other People's Money," "The Book on Rental Property Investing: How to Create Wealth and Passive Income Through Intelligent Buy & Hold Real Estate Investing!," by Brandon Turner, "The Book on Estimating Rehab Costs: The Investor's Guide to Defining Your Renovation Plan, Building Your Budget, and Knowing Exactly How Much It All Costs" by J Scott and found them all so informational it has got me amped! I have also turned my girl friend on to REI, she joined BP as well and now we both are excited and trying to learn as much as we can.

Our strategy is to pursue some buy and hold rental properties within a range locally to Jersey City, Bayonne, Union City, Newark, Garfield, and with the prices and returns here we feel the multi-family (2-4 Units) realm would yield better than SFH properties. It's a little tough to find good value add deals with low entry points, but we're on the sites looking at potential listings, driving the areas getting to know the people and neighborhoods, and analyzing the numbers/scenarios to see what the COC and Cap Rates would be, while we line up the funding side. Of course we're new to this so some items like estimating rehab and rent rolls (using rentometer) could be off a bit.

So as I mention I live in Jersey City, currently own a condo which has appreciated nicely since I had purchased back in 2012. Our plan was to obtain a HELOC to fund the value add investment properties' down payment and potential rehab costs, then secure long term conventional financing for the rest of the purchase price, and refi later on down the line to pull out the cash laid out and pay back the HELOC.

I've been looking up HELOC rates of various big banks, credit unions, and local smaller banks. I have excellent credit rating, and only 1 CC left to pay off (~$6k); for the HELOC amount I am targeting, Affinity FCU (2.99% first 12 months, Prime after) and Santander (3.99% first 12 months, Prime -.75%) are the front runners, however I am looking for other banks that could have better rates. All assuming they will qualify me for those best rates.

If you made it this far in my introduction wall of text, thank you for making it through! 

I look forward to learning more, meeting other local investors in the area, contributing back to BP and jumping into the game!

-Terry

I think you are on the right track looking for 2 families and up and those are all areas ive been investing in for years now. Just understand that there are some really neighborhoods in a lot of those cities and rent control varies by town so look into that. also some towns are a pain in the butt when it comes to permits and approvals and such. Also make sure you hit some of the REI meetings there are a bunch in Jersey City.

Hi @Terence Eng ! Welcome to Bigger Pockets!!  I actually started back in 2012 to heavily invest in Essex, Hudson, and Bergen Counties, Northern NJ. 

Buying and holding is a great choice due to the many benefits it brings to the table.  I'll leave you with a few tips that we have learned by buying, managing our own portfolio as well as managing properties for our clients.  I truly wish someone would have shared these with me when I started.

1) 3-4 Families - If you are looking for buying and holding and getting cash-flow, I would suggest sticking to 3 Families and up as after running your numbers you will notice that these properties will most of the time bring you a higher cash-flow then smaller properties due to the high taxes here in NJ.  

2) Contractors - Not every contractor is made equal, obviously as investors our goal is to attempt to get the highest return on investment possible. However, it is important to stay focus on the end goal which in my case is to provide a good quality product which my tenants will be happy to live in. Lower priced contractors are not always the best call, if you hire a lower price contractor, in some cases you will get stuck doing the same job twice. I'm not telling you to overpay for a job, but definitely get a few bids and do not go for the cheaper guy, we made this mistake a few times when we started and suffered dearly.

3) Property Taxes - Obviously keep an open mind on where to invest, at the end all that matters is that the numbers work. You mentioned two areas that I have been looking into for many years and those are, Garfield and Newark. The great thing about these two cities are that they both have low property taxes. As you probably noticed by now, property taxes will quickly eat up on your returns so these may be some areas where you can start searching. The downside with these two areas is that in Garfield, the inventory for these multi-families are pretty low and Newark, although the inventory is a little healthier, the competition is much higher.

4) Tenant Screening - Once you find the right property and get through the renovation stage, if any, the screening process will be the last place that can eat your returns. Even though we manage properties in C-D class neighborhoods, you can still have great tenants, the secret is learning a good screening process in order to hopefully not have to deal with evictions.

Best of Luck!

Regards,

Moises


 

Hey @Terence Eng feel free to come to out NNJ Meetup in Clifton, its free and a great way to hear what others are doing. We are doing a Q&A with 3 successful local investors this time - its going to be good.

https://www.biggerpockets.com/forums/521/topics/683318-a-nnj-rei-meetup-q-and-a-w-3-local-investors-rentals-flips-synd

@Allan Szlafrok , oh yeah we were driving around the Bergen/Lafayette area closer to the Greenville section and there are definitely some rough areas that we're not too comfortable with. I think it will still take some time for it to turn for the better, although I hear its coming.  In Newark we drove around the University Heights area (looked promising) and Lower Vailsburg  (not so great). I live in the Heights of JC, bordering Union City and feel that are is not as rough, but as you say some towns are a pain in the butt with permits and approvals and I believe UC is one of them.  Plus the taxes are killer!

I touched on some of the towns rent control laws, I'll still need to read more and understand them correctly. I know UC recently amended their laws to now include 3 unit non owner occupied under their rent control laws. Most towns rent control I'm only allowed to raise rent a specified percentage correct? If I inherit an existing tenant upon/if their lease renewal I'm bound to that percentage? However if I sign a new tenant is that rent bound to that % also, unless I rehab and add value to that space to justify a increase (perhaps to market rates) for that unit?

thanks so much for your info/response!

-Terry  

@Moises Mari ,

wow, thank you for such a detailed response and tips! My GF has been preaching we should be looking at the 3-4 over 2 families for exactly what you had mentioned. The better return on cash flow and the spreading out of the taxes over more units.  Running numbers on 2 family results in rather thin returns or negative returns.

Noted on the Contractors, and I agree I would not want to get the same job done twice! When starting out looking for contractors did you mostly go off of other's recommendations, look up in local directory and call them up ask for bids/previous job referrals?  There's a lot of new construction in my area, of the trucks outside the job site I was planning on taking pics of their vans and calling them up when time comes for rehab.  I figure if they are being used in the neighborhood for these nice new condos they should be doing some good work.

Yes the taxes in NJ are crazy, and I'm accounting for them in my expenses when running the numbers which like you say eats into the returns.  Going back to your 1st point, that's where 3-4 units will really help shore up the returns.  Agreed Garfield is low inventory but will still be keeping a pulse on there for anything to pop up and run the numbers.  Newark does have more inventory however some that need large rehab at our entry point, I'm not sure if it would be a good undertaking for first investment.

Noted on the Tenant Screening, I'm going to be searching through the forums and gather some best practices and also when time comes to utilize some online landlord management sites like cozy or turbotenant to assist in that matter.

thank you again for the info/tips!

-Terry 

@Sunny Burns ,

hah, as you seen from the post above by @Rose Zhang (The GF), we were both at your first meetup last month and it was great!  We were up in the 2nd row and was crazy to find out we pretty much work at the same place, (and finding out others at the meetup were from there too!)  Small world!  

We'll definitely be attending the next meetup and looking forward to it!

-Terry

@Terence Eng I didn't recognize you from the photo, but yea I remember you and @Rose Zhang !

Glad you two will be attending, see you at the end of the month. And good luck on your search.

We just had our offer on a 4-family in Lyndhurst accepted two days ago, so are pretty excited!

@Terence Eng , first ones the hardest. If we close on this one it'll be 11 units in under 4 years... just been BRRRing. Although recently HELOCing  due to the increasing interest rates, instead of cash-out refinancing. So BRRHELOCR!

@Terence Eng

Welcome. 

I am on the other side of two rivers, but spend a lot of time in your neighborhood. Also in a similar industry.

I have definitely found more opportunity looking out-of-state and partnering with people, accordingly. I do know of a couple tough people making it in JC and the NYC metro area, but it's a lot of work, and none are doing it on the side.

Anyway. Reach out if you need anything and want more info on what we've pursued.

Originally posted by @Terence Eng :

Hello BP community, 

My name's Terence (Terry) Eng I'm a software engineer by day and I'm looking to join the ranks of the many successful BP members in this Real Estate game.  I've stumbled upon BP about 7 months ago and started taking in all the basics and information that I can.  

I started with the UBG, started listening to the podcasts (about 2/3 of them so far) and lurking on the forums searching for topics of interest that I wanted to focus on or information that I didn't know. Picked up a few books and read through, "Building Wealth One House at a Time" by John Shaub, "The Book on Investing in Real Estate with No (and Low) Money Down: Real Life Strategies for Investing in Real Estate Using Other People's Money," "The Book on Rental Property Investing: How to Create Wealth and Passive Income Through Intelligent Buy & Hold Real Estate Investing!," by Brandon Turner, "The Book on Estimating Rehab Costs: The Investor's Guide to Defining Your Renovation Plan, Building Your Budget, and Knowing Exactly How Much It All Costs" by J Scott and found them all so informational it has got me amped! I have also turned my girl friend on to REI, she joined BP as well and now we both are excited and trying to learn as much as we can.

Our strategy is to pursue some buy and hold rental properties within a range locally to Jersey City, Bayonne, Union City, Newark, Garfield, and with the prices and returns here we feel the multi-family (2-4 Units) realm would yield better than SFH properties. It's a little tough to find good value add deals with low entry points, but we're on the sites looking at potential listings, driving the areas getting to know the people and neighborhoods, and analyzing the numbers/scenarios to see what the COC and Cap Rates would be, while we line up the funding side. Of course we're new to this so some items like estimating rehab and rent rolls (using rentometer) could be off a bit.

So as I mention I live in Jersey City, currently own a condo which has appreciated nicely since I had purchased back in 2012. Our plan was to obtain a HELOC to fund the value add investment properties' down payment and potential rehab costs, then secure long term conventional financing for the rest of the purchase price, and refi later on down the line to pull out the cash laid out and pay back the HELOC.

I've been looking up HELOC rates of various big banks, credit unions, and local smaller banks. I have excellent credit rating, and only 1 CC left to pay off (~$6k); for the HELOC amount I am targeting, Affinity FCU (2.99% first 12 months, Prime after) and Santander (3.99% first 12 months, Prime -.75%) are the front runners, however I am looking for other banks that could have better rates. All assuming they will qualify me for those best rates.

If you made it this far in my introduction wall of text, thank you for making it through! 

I look forward to learning more, meeting other local investors in the area, contributing back to BP and jumping into the game!

-Terry

Hello and welcome! Best of luck to you!

Hi Terry!

Your story is very similar to mine. My girlfriend and I are also JC residents and looking to invest in our first multi-family in the Hudson County area. We are currently searching for a lender and real estate agent to work with. We toured the Bayonne are and really liked it. Have you come across any 3+ family homes in that area? We didn't find much.

@Marky Suazo , we've been looking for a few months now and noticed that 3-4 family homes are hard to come by as it seems inventory are majority duplexes however that is what we're looking for as the numbers work out better with the extra unit.  

Coincidentally we just did a drive around Bayonne last friday and the neighborhoods are really nice...growing up in NJ and living in JC for a while I always heard Bayonne wasn't the greatest area but actually driving around there I now have a completely different mindset about it!  The numbers are tough as their taxes are also pretty high which takes away some of the monthly cash flow, but i feel its a good place to look if a deal comes up.

As for a realtor, reach out to @Diana Tian . She is local Realtor and a Investor herself!

@Marky Suazo , we're still deciding what is the best route to take whether house hack or just renting out entirety.  I do know some towns have rent control levied on 3+ unit apartments however if we owner occupy a unit in the building the rent control laws may not apply and could adjust to market rate rent upon lease expiring.  

We could do that and house hack it, and my current condo that I own we would rent that out.

@Terence Eng

I would keep all your options open. Just getting your first deal done even if it is a SFH will start you on the learning process from going through a deal from start to finish. The BRRRR strategy has got a lot of components to it. Good luck and feel free to share your experiences with the community!

@Pearly Tan , thanks for the advice. We have contemplated the SFH realm too but are still exploring what would get us bang for the (limited) buck we have. Preliminary analysis on the numbers we would not gain enough rent with a SFH to offset the taxes to be cash flow positive, which is why MFH seems like a better option currently. But I do agree with you, the first one is a learning process and gain immense knowledge of the whole picture.

@Tom Ott and @George Blower , thank you for the welcome!

Originally posted by @Terence Eng :

@Pearly Tan , thanks for the advice. We have contemplated the SFH realm too but are still exploring what would get us bang for the (limited) buck we have. Preliminary analysis on the numbers we would not gain enough rent with a SFH to offset the taxes to be cash flow positive, which is why MFH seems like a better option currently. But I do agree with you, the first one is a learning process and gain immense knowledge of the whole picture.

@Tom Ott and @George Blower , thank you for the welcome!

Her @Terrence Eng,

Stay away from renting out SFH, if one tenant leaves you are pretty much screwed till you get a new tenant. The cash flow is certainly not worth it either. The common consensus is to do at least 4 families and up (I would recommend 8 and up) to make it worth your time.

Founder, Refix Real Estate

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