House Hacking in New Jersey

18 Replies

Hi, My name is Aditya Puttigampala and I'm new to the Bigger Pockets community. I'm looking to house hack a multi-family home in New Jersey. I'm currently looking at Hoboken, Union City, Bayonne, and other parts of Jersey City. My goal is to break even with my cash flows so that I won't be paying anything in rent, while living in one of the units. Does anyone have experience house hacking or buying property and renting out units in these areas? I'm looking for some advice on how feasible it is to invest in these areas and how I can narrow my search down. Appreciate the help! :) 

House prices in those areas are absolutely absurd. I suggest looking for a distressed property that needs work, so you can fix it up and rent it for market. Hopefully this comes out to be a more of a bargain...

HI Aditya,

I have house-hacked a multi unit in Newark, NJ utilizing a FHA loan. I would look into a FHA 203k loan, which allows you to buy a property that needs repair and the cost of the repair be wrapped into your mortgage. I'll send you a PM so we can connect.

@Aditya Puttigampala as some said, it's unlikely to find that in Hoboken or jersey city. I would look into union city and Bayonne. As far as break even, what is your definition of that? Does that include cap ex, small repairs, etc?

It really depends on how much capital you are going to spend.  Both Union City and West NY and North Bergen are great areas.  Work with a reputable real estate agent to get you listings with current tenants so you can do the math.  I've actually just recently seen a 4-family in Jersey City (Grenville area ) that was generating positive cash flow.  

@Johnathan Boyle Thanks for responding. When I say break-even I'm including all expenses like mortgage, cap ex, water/garbage etc and deducting from my rental income. My goal is to have a positive net income but I am more than happy to at least live for free or significantly reduce my rent expense. 

@Aditya Puttigampala ok I understand. Unless you look off market, that may be difficult in most areas you describe as last few listings I've had went for over 20-30k above ask price. Or in the worse parts of jersey city it may be possible as someone mentioned Greenville. I'm assuming you're utilizing a 203k or fha loan then? 

@Johnathan Boyle I will most likely be using an FHA loan. I've been looking at Union City, Bayonne, Garfield, Montclair, and Bloomfield so far. I'm trying to avoid areas like Greenville. I'm open to fixing up a property before renting it out as well.

You asked “how feasible” house hacking was in some of North Jersey’s hottest markets so your monthly housing expenses would be zero out of pocket while only putting 3.5% down. Oh, and you want to avoid the less desirable neighborhoods while you’re at it. Wouldn’t that be nice?

Everyone of these folks who know these North Jerseys markets is telling you that what you are asking is not feasible unless you change at least one of your variables and by a lot. That is, you would either have to bring a HUGE down payment to the table, resign yourself to pay your monthly share of expenses, find an amazing off market deal (which may require an all cash offer depending on the state of the property) or you look in the far-from-desirable neighborhoods/towns to make that work.

It seems to me you have a couple of options here. You either take their advice, adjust your plan, and take action; or you could figure this out on your own by crunching the number a few hundred times and spend the next couple of years waiting for a unicorn or a radical change in the market (which does happen from time to time).

It may help to keep in mind that the first house purchase you make is unlikely to be your last.

@Aditya Puttigampala I did an FHA 3.5% down in Journal Square, Jersey City on a very large three family at 790k less then two years ago, brand new construction. Anyone who is telling you it can't be done is wrong. You will not get the same deal as guys bringing cash to the table, but if you buy a property that has a solid cash flow you will have outrageous cash on cash returns and it get's you in the game in an area that is rapidly appreciating. You can only have one FHA at a time, so my recommendation is to find the largest 3-4 family you can that cash flows positive. Some sellers will be skeptical of FHA, so make sure you have enough documentation to prove you are choosing this loan because you are a savvy investor and not because you can't come up with the 20%.

@Steven O'Leary where'd you buy your place? My wife and I bought a duplex with FHA in the Marion district of JSQ a year ago. Would love to meet for coffee at the new Starbucks at the PATH sometime!

@Stu Basham I'm also in the Marion District. I'm on Fayette Ave right off of Wales Ave. would be happy to grab a coffee some time.

I am just starting out and was also looking in that area, Union City and West New York. I have an aunt and uncle who live in Weehawken and they have advised me not to look at Union City or by Journal Square but I feel like there may be good opportunity there although UC prices are quite high. I do not have a mentor who I could ask for advice but I wanted to know if any of you had any further thoughts from your experience in these areas. I am trying to house hack as well but my family thinks these areas are too dangerous. It did not seem that way to me when I was there looking. I saw a lot of renovating and new construction. I have been doing this on my own but would love to connect with someone with experience and maybe grab coffee as well! I would be greatly appreciative!

@Sheila Reyes hi Sheila, I invest in the same area. I believe that JSQ and UC both have huge potential given proximity to the city. The price has gone up significantly for the past 1.5 years, almost doubled, but in the long run, I believe it is still under-appreciated.

In terms of house hacking, UC can be a little tricky as the city itself is insanely dysfunctional, but very doable. my recommendation for UC is that don't try to go by the book and use local people who knows how to deal with the city. If you purchase anything in UC, make sure you get the rebuild letter prior to closing. it is the only legal document that says how many units are legal in UC. Tax record doesn't mean anything in UC.  there is no Certificate of occupancy either. it is relatively safe area with good tenants, based on my limited experience.

If you are looking at JSQ, walkable distance to the path station, it will be hard to find anything that give you positive cash flow. it should be looked at as a long term investment. 

Otherwise, you will find positive cash flow properties in North Bergen, on the west side, but appreciation point of view, it has less potential than the east side IMO. 

I got a lot of help from BP when I first started 2 years ago. I'm not an expert by any means, but I'd like to pay it forward.  Let me know if you need any help. 

@Sooyeon Kim Thank you Sooyeon. I'm actually starting to look into North Bergen too. I live and work in NYC and am not too familiar with these areas outside of what I have researched. I also understand that UC has a lot of rent controlled tenants which makes it difficult to increase rents to market value.

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