Seeking angles on a NJ buy and hold strategy

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Seeking angles on a NJ buy and hold strategy

Eric D.
Maplewood, NJ · Member since 2016 · 38 posts · 8 votes

I live in Maplewood, NJ and did buy and holds in the past year - I own a 2-family in Maplewood and a 3-family in West Orange. I bought both off the MLS with conventional 30 year loans and 25% down.

I find, however, that it is very difficult to find a good deal off the MLS. Owners will offer multi families in North and Central Jersey for prices where you cannot make any cash flow with traditional financing like I have. And yet there are people who pay all cash for these properties.

I want to keep investing in real estate so that I can eventually stop working or at least scale back, as I am now 45. But I am intimidated and nervous at the thought of going out of state to PA or even further away. I feel like it is just too big of a time commitment to search for properties there when I have a family in NJ, and that I would have no control over the property after purchasing it. I can imagine headaches with tenants and repairs and it not ending up well.

I just do not see good opportunities here, and I am totally unfamiliar with off-market properties. I have never been to a foreclosure auction. I am not familiar with wholesaling. I am not averse to buying a property at a good price and fixing it up, but have never worked with a hard money lender. Also, it seems like the bargains that do exist are in depressed areas. People have mixed opinions about them. For instance, I know someone who lives in E. Orange and he is not happy there. Yet others have no problem investing there. I do not want headaches, however. And I would not want to put more than a total of 100-175k of my own money into a property.

Any advice on a strategy for me? Anything I am missing or have incorrect with my outlook? Thanks!

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Noel Challenger
Realtor · Paterson, NJ · Member since 2017 · 134 posts · 97 votes
8y

The best deals are in fact through real estate agents and wholesalers. This is because we are in front of real estate every day of the week! Don't forget the #1 rule in all things real estate -> "network, network network!"

There is a ton of competition in NJ, I agree with you on that! But, on the flip side there are still deals out there you just need to find them. The MLS has properties that cash flow, you have to act fast on them as they usually go into attorney review under 2 weeks. 99% of the time if you want to buy a multi-family under 200k you are going to have to buy them distressed and/or do some repairs.

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  • Aaron K.
    Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    8y

    It would appear that you have identified the majority of your options, but you just don't like them. So essentially your choices are pick one or don't buy more properties. Wholesale and foreclosure auctions will probably only yield results that are slightly better than MLS, so if you aren't close on MLS then you probably won't make it with the others either.

    1Reply
  • Eric D.
    OP
    Maplewood, NJ · Member since 2016 · 38 posts · 8 votes
    8y

    Actually, Aaron, I did not say that I do not like the various options. Rather, I said that I am unfamiliar with them.

    0Reply
  • Aaron K.
    Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    8y

    In that case your options are 

    1. out of state

    2. things that don't cash flow on MLS

    3. things that may be a bit better in terms of cash flow than MLS (but probably not much) also they don't offer many of the protections and benefits that MLS properties do.

    Which do you want to become more familiar with? Wholesaling? Auctions? Out of state? or something else?

    0Reply
  • Alex Deacon
    Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes
    8y

    @Eric D. keep looking and using more resources to find deals. Network with Wholesalers and more agents. offer the agents a bonus of a few thousand dollars if they find you a deal. Scan the MLS daily. I find at least one deal a month in the WPMLS which is Pittsburgh. You have to be quick to react and be a cash buyer. Also consider a sign for your car I buy houses. Thats going to cost you nearly nothing to do and you could set up a quick website. Consider calling expired listings. These are properties that did not sell on the MLS. You may be able to work with your agent to help you get this list. These are a few ideas locally. If you decide to buy in a different state like PA then you need to be extra careful and make sure you get a good team on that end. Knowing the market and getting trustworthy team members is not so easy.

    2Reply
  • Dan DiBiase
    Dayton, NJ · Member since 2017 · 17 posts · 16 votes
    8y

    Eric, you might want to consider joining a RE investors group like the South Jersey Real Estate Investors Association (SJREIA.com) or look for a REIA in North Jersey. They provide lots of face-to-face group meetings to discuss subjects just like this, and many members have properties they are trying to sell (although that is NOT the main purpose of SJREIA. My wife and I are new investors looking to start our business, and the group has been invaluable to us so far. Bigger Pockets is great, but sometimes the chance to sit down face-to-face with others with the same dilemma - and those that have worked through the same dilemma - is really irreplaceable.

    Email me off-forum if you'd like more info.

    Thx, Dan

    0Reply
  • Prem Schoff
    Hoboken, NJ · Member since 2017 · 22 posts · 7 votes
    8y

    Eric this is a helpful thread as you've identified many of the problems I am facing as I find the NJ market to be quite expensive in terms of buy-and-hold strategy. I am also considering buying out of state so that I can build portfolio of multiple properties that cash flow that are priced in the $100k - $150k ballpark. If anyone has any suggestions for out of state that would be great just to piggy back on Eric's thread. 

    @Dan DiBiase - REIA is a great idea. It looks like for North Jersey there is a group based out of Livingston (close to Morristown area). Here is website: https://www.meetup.com/New-Jersey-Real-Estate-Inve...

    3Reply
  • David Weintraub
    Lender · Berkeley, CA · Member since 2017 · 1k+ posts · 549 votes
    8y
    Eric, don’t be scared off a drive to PA. Listen to podcast with David Greene
    0Reply
  • Eric Beepat
    Accountant · Union City, NJ · Member since 2017 · 18 posts · 11 votes
    8y

    @Eric D. I PMed you as well.  I am fairly new to investing and have run into the same issues.  Maybe we can work on this a team.

    2Reply
  • Andrew Malina
    New York, NY · Member since 2017 · 19 posts · 3 votes
    8y
    Hi guys I would also like to get some properties in NJ It would be great to share ideas etc
    1Reply
  • Noel Challenger
    Realtor · Paterson, NJ · Member since 2017 · 134 posts · 97 votes
    8y

    The best deals are in fact through real estate agents and wholesalers. This is because we are in front of real estate every day of the week! Don't forget the #1 rule in all things real estate -> "network, network network!"

    There is a ton of competition in NJ, I agree with you on that! But, on the flip side there are still deals out there you just need to find them. The MLS has properties that cash flow, you have to act fast on them as they usually go into attorney review under 2 weeks. 99% of the time if you want to buy a multi-family under 200k you are going to have to buy them distressed and/or do some repairs.

    5Reply
  • Prem Schoff
    Hoboken, NJ · Member since 2017 · 22 posts · 7 votes
    8y

    @Noel Challenger - Good to know there are still some deals in NJ .. I'm especially interested in multi-family .. in terms of networking, do you recommend joining REI association (such as https://www.meetup.com/New-Jersey-Real-Estate-Investors-Association/) or are there any other specific resources?

    1Reply
  • Stephen McNeer
    Member since 2018 · 1 post · 2 votes
    8y

    Maplewood and South Orange are tough areas to break into. The prices are high and offer little cash flow. I have seen some opportunity in Orange, but i wouldn't get too close to east orange. I moved west into Morris/Sussex area 5 years ago, and the market around here seems better for my range.

    2Reply
  • Andrew Malina
    New York, NY · Member since 2017 · 19 posts · 3 votes
    8y

    Any of you guys invested in Irvington or Elizabeth? I've found many listings on MLS that would have nice cash flow, obviously needs rehab etc, however prises are enticing

    1Reply
  • David Weintraub
    Lender · Berkeley, CA · Member since 2017 · 1k+ posts · 549 votes
    8y
    Elizabeth > Irvington all day
    1Reply
  • Paul Papamarkos
    Succasunna, NJ · Member since 2017 · 104 posts · 12 votes
    8y

    Try more West Jersey.

    0Reply
  • John M.
    Investor · Cranford, NEW JERSEY (NJ) · Member since 2017 · 76 posts · 11 votes
    8y
    Andrew, Elizabeth is going thru tremendous redevelopment at the moment. It’s a better bet than Irvington (safer for one). But it all depends what you’re looking to do. Buy and hold? Fix and flip? Etc.
    0Reply
  • John Errico
    Attorney · Rutherford, NJ · Member since 2015 · 132 posts · 168 votes
    8y

    @Eric D. I'm a little late to the thread here, but I second the recommendations of others here on expanding your search. There are opportunities throughout New Jersey but, like many other investors, have found that the buy and hold opportunities in, particularly, north Jersey (Hudson County, Bergen County, etc.) are few and far between, and require a disproportionate amount of capital and effort relative to other areas--particularly in the past 18 months or so. 

    I've been looking a lot more closely at south Jersey (Atlantic County and surrounding areas) recently, and have been finding interesting deals that are, among other things, a lot less capital intensive. Not a ton of investor activity at the moment, but a fairly strong/growing rental market. It's "only" about an hour and a half drive from most parts of north/central Jersey.

    2Reply
  • Chris Anderson
    Manville, NJ · Member since 2015 · 140 posts · 59 votes
    8y

    @Eric D. Please think more creatively.  What you are saying is that it isn't easy.  You are right you can go to zillow.com search for multifamily and buy cash-flowing properties with one phone call.  

    That does not mean that they aren't out there.  They are,  I and others like me buy them regularly.  It just takes a different angle.  

    Biggerpockets members apply a number of different strategies to find properties.  I do basically a little of everything in my business.  I would tell you to do the same.  

    I network, use direct marketing, buy from wholesalers, use traditional agents, online auctions, sherriffs auctions, and more.  You need to be more then a one trick pony.  Or work harder at your trick

    That means making a lot of offers.  We make at least 5 offers a week.  We try for 8.  That helps us to get 2 or more houses per month under contract.  How many offers are you making.  I also don't wait to hear on my offers.  We just keep going.  Sometimes to many say yes.  Then I use my network to wholesale that deal to another investor and make a nice fee.

    1Reply
  • Nana G.
    Rental Property Investor · Cherry Hill, NJ · Member since 2018 · 3 posts · 2 votes
    8y
    Have you searched South Jersey? There are plenty of homes in SJ on MLS in C+ neighborhoods that cash flow well.. DM me if you need some names of towns to look at..Good luck!!
    0Reply
  • Aaron K.
    Specialist · Riverside, CA · Member since 2015 · 6k+ posts · 3k+ votes
    8y

    @Chris Anderson I'm a bit confused, in the original post you said you were having trouble finding deals on MLS. I'd be happy to learn ( I always like to learn from others) if you can indeed still find things in NJ that cash flow $500 per door with 25% down in good areas.

    0Reply
  • Chris Anderson
    Manville, NJ · Member since 2015 · 140 posts · 59 votes
    8y
    Originally posted by @Aaron K.:

    @Chris Anderson I'm a bit confused, in the original post you said you were having trouble finding deals on MLS. I'd be happy to learn ( I always like to learn from others) if you can indeed still find things in NJ that cash flow $500 per door with 25% down in good areas.

    I am not the original poster.  I do not have a problem finding them.  They just require more work.  Larger rehabs and a little creativity sometimes.  More offers.  But they are absolutely out there.

    0Reply
  • Jonathan Herron
    Attorney · NJ · Member since 2018 · 120 posts · 58 votes
    8y

    In South Jersey, you will likely find options more to your capital and effort goals.  Feel free to dm any questions about towns/counties.

    0Reply
  • Julio Anselmini
    Union, NJ · Member since 2015 · 10 posts · 4 votes
    8y
    Eric how are you? Hope everything is going well. I live in Union New Jersey. I totally understand where you’re coming from. I’m looking to buy Multi family units now. I see a lot of house within The surrounding areas that are very reasonable but I know that my tenants in those areas will probably not be very good ones. I sat down one weekend and I wrote down a list of towns that I like to invest in and Why I would want. Two I told my agent what I’m looking for. When they find them to send me all the information on the property. How much is the current rent (if they are currently occupied) if they are Vacant how much the rent could be. I can tell you right now that there are some going deals in union county. But they need work. Now when I get a listing from my agent. I call my contractor to go check it out with me. To get A rough estimate how much it’s going to cost to fix it up. For me personally the only way I would invest in out of state would be in larger multi family units. They would have to be 16 or more. For the reason beings I can pay a super decent money to be there to fix up any issues I have. At this time I don’t have the money for that. So this is why I’m starting out with two units are higher. If you need help with anything or just want to run some ideas by me feel free to contact me. Good luck, Julio Anselmini
    0Reply
  • Ryan Stark
    Accountant · Caldwell NJ · Member since 2013 · 10 posts · 1 vote
    8y

    @Chris Anderson Hi Chris,

    Is the $500 per door your target number for single family homes or for multifamily properties? Would you mind sharing what type of down payment your putting down for these properties?

    Thanks in advance,

    -Ryan

    0Reply
  • Chris Anderson
    Manville, NJ · Member since 2015 · 140 posts · 59 votes
    8y

    @Ryan Stark

    OK, so here goes it.  I analyze a lot you can find under valued properties and ones you can add value.  Here are a few of our properties.  We do larger renovations in order to force appreciation so that we can pull out our money.  Our single and multi cash flow over $500 on average.

    Purchase price $63,000

    Repairs $105,000 approximately

    Appraised Value $320,000

    Cash Out Refi $208,000

    Rent $2,650.00

    $350 cash flow made about $20,000 on the refi when calculating holding costs and fees

    Sold 1 year later for $295,000

    made an additional $65,000

    Purchase price $105,000

    Repairs $7,500

    Appraise Value $187,000

    Cash Out Refi $121,500

    No net on cash out No Money in House

    Rented for $2,300 per month

    Net Cash Flow is about $980.00 per month

    This one just is a two family.  Just lease both apartments These are the numbers

    Purchase $90,000

    Repairs $245,000

    ARV $475,000

    Cash Out Refi in Progress Expected amount is $330,000 We will leave behind a bit in this one. But it will be fully repaid in 2 years.

    Rent Roll is $2400/month and $2025/month

    Everything is new gutted to the studs

    PITI will be aprox $3000/month

    Net Cash Flow is $1400/month or $700/month

    These are real deals.  We use a combination of investor partners, hard money and lenders to make our deals work.  Some are cash flow plays some are appreciation.  Some we flip for money.   You are not far form me reach out and I will give you the nickle tour of what I do in my business.  

    The simple steps are is 

    1 Analyze every deal in your target market. So that when one is a actually a deal you can spot it easily.

    2 When the numbers look good get there first, make an offer.  Always make the offer.

    3 Rehab the property as fully as possible.  I don't cheap out on anything. Make my holding costs more consistent. And makes the management easier.

    4 We are ready to go with permit applications on closing.  Some municipalities will actually review you permit apps and plans before you close.  So that you can start right away.  Ask.

    5 Have a plan on how you are going to get your money back. We have out numbers months in advance.

    6 Get your money back and repeat. 

    @Ryan Stark

    2Reply
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