I am very new to real estate investing. I've been looking for deals in the Watsessing/East Orange/Upper Roseville area to house hack (mainly 3-4 families). I have not found much that will cash flow to my liking. I'm now thinking of a different strategy. There are a ton of 2 families going on the market that are being flipped. So basically, it is a 2 fam with 2-3 br per apt and everything is brand new, but the basements are unfinished. I'm a single guy looking for cash flow only. I am thinking I can offer below market to get the cash flow I'm looking for, then renovate the basement to make an apartment for myself. I'm wondering how I would present that to a lender so I can get an FHA loan. I have about 30k saved to put down and use towards renovation. Am I crazy? Like I said I am extremely new to real estate investing and looking for any advice you all can give.
What David said above, plus 2 other thoughts.
1. The cost of making the basement livable (legally) will likely exceed your estimates. Finances aside, the cost to your health and safety if you don't do so legally is simply not worth it.
2. Calculate the difference between what "cash flow to your liking" is and your other investment options. NJ is a tough market right now, but if you want to live here, the lower cash flow may be worth it vs. paying rent.
I would like to clarify that a house call be a three family if it is zoned for it. This in most cases needs a variance
Ok, I guess I should just look a little harder for a 3-4 family. I appreciate the advice folks.
you do raise an interesting point as im planning to do this w a 2family. basement is semi-finished but as far as i heard renting them out is not legal. being the owner living there? would your tenants rat on you that you personally as the owner live in illegal zoning? highly doubt it, but could happen. so as long as there is eagress, windows and a door to go out, i could see swinging it for a year for the FHA. but most likely not legal per se