House Hacking -- Multifamily in NJ?

Question

Hello,

I'm trying to kick-off my real estate career by doing house hacking. I'm going to be working in Chelsea NY and looking to invest in a multifamily property in NJ that is accessible to NY via train. I'd be staying with my wife, no kids -- we are a young couple. We'd prefer a nice and safe neighborhood that's it. Please share any recommendation, tips or advice you have for me. My budget is ~550k max!

Thanks,

Vaughn Smith · Answer

@Joseph AntwiIf you have a budget of $550,000 (assuming that you don't want to renovate) you should take a look at towns like Maplewood, Clifton, Bloomfield & Rutherford. Keep in mind that the market is still an aggressive sellers market so you'll likely end up paying above asking, so don't start your search at $550,000 you should look in the $500,000-$525,000 range

Natalie Schanne · Answer

@Joseph Antwi - It depends on what you’re looking for. I’ve met several investment banker types who bought in West Windsor / Robbinsville / Hamilton and used the Hamilton or Princeton Junction train stops to get to Penn Station. These areas are much more suburban with driving required to get everywhere. Plenty of space for pets and growing your family.

A suburban multifamily over here could be as inexpensive as $200k with a 5-10 minute drive to the train station. Move out rents would be like $2400/mo total. I helped a buyer get a suburban duplex two years ago for $240k and he’s now getting $3000/mo of rent.

I’m also a huge fan of the separate entrance / in law suite type arrangement which can be rented like a duplex but is usually less expensive (higher ROI). I’ve also had good success renting rooms in my house as well like episode 392 with Todd Baldwin.

Sal Orlando · Answer

I just closed/moved into my first house hack last October in NJ. Two things that I do not necessarily regret but learned from that might help you. 1. Make sure you when you move out of your unit your cash flow goals are met along with you CoC return % goal. I was so blinded by the fact that I was cash flowing a small amount while still living here that after I move out the property I wont reach my CoC return criteria of 12%. It will still cash flow positive but lesson learned. 2. Do some shopping for lenders and insurance policies. You will be surprised how the numbers and cost involved differ from each. The more people you talk to, the better chance you have at finding the best rates for you.

Hope this helps. Would be happy to answer any questions to the best of my ability.

David Wrenn · Answer

Hey Joseph, I represent developers all over NJ(primary market is JC) so I'm happy to help.  The challenge with Northern NJ is typically taxes. I've seen people mention Montclair(there's so few 2/fams) which is where I live, great town however it's in Essex County which means your taxes are very high(top 5 in the Continental 48) so rather than your purchase price defining your barrier to entry taxes in Northern NJ are just high in general.  It really comes down more so to your carrying costs to establish the metrics you'll need to identify your Cap rate, ROI/ROE.  Bergen County same thing with crazy taxes but good schools.

When Identifying train lines or PATH lines which should be your #1 priority period in NJ, be sure to check ad see if they have to switch at Secaucus Junction.  It's not a big deal but good to know.

How far out are you willing to look from a commute standpoint?  Once I have this I can make numerous suggestions.

If you need an agent who doesn't limit his or his teams territory and would like an agent with a literal PHD in organic chemistry among so many accomplishments prior to getting into real estate let me know.  He has a knack in the off market community as well and is one of only a few agents in the state I would recommend.

Satha Palani · Answer

Lots of factors to consider:

1. How close do you need to be to public transit to get in and out of NYC?

2. How much of a commute are you willing to tolerate?

3. do you plan to own a car and therefore need parking?

4. What is your medium term plan? Are you going to live in the house for a few year before moving on ? is this a one and done deal?

Everyone has their own opinion about how safe a neighborhood is. For what it's worth you can look up crime stat data. I would focus on determining level of violent crime; murder, rape, aggravated assault, carjacking, Auto theft and the like. High rates of these types of crimes are red flags for systemic problems (rough neighborhood).

4 years ago my wife and I bought a Multi family in the ironbound section of Newark. Our house is a 10 min walk to Newark Penn Station. I work in midtown. My door to door commute is 50 min (including the 10 min walk to the station). The neighborhood is safe (violent crime is very very rare). My wife works uptown and commutes into the city more than I do. She returns late (9/10 pm) fairly often and feels safe being out at that hour (walking back from the station to our house).

More recently I have had my packages stolen a few times and a couple of teenagers' attempted to snatch my wife's cell phone while she was texting while walking (Phone fell  and the perps ran off). Both happened after Covid started. Neither incidence made us feel un-safe. Covid restrictions have resulted in a small uptick in crime. Nothing alarming.

best of luck in finding the right spot for you and your family

Johnathan Boyle · Answer

@Joseph Antwi I would first recommend thinking to yourself what you define as nice and safe. I have more bougie friends who think my town Belleville is the hood and then I have others that think it is a great place to live. I would say do a little driving around each town and see what you think. Around that budget, on market, you can get something probably in a nice area of Essex county fairly close to a train or bus. I hope this helps.

Aubrey Tatarowicz · Answer

@Joseph Antwi Jersey City (Journal Square) stop has a lot of smaller multifamily with 10-15 minute walk and a really quick commute via the PATH to get to Chelsea.  Another thing to consider with a multifamily house hack is you can often qualify for a higher loan if you show what the rent comps are.  I'm not sure if your max is due to down payment limitation or qualification, but there are ways to qualify for a higher loan because you will have an income generating property.  This could open the door to get more units.

Daniel Gonzalez · Answer

@Joseph Antwi Hi Joseph welcome to BP and congrats on taking the first of many steps on the REI journey. Since you don't have kids yet you could look into Jersey City, it's very easy to get into NYC, there are a lot of multi-families, and once things go back to normal there is a good food scene. If you prefer more of a suburb check out towns in Bergen county such as Rutherford, Ridgewood, Oradell, or Essex county such as Maplewood, South Orange, or Montclair.

These are just a few of the towns that come to mind but they are plenty to get you started. Good luck.

David M. · Answer

@Joseph Antwi

While there are fewer multi's out my way into Morris County (and surrounding Counties), its generally cheaper and more "open."  Its a long train ride, but Dover had a direct to Penn Station (I've haven't checked since covid).  So, if you follow anywhere along that train line or similar, you might find some good deals.  Message me if you'd like any assistance.

Daniel Gonzalez · Answer

@Joseph Antwi Just sent you a message.

House Hacking -- Multifamily in NJ?

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