All Real Estate Investors,
I have been on this forum and educating myself way on how to invest in real estate and I appreciate all your contributions. I'm now ready to invest in a multi-family home. I found one with 3 apartments in the upper Vailsburg area of Newark in New Jersey. Below are my questions:
Property is going for $390,000 - is this a reasonable price for a multi-family which has 2 -3 bed apartments and 1-2 bed apartment?
Seller is telling me I can get $1500 rent per month from the 3 bed apartments and $1200 from the 2 bed - is this accurate for this area?
How safe and easy is it to rent such a unit in this part of Newark?
I appreciate any comments and suggestions from any of you that are very familiar with this area.
Thanks in advance.
Hi Paul - it seems to me that you should wait a little bit before moving forward. If you're planning to buy a multi-family home in Newark, you should deeply understand the market conditions before, and that should be able to tell you if the price is reasonable or not. The same for the rent. I wouldn't trust the seller information only. I would take a step back, study more, network with successful investor in the area, attend REI meetings, talk to Real Estate agents and gather as much information as you can. You should also do your own due-diligence in terms of the prices of the properties, average rentals, etc.
So in my opinion, as you will put up a LOT of money in it, you're still not ready to invest. Hold on your anxiety a little bit, learn, talk, network, meet people, gain knowledge of the market, understand all of the complexities of buy and hold, and then move forward after you fell confident about your deal!
Just my 2 cents.
@Paul Muwonge like any other deal make sure you analyze this one thoroughly. Ask to see evidence of any claims a seller makes in the form of electronic payments and thorough record keeping. In terms of rent, you should take a loo at rental comps for the area and be sure to use comps that reflect the level of upgrade that you will provide your perspective tenants. Lastly, get familiar with the area go there and walk around and explore it in the day and at night make sure that you feel comfortable living there and feel comfortable with the community as you will most likely be in the property for a minimum of 6 months (depending on the type of loan you have)
Feel free to reach out with any questions, good luck
You should do your research ask a Realtor about the comps in the area and standard rental amounts. Talk to a local Property Management company. The property condition is a factor for the rental amount. Call me if you need help.
Thanks for your responses, really valuable information. I'm going to do more due diligence and research to verify the numbers and also take a walk around the community to get a good feel before I make any decisions.
I really appreciate all your comments.
Will keep you posted with updates in the next couple of days or week.
Hi Paul!! As an investor and a realtor, I agree with the other posters.
Visit the area in the morning, afternoon, and evening. Neighborhoods in Newark vary from block to block so travel a few blocks in each direction. Speak with a local realtor to determine the comps. They may even work with you to visit the competition to see what properties renting in the area look like.
Take a look at Brandon Turners Video on calculating the numbers based on the FOUR SQUARE METHOD: https://youtu.be/T_7vhsSBi7c. You may be able to utilize the resulting data to negotiate the price down.
Wishing you much success!!
Well, like much of Newark, Vailsburg is block by block, and that will affect both the quality of tenants you’ll attract and your rents. To answer your question more directly, those rents you were given ($1,500 for a 3 bedroom and $1200 for a 2 bed) are within the range of what you can expect provided the apartment is in very good shape and in a good area. If you’re missing one of those 2, you’d need to provide something else to command that rent like free off-street parking or heat.
If the 2 bedroom is a basement unit, it’ll be difficult to get $1200 in Vailsburg (maybe if the location overall is excellent, maybe). Also, check to make sure it’s a legal unit.
And make sure when you compare comps you're looking at rents in that same neighborhood. I avoid pulling comps from properties on the other side of Main Streets that border the property. And be careful when you look at those comps. You don't want to be on Poe Avenue which is considered upper Vailsburg but comparing comps on Tuxedo Parkway which is Ivy Hill, a highly desirable (relatively speaking ) section of upper Vailsburg but nicer and bordering South Orange. The rents on tuxedo will be higher. Thus make sure you're comparing Apples to Apples.
The rents are on the higher side of the range and so is the asking price. Unless the property was recently renovated and is in the best part of vailsburg, I wouldn’t pursue that deal.
I would night visit the area in the evening. Nothing good could come out of it....
@Ibrahim Hughes great advice. @Paul Muwonge I just closed a buy and hold in a “rough” section of Newark. The numbers made sense, property cash flows almost 1k, and I used fha financing so I didn’t have to put up alot of money. With that being said, finding renters who can afford $1500 monthly for a 3br is challenging, unless they are section 8 or similar programming. So I would consider all the information listed above in addition to who you will attrack, what folks can afford in that area, the community amenities, and perks youll offer as part of rental etc. Reach out directly if you have specific questions. Good luck moving forward!
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