South Amboy, NJ · Member since 2014 · 114 posts · 2 votes
I need help on a deal in nj. It is a 3 family home that needs about 30k of work put in. My family does construction so I already know the numbers to renovate the place. Two of the apartments are 2 br 1 ba and the other is 3br 1 ba. The lot is 5000sqft and the house is 3500sqft. It is not occupied. The price I'm paying is 220k plus the 30 I need to renovate. Taxes are 9k.
25% down 55k plus 30k for renovations is about 85k out of my pocket cash. Mortgage will be cheap and figuring I get a total of 3300 in rent give or take. I'm having a hard time pulling the trigger because it's a lot of cash to invest on one deal for myself.
I just want to rent out all 3 I am not planning to live there.. I don't know what it will be worth after rehabbed ? I don't know how to get that number either ... Comps in the area go for 300k or more though. My building is bigger. The rent give or take will be approximately 3200 -3500 between three apartments. Expenses taxes 9k, water 400 a quarter, insurance 1700 a year. Utilities are separate so that would be renters expense.
Have not gone through the numbers in detail but you are saying 250k to earn 3300 per month in rent? Those numbers sound pretty good for NJ (contigent on location of course).
What kind of area? How confident are you about getting that sort of rental rate?
Ok so based on what your saying it will probably be worth 330 -350,000.
lets work with the 350,000 #
Option 1 you could probably get a loan on the future value from the bank and put 25-30 down. cash out of pocket would be about the same as the down payment and you would save the 30k
Option 2 You could buy it and fix it up then cash out refi it for 70% LTV. 350.000 total mony come back would be 245,000
You purchase the place for 220K +30 = 250,000 minus the cash out refi which is 245k so you will have a total of 5k invested after you get done with everything to move on to the next one. This does not include closing cost etc.
Hi @Joseph Tarallo , my husband grew up in South Amboy and his mother still lives there. He knows all the areas. A friend of ours lives near the roller rink. If you have any questions about the area, PM me.
Check www.rentometer.com for average rents in the area. I've found them to be accurate for our SFRs in Trenton and our condos in Ft. Lauderdale.
@Aly W. yeah I know where the hole and the wall is. I'm born and raised in south amboy so I know the area well. Small town and small world lol. I'm just getting cold feet going into the deal now. I think in the area 220 even though I may need to dump 30 into it will be a good deal
The numbers sound good to me.Make sure you have enough reserve fund to cover the vacancy period you might experience in the beginning. I.e have reserve funds to cover 6 months of mortgage payments. You might not need it but good to have yourself hedged.
To get renters in asap perhaps do not wait for entire building to be updated. Focus on 1 apt at a time to get it renters in there asap.
Based on your previous threads, it looks like you've been eyeing this property since at least September? Looks like a decent deal. Numbers look ok to me. Did you find this off-market or through MLS?
85k cash is definitely a lot. Since your family does construction and your willing to purchase distressed properties you should have some leverage when submitting offers. Are you paying the asking price? How long has the property been on the market (dom)? Not good leverage with the 85k. If your a 1st time homebuyer you can do 3% down and use a 203k to do repairs. If it needs 30k how do you know it doesn't need 45K. taxes sound high. Is there a driveway and garage? Seperate utes? Good luck
If your rents are realistic, and you say about half of that is going towards expenses (a generally fairly accurate number) then your net each month is about $1650 per month
Your mortgage payment will be about $950 per month
Net cashflow on paper based on the numbers your laid out is very solid at around $700 per month, and about a 9% cash on cash return. This is a good deal, assuming you can actually get $3300 in gross rent. Cashflow is very solid and cash on cash once stabilized is also pretty good (not a home run), but for getting a property in a decent area, hopefully securing long term financing at a low rate.
You should have a realtor or appraiser pull some comps, as I think your equity position may be a bit weak if the house is only worth 300-330, but if you are holding it and you can get the rents you think this is a good deal, move forward!
HI Joseph. I don't know if this will make you feel any better but i'm looking at almost exactly the same deal in Lodi, NJ. I'm not a seasoned invester however i did pretty good with my first property a multi family in So Hackensack (my current residency). What i plan to do is use an FHA refinance in a few months and get some cash out (or line of credit) and move on the my next deal. I'm very exactly about this deal. FYI my numbers are something like this $229 purchase price $20K in Rehab (a lot of flooring) taxes $10K (yes folks this is what we deal with in NJ) water $715/year insurance $800 (because it will be owner occupy) gross income $3330-3500 once i move out. My mortgage will be $2000 at the beginning ($240 for pmi) $1760 after i refinance. Lodi, NJ is a nice area for those reading this that are not from the area. Reading Brandon books and reading post here on BP have open my eyes while open. Worst thing scenario if i get this deal i buy fix it up and sell it for $350K. I believe the house is worth around $300K as is.