Mullica Hill, NJ · Member since 2015 · 3 posts · 0 votes
Hi all,
First time real estate investor here. I'm looking to get involved in a turn key duplex in south jersey selling for 140000 and currently rented for 850 per unit. The unit has been on the market for 2 months. Taxes on the property are 4600 per year. My plan is to put 10000 down on the house. When I plug the numbers into a mortgage calculator accounting for taxes and PMI and budgeting 150$ per month for repairs I'm getting an all in cost of 1300 per month. Do these numbers make sense for someone looking to invest For cash flow in a relatively passive manner. If not does anyone have any suggestions on how to refine my search a little? Am I missing any key factors in my evaluation? Much thanks in advance!
Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
9y
@Joshua Wileczek - You're missing a number of factors you need to take into consideration.
Your monthly budget should include all of the following on top of mortgage, PMI, and taxes:
Repairs - $160
CapEx - $160
Vacancy - $136
Property Management - $160
Insurance - Somewhere between 50 and 120 a month depending on your coverage and agent.
In that regard Here's how the numbers would break down
Rent
$ 1,700.00
Mortgage/Taxes/PMI
$ -1,150.00
Repairs
$ -160.00
CapEx
$ -160.00
Vacancy
$ -136.00
Property Management
$ -160.00
Insurance
$ -75.00
NOI - aka..cash flow
$ -141.00
Based on this math it doesn't look like a good investment to me..and is the reason why in spite of living in Southern New Jersey, I don't actually invest here :)
Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
9y
@Joshua Wileczek - You're missing a number of factors you need to take into consideration.
Your monthly budget should include all of the following on top of mortgage, PMI, and taxes:
Repairs - $160
CapEx - $160
Vacancy - $136
Property Management - $160
Insurance - Somewhere between 50 and 120 a month depending on your coverage and agent.
In that regard Here's how the numbers would break down
Rent
$ 1,700.00
Mortgage/Taxes/PMI
$ -1,150.00
Repairs
$ -160.00
CapEx
$ -160.00
Vacancy
$ -136.00
Property Management
$ -160.00
Insurance
$ -75.00
NOI - aka..cash flow
$ -141.00
Based on this math it doesn't look like a good investment to me..and is the reason why in spite of living in Southern New Jersey, I don't actually invest here :)
Real Estate Agent · Hamilton, NJ · Member since 2013 · 464 posts · 311 votes
9y
From my experience, it's kind of hard to cash flow in NJ when using a low down payment method. Although yes it is possible its just very few and far between. As the others have said, look at your current living situation.. Are you paying $850/month on rent but if you were to house hack this duplex you would only have to pay $600/month in "rent"? If so, maybe it might be worth looking into. Just know that it would most likely be a liability when/if you went to move out due to the negative cash flow.
Contractor · Franklinville, NJ · Member since 2013 · 183 posts · 86 votes
9y
You can get great cash flow in the warzones of SJ if you're willing to venture there. Salem, Camden, etc... I've got property there, it works if you're never expecting appreciation.
Haddonfield, NJ · Member since 2017 · 22 posts · 4 votes
9y
I'm in the same boat by being in South Jersey....PA was recommended....so my question is what areas in PA are great investments? How's the Philly market? Mainly looking to purchase multi-units.
Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
9y
@Haney Mallemat - Philly market is super hot right now. Some neighborhoods more than others. For multi-family check out the areas near Temple, Drexel, and UPenn. Lots of competition, but all the colleges have a housing shortage right now. Other than that it depends on what type of neighborhoods you want to be in. There are some good options that are in the surrounding counties, but some areas are better than others...so your tolerance for type of tenant is going to weigh heavily in your decision to get into small 2-4 unit multi family buildings.That having been said I'm not an expert and there are a lot of other Philadelphia experts on the forums here that can provide better guidance than me.
Haddonfield, NJ · Member since 2017 · 22 posts · 4 votes
9y
Thanks for your help! It's unfortaunte that the South Jersey market isn't better since I'm right here. Do you know if the commercial market is any better?
Rental Property Investor · Greer, SC · Member since 2017 · 51 posts · 33 votes
9y
Port Richmond is starting to get hot right now in Philadelphia. Pt Breeze is where a lot of gentrifying is currently happening. As people have mentioned Philadelphia is very neighborhood segregated. The benefit is any new construction or major renovations gets you a 10 year tax abatement. Plus property taxes are already relatively cheap compared to the rest of the northeast. If you're willing to take some chances around temple. You can find some multi-family properties for almost nothing. I believe that eventually that will be the next hot spot in Philadelphia. However it is currently a war zone.
Investor · Philadelphia, PA · Member since 2017 · 97 posts · 30 votes
9y
Philadelphia defiantly has some up-incoming areas. What I would do is try to study the sales and inventory data from the MLS. Most of the time, people tend to chase certain areas. If you need someone who understands this, let me know if I can be of assistance for you.
Philadelphia, PA · Member since 2017 · 140 posts · 37 votes
9y
Originally posted by @Account Closed:
Philadelphia defiantly has some up-incoming areas. What I would do is try to study the sales and inventory data from the MLS. Most of the time, people tend to chase certain areas. If you need someone who understands this, let me know if I can be of assistance for you.
What zipcodes in Philadelphia do you think worth researching? I am only interested in small multyfalimy.