Analyze deals in Jersey City

10 Replies

Dear BP members, 

I have been reading and listening to BP podcasts and am anxious to close on my first deal.  The two deals listed below are in the Jersey City, NJ area.  I think property around here is relatively more expensive and I think would be difficult to find a 2% Rule deal.  50% ruIe works.  I would be so grateful for any advice they can give on these two potential deals.  Thanks in advance!

Deal #1

Asking Price: $340,000

2 Unit duplex 

SqFt: 2827

Rent: 2600 / month (for both units together)

Brand new renovation just done on one floor, other floor needs $20,000 to renovate

Deal #2

Asking Price: $399,999

2 Unit duplex

SqFt: 2500

Rent: 2900 / month (for both units together)

Already has tenants.  If tenants leave, I would spend about $60,000 to gut renovate

Are there any experienced BP members that can help me to analyze this deal?  I've done some calculations myself but I would feel much better if I can compare my analysis to experienced investors.  

Thanks so much!

You'll need to give a little more info on the expenses. What are the taxes? Debt service? Are you managing yourself? The numbers that you have tell me they are cash flow negative, but there really isn't enough to say for sure

@Jason DiClemente  

Yes, I forgot to list the taxes, thanks.

Deal 1 Annual Tax is $4159

Deal 2 Annual Tax is $5819

I have $300,000 cash I can use, so either to use all for one property or to leverage for more, it would be great to hear your thoughts on that too.

And I will hire property managers 

With those numbers, I feel that duplex #1 Is the better deal. $100k less total investment and $150/month less in taxes and only $300/month less gross rents. Before debt service, you're at $350/month taxes, figure $400/month maintenance and capex reserves, and $200 reserve for vacancy. So before Mortgage and insurance you have almost $1000/month in expenses. With $300k to invest, you can play with the numbers to see where the sweet spot is between cash invested and cash flow and see if it makes sense to you.

@Jason DiClemente

Thanks so much Jason!  That information is so helpful and I really appreciate you taking the time to look it over.

@David Weintraub

These are properties towards the south part of Jersey City, but still close to the Light Rail.

I'm looking in the Jersey City area because I'm a home inspector in the area and currently doing a tax revaluation for Jersey City.  I walk door to door for hours each day for my job and I see the appreciation for the properties.  I also like this area because close to NYC, there's never a worry of a population or job market decline.

I get to speak to a lot of homeowners, some who can't afford their homes, some who inherited, some who can't stand their tenants and just want out...  I run into motivated sellers almost on a daily basis who haven't yet listed their homes for sale.  I think there's a lot of potential here

What a privileged position from which to study a market and buy! Those prices for a duplex seem low for the areas that are on the up-and-coming in JC, but you have insider information on values across the city.


@Ro Maga

Haha, well this job doesn’t pay too much so it’s be great to supplement my income. I was forced to make a career change and chose a career in real estate to get involved, I know I won’t make a good realtor. 

I’d like to add, in case it makes a differ nice or for any experienced negotiators:

Deal #1: property owner is 91 yrs old diagnosed with leukemia and few months left. Son is taking care of selling property. 

Deal #2: current owner cannot stand second floor tenant and told me he just  wants out ASAP. 

@Herman Chen   I'm highly interested/looking in JC as well. Feel free to reach out at any time on these "situations." 

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