New Investor from Jersey City, NJ

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New Investor from Jersey City, NJ

Adrien Salvador
Rental Property Investor · Jersey City, NJ · Member since 2019 · 72 posts · 26 votes

Hello BP Community!

My name is Adrien and I can't express how grateful I am for this community. I can't imagine a time where I am not able to access information as easy as Bigger Pockets make it seem. I've graduated from college on August and have been working a full-time job since as Mechanical Engineer. My mother knew I didn't want anything else for graduating other than a house. She knows that my main goal is to help my family through real estate in the long run. Right now, I've saved a decent amount of money and on top of that my mother's willing to pay for my down payment. I've already been pre-approved, setting my budget for somethings $350,000 or less. 

I just wanted to express some questions I have for anyone reading that is in the local area. I wanted to find out if any of the people here in the BP community knew a reliable 203k contractor. One of my fear is going over the budget that the loan provides for me for rehab. At the same time, I am having trouble estimating how much rehab costs because it varies for every location. Should I call every 203k contractors in the area and ask them for the $/sq for tile installment, floor, bathroom, etc? I would appreciate any response I get from any of you! I would appreciate any other contractors as well because I know that they don't have to be certified. I just want to hear from those who already went through a RE deal in New Jersey with a FHA203K loan. Thank you!

I can't wait to connect with everybody here and especially people in the area who could become lifelong friends of mine! I am definitely here in the long run and this isn't the only thing I do to help myself move towards my FI goal. My job do not require much labor so most of the time I am free because the tasks given to me I can accomplish in 30-60minutes. While I am free at work, I look at the stock market and place 90% of my money into long term stocks(or a swing) and swing trade 10% of my money into options. I'll be taking any profit I've made so far and using that for my downpayment. To be honest, I am extremely unhappy with my job because I am not learning, but I am just sticking it through until May 2021 where I will get a job in Rhode Island with my bestfriend in college. This is why I want to get a BRRR going before that time so at least my FHA203k contract would be reaching 1 year by then. Thankfully I met a friend who is willing to share any type of insight to get me jump started in this.

Thank you to everybody involved with this community and actively helping newbies like me! I can't wait to make connections here! Happy holidays everyone!

Best,

Adrien 


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Diana Tian
Real Estate Agent · Jersey City, NJ · Member since 2014 · 218 posts · 50 votes
6y

Hi Adrien, welcome to biggerpocket! I don't have much experience with 203k; I only did it once. 

It was not a great experience. The contractor was very good with numbers (a detailed estimate would be required by the lender) but not good with the work. The house I was working on was not habitable so 203k loan helped us to get the deal. But the renovation took way longer than expected. In the process, we changed work order a few times. It took time for the lender to approve.  

I think as a first time home buyer, you could focus on houses that are in livable condition so you could have income right away, and then do some work while living there. 

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  • Diana Tian
    Real Estate Agent · Jersey City, NJ · Member since 2014 · 218 posts · 50 votes
    6y

    Hi Adrien, welcome to biggerpocket! I don't have much experience with 203k; I only did it once. 

    It was not a great experience. The contractor was very good with numbers (a detailed estimate would be required by the lender) but not good with the work. The house I was working on was not habitable so 203k loan helped us to get the deal. But the renovation took way longer than expected. In the process, we changed work order a few times. It took time for the lender to approve.  

    I think as a first time home buyer, you could focus on houses that are in livable condition so you could have income right away, and then do some work while living there. 

    2Reply
  • Robert Shearman
    Member since 2019 · 1 post · 0 votes
    6y

    Welcome, Adrien! 

    Unfortunately, I do not have any substantial answers for you as I am also a newbie looking to start investing with FHA sponsored loans in the Jersey City/Bayonne market with a background in Mechanical Engineering.

    That being said - I'd love to piggyback on whatever answers you get! 
     

    0Reply
  • Darren SagerPro Member
    Investor · Tampa, FL · Member since 2013 · 2k+ posts · 1k+ votes
    6y

    Welcome to BiggerPockets @Adrien Salvador.  Glad to have you on board.  203K loans can be tricky as the rule of thumb is that you're going to overpay for the service that the 203K loan approved contractor will provide.  There's much more red tape involved with getting the work done and the contractor getting paid.  The contractors wind up floating the money up front to cover all the costs so in most cases that we're aware of they put a large buffer in there for interest.  Just keep that in mind. There are other programs we've heard of that offer something similar but don't require use of the 203K loan approved contractors.

    862-208-2287Podcast Guest on Show #48
    1Reply
  • Adrien Salvador
    OP
    Rental Property Investor · Jersey City, NJ · Member since 2019 · 72 posts · 26 votes
    6y
    Originally posted by @Diana Tian:

    Hi Adrien, welcome to biggerpocket! I don't have much experience with 203k; I only did it once. 

    It was not a great experience. The contractor was very good with numbers (a detailed estimate would be required by the lender) but not good with the work. The house I was working on was not habitable so 203k loan helped us to get the deal. But the renovation took way longer than expected. In the process, we changed work order a few times. It took time for the lender to approve.  

    I think as a first time home buyer, you could focus on houses that are in livable condition so you could have income right away, and then do some work while living there. 

    Thank you for the warm welcome! I was going to approach it this way until my cousin (who is in the middle of doing his 5th deal) told me that this was the type of deal he did in his first property and it helped launch him quickly into his 2nd property. He used an FHA203k loan on a property worth $75,000 and ultimately doubled that property's value by the time he was done. I was hoping to replicate the same scenario here in New Jersey (preferably in East Orange, Newark, Passaic or Paterson). Although this is my main goal right now, I still haven't stopped looking for turn-key properties that I could easily house hack. 

    0Reply
  • Adrien Salvador
    OP
    Rental Property Investor · Jersey City, NJ · Member since 2019 · 72 posts · 26 votes
    6y
    Originally posted by @Robert Shearman:

    Welcome, Adrien! 

    Unfortunately, I do not have any substantial answers for you as I am also a newbie looking to start investing with FHA sponsored loans in the Jersey City/Bayonne market with a background in Mechanical Engineering.

    That being said - I'd love to piggyback on whatever answers you get! 
     

    Thank you, Robert! Of course! I would love to relay some information to you when I find a reliable contractor. Likewise, I hope I could piggyback on any tips you find along the way since we are basically in the same situation, haha! Mechanical engineers looking to invest in real estate!

    0Reply
  • Adrien Salvador
    OP
    Rental Property Investor · Jersey City, NJ · Member since 2019 · 72 posts · 26 votes
    6y
    Originally posted by @Darren Sager:

    Welcome to BiggerPockets @Adrien Salvador.  Glad to have you on board.  203K loans can be tricky as the rule of thumb is that you're going to overpay for the service that the 203K loan approved contractor will provide.  There's much more red tape involved with getting the work done and the contractor getting paid.  The contractors wind up floating the money up front to cover all the costs so in most cases that we're aware of they put a large buffer in there for interest.  Just keep that in mind. There are other programs we've heard of that offer something similar but don't require use of the 203K loan approved contractors.

     Thank you for the welcome, Darren! I'm excited to be here. Do you mind elaborating on said programs? Is it still possible to house hack a property and not use 203k loan approved contractors? I have read from other posts that this was possible, but I haven't found out for myself first.

    0Reply
  • Andre Fierro
    New to Real Estate · San Antonio, TX · Member since 2019 · 67 posts · 19 votes
    6y

    Hey Adrien that is awesome I'am in a similar boat myself and actually I think I might be more of a newbie to all this than you are. I am just trying absorb as much information when time allows it. Juggling between full time job/school and a family complicates things but i am hoping perusing a career in real estate will give me some freedom. I too have come across some listing in the Newark area that are pretty much ready to go no rehab needed. The 2 concerns I have are; Is Newark a good area to rent like how would one figure out if the rentals are in high demand? and are you required to live in your rental unit in order take advantage of an FHA or 203k?. Anyhow still trying get more educated on this process before I jump on it. I am just so anxious to start,time can be your friend or enemy. Good luck!

    0Reply
  • Adrien Salvador
    OP
    Rental Property Investor · Jersey City, NJ · Member since 2019 · 72 posts · 26 votes
    6y
    Originally posted by @Andre Fierro:

    Hey Adrien that is awesome I'am in a similar boat myself and actually I think I might be more of a newbie to all this than you are. I am just trying absorb as much information when time allows it. Juggling between full time job/school and a family complicates things but i am hoping perusing a career in real estate will give me some freedom. I too have come across some listing in the Newark area that are pretty much ready to go no rehab needed. The 2 concerns I have are; Is Newark a good area to rent like how would one figure out if the rentals are in high demand? and are you required to live in your rental unit in order take advantage of an FHA or 203k?. Anyhow still trying get more educated on this process before I jump on it. I am just so anxious to start,time can be your friend or enemy. Good luck!

     Hey Andre! (cool name, that's my little brother's first name haha!) I think it is a matter of your ability to be comfortable in these areas. One of the biggest advice I've received is to constantly visit the neighborhood that you projected yourself to be living in. Visit the area at night, in the morning, in the weekdays, and during the weekend. Make sure that you love the neighborhood no matter what time of the day it is because you would want your tenant to feel the same way. For future outlook, once you move out... You'll want the new tenant to be satisfied with the area that they'll be going to live in. At the same time, you may have trouble filling in your units compared to apartments in.. Jersey City(for example). So you will need to be patient and make sure that you are going to rent out your units towards the desired tenant and desired price. A few months of vacancy will triumph over picking a bad tenant and lose money in the long run. Typically, rental units are in high demand no matter where you are around New York City. I like to look at properties an hour away from World Trade Center, but I have found that I want to own my first property in Jersey City, no matter how competitive it is. My mother will be cosigning with me and she will be putting down most, if not all, money at the start. Y

    For an FHA or FHA 203K loan, you are required to stay at the property for at least a year before moving out. The only way you can move out early is if you have a valid excuse of finding a new job out of state.

    Definitely, do not be anxious to start. Feel free to connect with me and chat! I am always here to help. You already know my circumstance and being patient pays off (learned this having experience trading and investing in the Stock Market). Just take your time and learn what you need to learn... Just make sure you find a dependable real estate agent who will help you along the way. (make sure they invest themselves too because they will understand your goals more). 

    Commenting on the juggling part, I have learned that sometimes you need to sacrifice time to learn better things for yourself. I have dramatically reduced the amount of time I spend with my friends and family and focused on learning more about real estate and the stock market. If you think about it in the long run, a few years (5-10 years) of time sacrifice will pay off much much more in dividends. 

    (also sorry for the late reply, I've been extremely busy)

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