All Forum Posts by: David Da Silva

@Giovanni Soto

Hey Giovanni,

Just a few questions, if you don't mind telling us.

1. What is the purchase price of the house? If you prefer to keep the info private I understand, but it helps to get an idea if the investment is worth it or not. Also like I said before keep an eye on the taxes.

2. What type of sale was this? Short sale? Forclosure? Was there any issues maybe with oil contamination? (NJ is famous for this, as many houses used underground oil tanks for heating, and they would leak over time if not removed or fixed/replaced). What kind of repairs are you looking at? How is the plumbing/electrical? Are the pipes still there and working? I know you mentioned new pipes but there may be discrepancies with main lines/sewage.

3. Does your investor have experience in NJ? NJ/NY Laws have many differences. I'm currently going for my realtor license in NJ and NY as well. I have one good friend of mine that does work in NYC and another in NJ. The rules/laws are pretty different from each state or even county, so it might be best to get advice from an experienced investor in the NJ region especially in Newark or Essex County.

With that said, I would recommend you get an estimate from at least 3 different contractors. I know this may sound like a lot of work, but this can potentially save you thousands of dollars in what could be a horror story. It's best to play it safe, especially if you aren't familiar with the area. Most of the buildings here are easily over 100 yrs old, so you have to know what you're getting into.

As said previously by other, NJ is a hot market, so you need to be ready with finances, lawyer(s), contractors (if needed), and a good source of information on the property, before you even plan buy it. There is a ton of competition, but with preparation, you can jump on the offer before others do.

I strongly believe networking is key is real estate (I do sales for a living and absolutely can't stress enough how important building contact lists are). If you don't have a broad group of contacts, your selection will be severely limited to what you find. More heads = more results.

Lastly, this may sound lame to you, but I have found that driving around the area you're interested in can help you catch a deal before it even goes up on the MLS or any other selling institution. I have found a couple of sweet short sales and conventional deals that never made it to the MLS because of local interest. I helped a family member of mine buy a nice duplex in North Bergen that wasn't even listed in the MLS.

The opportunities are out there, it just requires a bit more diligence.

+1 on the Separate savings account. 

This may not directly relate to your question, but I would like to add when purchasing property, consider negotiating on a lower purchasing price by using CAPEX as a reason for devaluation on property, especially if it's an older building that may need more immediate repairs. This will allow you to repair or even remove some of the potential CAPEX from happening in future occurrences with the money you save on the deal.

@Joseph Gaston

I agree with the others, Investing in war zones is very challenging. Experience with the area, having investors/financing willing to go in on these properties, and ensuring security are going to be the most difficult factors.

I am curious where you were looking to invest if you are willing to share this info with us? I work in NYC so I'm familiar with most of areas overall.

@Woodson Davenport

I can agree with the strategy to a certain degree, Woodson. If you can group some investors to purchase property by the block, you can aggressively change the landscape of Newark. 

Some areas now look like you just entered Detroit (South 13th St for example) and it's a shame to see such beautiful and historic houses in ruins. 

I would love to form a team of investors one day, that are willing to put some time and effort into these areas, as I believe that Newark is much more feasible to redevelop than many would imagine, and there is a ton of potential as opposed to to other cities. 

@Jack K. mentioned, North Newark (Ironbound) and Weequahic are solid choices as far as investment in Newark. Although it is tough, you can still find some good deals there, and the property is expected to appreciate aggressively over time due to the expansion of the Prudential Investors. Rents will go up, and property value will go up.

The school areas are tougher to purchase because Rutgers/NJIT bought out a lot of the property there. If you can get a good deal around there, Jump on it.

STAY AWAY from the numbered streets, those areas are all war zones. 

Thanks Vincent,

Big Fan of the BRRRR technique. Patience is definitely vital in NJ. I can agree that NJ is a tougher but very rewarding place to invest in.

I'll add you to my contacts.

Newark property value is going up like crazy due to the investments from the Prudential center. If you can get a multifamily in that area, go for it, the property has a great appreciation rate and the rents are going up. I will advise to be very cautious however, with where you buy. Some areas in Newark such as the numbered streets are war zones you do not want to invest in. My best advice is to drive around and look at the areas of interest to you. I am local to this area, and I can tell you a good amount of property goes up for sale often and you won't see it go on the MLS just because it sells fast.

Getting 100% financing will most likely not happen by using a commercial bank.

I would recommend finding a private investor or a partner that you would feel comfortable investing with that can give you the 3.5% needed or is willing to cover the whole loan under his/her name as well.

What is the price of the property you're looking at? 

3.5% is a small amount that can realistically be payed off quickly if you roll in the down payment to be repaid via the future rent to your investor. 

Completely agree with Patrick. 

I'm not sure why you would make the rent prices of a 3 bed the same as a 2 bed. Be careful with over inflating the rent prices, unless you have a good reason to do so (adding value).

I like to use 10% vacancy when doing estimates just to assure myself that the deal is truly worth the time. Remember, 10 units = 10 potential vacancies.

+1 on the CAPEX