All Forum Posts by: Dominic Rosato

Hi Leo- Keep in mind you are not performing an eviction here. You shouldn't even have to send the notice-to-quit (but that depends on the type of lease that is in place). As someone who works in leasing & property management here in NJ, you should be able simply non-renew their lease as it expires. They signed a binding document that has a specific end date, although I haven't seen a copy of your lease. If you want to be sure, I would absolutely have an attorney go over your lease and make sure you're not missing anything.

NJ is a tenant-friendly state, so it is important that you do everything by the book. If you'd like any recommendations, I work with some great real estate attorneys. Let me know!

I work in leasing/property management in NJ, and we encourage most of our landlords to require these two main criteria:

1) Household annual income > 40x the monthly rent

2) Credit score above 680

In addition, we screen their credit report to verify there are no red flags (rental collections, high CC balances, etc.), as well as previous two months of bank statements / investment accounts, whichever they'd like to provide (can they pay rent if they lost their job?). We also allow them to have a US-based guarantor if those criteria are not met. They will be subject to the same criteria, except they must have an income > 80x the monthly rent.

Under no circumstances can you make exceptions based on a good story. Let the numbers talk, plain and simple. The only criteria we will sometimes make exceptions on is income, because in some scenarios, applicants will have hundreds of thousands in savings, flawless credit, but only make 34x the monthly rent.

Hi Rose- Few things to note about buying an investment property.

1) Expect to be putting down 25%, as this is most lender's required downpayment on "investment" properties.

2) You likely won't be cashflow positive unless you are putting >50% down, OR are buying in a C-class or worse neighborhood.

3) Starting out with a condo or townhouse could be a great idea if you're just looking to get your feet wet with landlording- It is less maintenance than SFH or MFH, and you will gain invaluable experience managing a tenant.

Aside from the financial challenges, I think it's great that you have the mindset to grow your portfolio. Your future self will be thanking you!

Hi Steve- I used to work in the insurance industry and understand the confusion. However, if you work with insurers based in Northern NJ you will have no trouble finding something that works. 2-4 unit properties are in abundance here and are often being house-hacked. I always recommend State Farm, as their standard homeowner policy will cover your additional rental unit automatically. If you'd like any recommendations for an insurance broker or have questions regarding coverages, feel free to reach out! Best of luck with your purchase.

I work with a great lender that specializes in 1-4 family properties (and invests himself). Name is Matt Manos, google Manos Mortgage. I'd be happy to introduce you guys if you'd like.

I wouldn't "not bother" with the property just because of the water stains. It could very easily be coming from a hole from the satellite that requires a simple fix, like the seller says it is. Water scares away a lot of prospective investors immediately- this could be your chance to get a deal.

That being said, it could just as easily be a major problem that the seller is trying to cover up. The reality is, you won't know this for sure until you can get professionals up there to inspect. Even then, there's no guarantees.

When I bought my place, we found water stains on our ceiling during the walkthrough. Turned out it was from a plumbing leak years ago, and the seller never bothered to paint it over. It's unbelievable how poorly some people treat their investments.

Also- I wouldn't low ball too much without more evidence of a major issue. You don't want to turn off the seller before you even start negotiations. The time for negotiating issues will come later on. Feel free to reach out if you want to chat further!

Hi Eric- I bought a condo in Jersey City last year, with plans to rent it out in a year or two after I move out. There's lots of good advice above me. However, in many cases you likely won't be able to obtain by-laws until you are under contract.

I would have your attorney include a specific "HOA" rider in the contract for this exact reason- It basically would require that you have ample time to review the governing docs of the HOA, such as master deed, current by-laws, current year's budget, and last two years of audited financial statements, association meeting minutes, etc. If you're not satisfied, you can cancel the contract.

I highly recommend doing this, as it provides an easy out. I'm a realtor in Hudson County, and would be happy to answer any more questions you might have!

Having a LLC (a type of business entity) and setting up an umbrella policy (provides a specified amount of liability protection) are decisions you should make independently of one another.

As someone who has previously worked in the insurance industry, you will want to do the following:

1) Alert your insurance company that this house is now a rental.

2) Make sure have this rental home covered for over $1 million in liability coverage. How you obtain that is up to you. You can either A) Set your liability limits on your rental home's policy to at least $1 million or B) Search around for an umbrella policy that adds $1 million in liability coverage to both of your properties.

$1 million in liability is what I recommend to have, but you can certainly go higher (or lower). I can't really speak to setting up an LLC, but I wouldn't assume that is necessary for you at this point.

Personally, I wouldn't even think about purchasing long distance without a realtor. They are going to be the key to building a successful team, and provide immense value. It'd likely be a disaster without one.

The way I see it, you can break this down into three parts:

1) Setting your price- Find comps nearby, think about location, renovated/un-renovated, BR & BA count, specific features, etc. Don't list higher than your competition (active rentals).

2) Listing the units- Sure, you can list on Zillow and similar places for a fee. I'm not sure how it is in your area, but trying to fill a unit in NJ without putting it on the MLS will limit the amount of views on your property, and ultimately hurt you.

3) Screening tenants- You'll want to find software that runs credit checks (680+ is good) and background checks. You'll also want to verify income with recent pay stubs. Usually you want income to be 3 x the monthly rent. A previous landlord referral letter is sometimes requested as well.

Overall, these are time-consuming tasks that can be outsourced to a realtor for a fee (In NJ, that fee is often usually paid by the tenant). If you're willing to spend the time to learn, go for it! Otherwise, finding an investor friendly realtor may be the way to go.