All Forum Posts by: Joe P.

You purchasing at 400k? For a buy and hold investor, you probably overpaid by ~150k.

3 bedrooms in that area rent for about $1500 to $2000, and its still a bit "block-to-block". If you're buying at 400k, how are you making any money, even with a tax abatement?

Get involved in some of the local REIA meetups...advantage for you since a majority are virtual. Perhaps hosting a "self management" webinar/meetup where you share some important things for a newbie to look at?

Every single manager, maintenance, trades, financial, agent, mortgage person(s) I've ever spoken with have been from a referral. I'm trying to think of an instance, perhaps one, where I used a Yelp handyman to do some work, but that's it. Getting ingrained in the close knit community is probably your best bet. But, its a double edged sword. If your services are not up to par, too expensive, "all bark and no bite", then you can quickly expect that negative information to float.

I think for any deal to be successful, at the base level, you need to do a few things:

1. Set expectations, start to finish.

2. Be able to hold each other to the expectations.

3. Bite off a piece of the steak at a time, not try to do the whole thing at once.

In that vein, your son is no different than a contractor, and you're no different than an investor. You need to make your money back plus hopefully some "interest" in holding in taking on the risk. He needs to complete the work necessary to realize that windfall, and do with quality -- and then be paid for his time OR receive the property as his own for his time.

At the end of the day, the property and numbers on this are everything. What's going to be a strain for you both, personally, is if things get out of hand. You purchase it too high, the rehab was not estimated correctly, work takes too long, you can't flip or refinance at the number you need, etc. When these things happen when you have a contractor, its disappointing. You either made a mistake on the buy, or they didn't do something right on the rehab, or they took too long, or something. You can sever that relationship. But with your son, you need to be careful that this doesn't turn into a project that can destroy your relationship.

Setting the expectations in this case should entail the good, the bad, and the ugly. You both have to be prepared that it won't go as swimmingly as you'd hope (but be pleasantly surprised and happy if it does). I think its wonderful that you both can participate in a project like this, and there are many exit strategies available. @Nicole Holcomb suggested a great one that is in line with my thinking -- get your money in, get your money out, and let them be with a new house that is theirs to own.

@Sarah Brown put it succinctly -- "Keep in mind that doing deals with family can be tough because you will both have your own ideas of what should and should not be done." Given that, its why I recommend "acting as a bank" to get your son this property and fund the rehab, cash out your money, and then they have a house they can own, pay the mortgage on, or sell for any profit/loss in the future...its on them.

Hey John. Sort of.

I opted to not have the doors replaced as I couldn't get more quotes to level set the numbers. In the interim I figured I would try and find a mat that would cover the doors while I pursued a long-term solution.

i stumbled onto this website (https://www.americanfloormats....) and ended up purchasing a corrugated rubber mat that fit a bit over the dimensions of the bilco doors. Frankly, it's taken care of 98% of the water issue. There is the occasional drip here and there but as long as it stays on top of the door area, it's taken care of most of the rain events. It's also very heavy...25 lbs, so it's not going anywhere.

Total cost to me was $130 and I suspect that over time weather/sun will cause the material to deteriorate a bit, and I'll need to buy another one. But I would take $130 every 3 years over a $6500 replacement. 

I don't think you'll get a 3% interest rate on an investment duplex for in refinance.

I think your vacancy should be about a month - so $183 per month.

Basically for maintenance and CAPEX you have 5% setaside, and then 5% anywhere else. Sounds tight.

Have you confirmed management fees? Love building that in but that seems like a ton of money for management, unless they do other things for you, like routine maintenance?

Did you have an agreement on the payment schedule before hand? I believe that's the basis of reality/expectation that needs to be cemented.

I would never provide more than 25% up front. I usually shoot for 10% and materials.

I just had an electrician help me in Gloucester City, NJ - I paid for all materials up front and since he knows my PM, the full payment was due on confirmation of everything working.

Proud Temple University alumni, with a degree in Business Administration - Marketing.

I haven't really used my degree for anything in my working life or real estate life, but I will say my marketing capstone professor (who everyone hated, but I strangely enjoyed his class) really helped set me up for success professionally.

He acted like his class and any presentations, tests, etc., were all like a real working environment. So if you were presenting on Kodak, for example, and started off with "Kodak was founded in 1888..." he'd sharply cut you off and say "you're sitting in Kodak's Corporate Office, the CEO, COO, Vice Presidents are all here...and you're telling them when their company was founded? They know it. MOVE ON." I loved that class because it was the best "real-world prep" I ever got while in college.

1. Do not assume that money will just start raking in. Typically to double your salary you're likely looking at changing jobs, changing companies, or getting advanced degrees (usually with debt) to faciliate it.

2. Live off your 120k salary...get as mean and green as possible NOW at 24. Househack if you can locally (in fact for a first investment, I think it should be the primary way to go). Cutting out a rent or mortgage payment by having someone else pay for it will exponentially increase your saving ability. At 120k, if you're paying more than 1500 a month for rent or mortgage, you are cutting yourself off at the knees. I would look to make 120k go a long way (and it should, frankly), by starting to attack every and all expense you have to see how you can eliminate or reduce it. Then you can save money for investments and for yourself (god forbid you lose your job).

3. I don't recommend investing long distance, especially to start. It's just a bad idea...you have no eyes on your investments. I have stocks which I check daily, houses which I check weekly or every two weeks. You need to keep an eye on your investments because no one else will with the level of scrutiny that your money will require.

Also difference between Gloucester City and Gloucester County. City is in Camden County. Just Jersey being Jersey...
 

Hi Bailey - lots to unpackage here.

Do you have independent funding or funding from a W2 to support your real estate goals?

Every purchase should be a "make money when you buy" purchase. 180k with 20k rehab to get to 230k gets you some instant equity, but if the taxes are high and you can rent for 2000 a month, I'd question if its a good cash flowing deal. Otherwise you're just tying up 200k in a very slow moving boat, and that would prevent you from moving forward onto your next deal.

Tune your search based on your goals. If you want cash flow, what is the specific number you want per month? Does this property hit it?

Older houses aren't necessarily a problem unless the mechanicals are old - cast iron plumbing, knob and tube electric -- those are the things that will cost money. But a wood-framed brick house with no water or termite damage can last multiple generations. I've seen houses built in the 80s with the cookie cutter companies have more issues than houses built in the 20s. Every property is unique.

I have properties in Gloucester City, most are older, but there's a few of us down here working on rehabing houses and renting them out. We like the neighborhood and most of the bones of the properties here, and the tenant class is C to B. There can be cash flow on these properties and the entry price is cheaper than surrounding neighborhoods.

Hi Ryan. You probably won't find a viable househack situation in Grad Hosp. Not enough inventory, prices are high, and even if you rent out a 2 bedroom for 2000 a month, you're going to pay 500k for something like that. I think you should expand your search, frankly, to neighborhoods with better price-to-rent ratios and more inventory. You may want to consider Point Breeze area which is south of Grad Hosp, and is up-and-coming on a block to block basis.