All Forum Posts by: John Walter

Hey @Ishmail Ahmad Welcome to BP!

I'm in the central/northern jersey area as well. I invest in Elizabeth, where there isn't a single wholesaler I have met and a lot of the investors I know that target the northern Jersey areas haven't had the best experience with wholesalers there either. Sounds like you already know the construction side, so if you can parlay that into learning how to negotiate and properly price you'll be set.

Good luck and feel free to connect.

@Lindsay Op de Coul Thank you, I really appreciate it. Next on the agenda for me is to try and purchase either another small multi or a mixed use property. The mixed use would be in the NJ market, but the multi could be anywhere. 

I just looked at a duplex the other day that actually got me excited for the first time in a while. Yes, it’s a bit over priced and of course listed “as-is” and buyer responsible for all certifications, but it’s the location that excites me. For this area, I am only interested in properties within walking distance to the train station and this is only a stone’s throw away. I’ll be keeping an eye on it to see what happens in the next few weeks. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Webster.

Purchase price: $225,000
Cash invested: $80,000

Purchased a duplex that had fallen out of contract with a wholesaler. One unit was newly renovated and the other was completely trashed. Remodeled that unit down to the studs, which took about five months (after I had to fire the first contractor). Both units are now rented to happy families and I could not be happier.

What made you interested in investing in this type of deal?

Significantly lower taxes and purchase price than my home state. That, and my real estate group all started looking in this area so I had others to join the journey with me.

How did you find this deal and how did you negotiate it?

I had a real estate agent. In Philly, wholesalers often place their "deals" on the MLS. My broker reached out to the wholesaler and we submitted an offer to them. Their contract expired a few days later (after not responding to the offer) and we ended up reaching out (and buying) directly from the seller.

How did you finance this deal?

I used an investment property loan and funded the downpayment and rehab with my savings.

How did you add value to the deal?

Rehabbed one unit from top to bottom. This was one of the worst units I had ever seen; it had missing fixtures, holes in doors wood that was rotted. My (second) contractor fixed everything and brought the unit up to modern standards.

What was the outcome?

Two beautiful units that anyone would be comfortable living in.

Lessons learned? Challenges?

Biggest lesson was not hiring the correct contractor the first time. Communication was awful the entire time. This was an out of state purchase so I relied on photos/videos, of which he refused to share. After the third time he told me it would be two more weeks, I finally let him go. The next hire came from multiple referrals and he did an amazing job. I know use him for everything and recommend highly.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

My real estate agent and contractor were both fantastic. Feel free to reach out for their contact information.

@Natalie Schanne Thank you, I appreciate it. Trying to guess the taxes here in three years is completely up in the air. The city is currently going through a complete tax restructuring. They have sent letters to all the residents advising they will be sending appraisers to all properties in order to better evaluate how much taxes they are charging. Originally, I would have assumed to be charged about $14,000 after the abatement; however, that could completely change now.

This purchase has been a home run though, so I am not too worried about taxes. This tax "restructuring" seems to be catching on from municipalities as I recently had another property's tax assessed value increase by 500% from last year (not exaggerating). I am of course challenging the city on it, but even then I only expect it to maybe decrease slightly.

For this NJ duplex, I really bought at a great time. I purchased this new construction for $535k and similar properties are now selling in the 700's. That said, I also got a 2.25% interest rate, so my PITI is around $2,700. Granted, when the tax abatement goes away that payment will increase significantly, but considering I am currently earning over $4,500/mo. in rent and living in one of the units, I'm OK with that.

I would certainly agree the 2/3 of the mortgage being covered is more common, especially with prices the way they are now.

Hey @Jawar Mejia I would definitely recommend Veteran's United. I've used them multiple times and they have always been a huge help, even enabling me to close two weeks early on a property when the deal started to go sour.

I did a lot of planning beforehand, so I can't say there is anything that I would have done differently; however, if I would have known the market was coming to what it is now, I would have tried to buy more. Just remember with your disability percentage, you are entitled to have the VA Funding Fee waived. In northern NJ, that can easily equate to over a $10k savings. Also, make sure you have a good realtor/broker. My first purchase, I had a new agent and I suffered because of it. Don't be afraid to ask questions and not settle for the first person to come along.

Let me know if you need anything.

Thanks @Jonathan Greene

Hi @Lauren Sherer Which area are you looking for? I see you're from Boulder. As you probably already know, laws in Boulder are very friendly toward roommates since the university is right there (Go Buffs). I believe in Boulder, you can have up to nine unrelated adults living in the same property; however, that number changes depending on the city.

Square footage really shouldn't be your biggest concern if you are planning on turning this into a rental either way. Everyone's wants/needs are different. Layout is much more critical. If you're against looking for multi's try looking for homes with dual mother-in-law suites. The first property I went to buy was a two-bed, two bath where both rooms were essentially the master. This layout worked great when renting to others because we felt we had our own space and they had theirs.

If you have any specific questions though, feel free to let me know.

For the wholesalers, what part of the process is difficult? Is it finding deals, finding buyers, good comps (especially without direct MLS access)? Is it contracts or negotiations?

I’m genuinely curious. I work 50+ hours a week, and don’t have a lot of free time so a good wholesaler would be great to know. Problem is, finding a good one.

@Devine Fletcher Wait, so you are doing a conventional or investment property loan? Since you have a 780+ credit score, I would be extremely surprised to see a 4%+ interest rate. If you meant investment loan, then I would say that is competitive.

@Devine Fletcher That rate seems about right for a (residential) investment property. I am assuming you are asking about an investment loan and not an FHA, conventional, etc.? As @Michael King mentioned, my last residential investment property was 3.875% with I believe 3 points (also $6k). There are a few ways to get those fees waived, but that's a different discussion. 

Hope that helps.

@Account Closed Are you planning on living in either of these residences? If so, why not house hack one (saving on the massive down payment, having to pay refinance costs [or] HELOC fees, etc.), put 25% down on the other property and keep the rest in the bank for reserves?

Don't forget about maintenance, capex, associated fees (again HELOC or refi), and of course vacancy. If your condo goes vacant, you're having to pay out an extra $2k a month. If you're risk averse, seems like your strategy leans toward the more risky option. Whatever you decide, insert all the variables to accurately quantify cash flow. Good luck.