All Forum Posts by: Mala S.

Roy N. Thanks for the info!
However, That sounds really low to me for this area.

I guest I should call an insurance company and JUST ASK and solve this big mystery once and for all ;)

Mike B. btw, where did you get the info about the 3K for insurance in flood zones?

Mike B. Her reason to sell is that she moved to Florida and is sick of flying back to NJ every time there is an issue with her property. And she has had several issues this year, including having to do renovations after her tenant left the window open during Sandy.

She would also rather cash out and invest that money in florida right now.

All that being said, I don't think she is motivated enough. She doesn't want or need to sell for below market value right now.

HOWEVER, She is a seasoned investor who has owned several properties all over Jersey so she has a lot of stories and good advice to share. SO, this potential motivated seller lead just might turn into a potential mentor for me...yay! Either way, I feel like it's a win!

Ankit Duggal I agree, 300,000 is way too high for this area. 6 or 8% cap rate makes much more sense. Thanks

Mike B. I don't know how much the insurance would be and 5% is not a way to calculate it, but I wanted to put something down for it so i just picked a reasonable number until I can get better info. Btw, I am new to this so still figuring things out as I go :)

Ankit Duggal, thanks for your reply!
I see you are flipping the cap rate equation, of course that makes sense.

Ok, so I did the math and I think something is wrong because I am getting a home value that is inflated...It might just be because I don't know how to include the cost of financing into the expenses. Shouldn't I always include cost of financing even if the end buyer pays all cash? Since they will likely want to refinance or something later.

$27600 (annual income from rent)
-8400 (taxes)
-2760 (repairs - assumed 10% of rent)
-2760 (prop management - assumed 10% of rent)
-1380 (insurance - assumed 5% of rent)
$12,300 Net operating income

12,300 X 100 = $307,500 purchase price
4

Also, is 4% an appropriate cap rate for 07304 zip code in jersey city? I know it is tough to get higher cap rate near NYC but 4% seems really low...

I sent out about 200 yellow letters last week and another 300 this week and the calls have started rolling in!

I am totally psyched! I love talking to people about their properties and listening to their situation. Most have not been very motivated but I did have one caller who is motivated - an out of state owner who owns the property free and clear.

I have read and heard a lot from investors who flip properties in my area about how you should make offers that are 65% of ARV - repairs - wholesale fee. But I don't think this property fits into the fix and flip model.

So what are some rules of thumb determining the max purchase price an investor would consider for a buy and hold multifamily with good (according to seller) tenants in place?

Here is the property info:
(mind you this is all info from seller, i have not seen the place yet)
The property is a 2 family house that was moderately renovated this year (kitchens updated, new tile, painting etc.)

1st floor - 3 br apt, renting for 1100,
2nd floor - 4 br apt, renting for 1200.
additional 2 bedroom apt in basement (not legal) and not currently rented.
Taxes are $8400.
40 min commute to Manhattan via path train. 20 mins drive to manhattan. In a good neighborhood in Jersey City near a park.

The current rents seem really on the low end IMO for the area. But again, I haven't seen the condition of the place yet.

I have heard of the 2% rule for buy-and-hold properties (rent should be at least 2% of purchase price), but that is a really tough thing to achieve in the new york/ new jersey area. In addition, how are the high property taxes in new jersey taken into consideration when determining the max purchase price that an investor would consider for this property?

Any advice would be greatly appreciated!

Thanks for the reply Ned Carey
I definitely plan on going to my local REIA meetup to network with buyers. I just thought I might cast a wider net by asking the question here.

I want to invest in properties myself in the not too distant future so I am so far targeting areas that I myself would like to invest in. (Mostly areas where buy and hold numbers makes sense, and with easy access to public transportation/ commute to NYC). But then I thought I may be limiting myself too much since not every investor or end buyer for that matter is like me.

Wow, it looks like you are getting a great response rate! At least you know your marketing strategies are working.

I'm just getting into wholesaling myself and my greatest fear is after all the marketing - no one calls...

7 offers in 30 days is awesome, its only a matter of time before one sticks.

Good luck to you!

Hi! I am new to wholesaling and planning on sending out my first direct mailing next week! (i'm psyched :) ) I've been combing through bigger pockets and absorbing as much as I can... I can't wait to get that first call from a potential motivated seller!

I have some ideas about what neighborhoods and lists I wanted to target. But I thought, why not ask people who actually invest in the New York/ New Jersey area what they are looking for in their next investment property? Any advice would be greatly appreciated!

Any particular neighborhoods in New Jersey or New York (close to NYC) you want to invest in?
Are you interested in single family or multi-residential?
Minimum/ max square feet?
Any particular price range work better for wholesale deals?
Does the property have to have easy access to public transportation?
Anything else that is important to you as an investor?

I would love to hear from any investors but would especially like to hear from those in or very familiar with the New Jersey / New York area. Feel free to message me privately.

Thanks in advance!

Mala

Thanks Jenkins Ramon