All Forum Posts by: Mark F.

@Stuart Udis I'd love for you to post another reply or new thread on how to continue operating the LLC the way it was intended such as setting up the operating agreement, continued proper use of the LLC, and on what occasion it would be time to put your next property in the same LLC as your last property or form a new one. Also someone asked the question I'm curious to know too, can we set up our own LLCs in our own states for a rental without issues? I know setting one up takes about 10 minutes via the states website.

I'm also curious and assuming you'd recommend a roboust umbrella policy (personal or is there one for businesses/LLCs?) and continued maintenance of your property as other good strategies? I have a personal umbrella policy but wasn't sure if they're also separate for LLCs. Thanks for your time.

I stated online rent payments with Cozy.Co the day I closed on my first duplex, best decision ever. Now it's apartments.com and I'm up to 6 units on there, works perfectly fine and it's free. Auto late fees and reminders just make it super simple.

No issues with laundry yet as I've been lucky to set up every unit with their own.

Parking has been straightforward as my driveways have been set up to where each parks on one side. I imagine once I buy a place with a small lot, designated spots are the way to go like you said. Maybe little signs or spray paint numbers?

I completely agree with the exterior property maintenance. Whenever I'm at a property, I pick up little pieces of trash. My realtor is also having a sit down with a prospective tenant to address some concerns I heard when I called their previous landlord, mainly no smoking and holes in the walls. I've heard your philosophy on how it's our property but it's their home. If tenants are willing to treat it as such, maybe it's not a good fit. We'll see how their tenancy goes. First ones that have had a spotty past.

Option A for me. My agent has been around for a long time and have done multiple transactions with him as he's an experienced REI. Heknows the market extremely well/always a top agent in his area.

Once he retires I'll switch to option B as I will have even more experience with this. 

They make anode rods that are cut and held together with wire, almost like sausage links. This is so you can bend it in tight spaces like your situation. Like this one. Anode rods last 2 to 3 years not months so obviously you have other issues.

https://www.amazon.com/Magnesium-Anode-Flexible-Water-Heater...

 I like Jonathan Greenes advice. You're kind of all over and I'd say first narrow down a county, max 2, then pick about 3 to 5 towns to drill down on and you know like the back of your hand. Go see properties tl get familiar with the area then when something pops up you can pounce and you're confident in your numbers. All the Nothern NJ counties have positives and negatives.

It's all a trade off. Closer you are to the city or public transportation the higher rents, appreciation and lower the vacancy but the more tenant friendly it can be. I like areas that are balanced between appreciation and not too tenant friendly. Good luck

 I have first hand experience that @Melanie P's suggestion (cant tag her) does not work. Round up 3 million of them to send them back and they will just make the trek again. I interviewed hundreds of migrants who crossed the border in my previous job and some would cross up to.... wait for it... 100 times. Yes, we would literally catch them and send them back just for them to do it again, and again and again. Then, even when they did make it across, a lot of them took care of business in the US then went back home just to cross again. You have a bunch of people who cross for the first time but there are plenty of them who just cross indiscriminately back and forth. They don't care. They do whatever they feel like and they are not scared of being arrested or getting caught. Why? They plan on doing it over and over again! 

Greg, love the suggestions. 

I invest in northern NJ like Shawn (3 small multi family properties last 4 years, all house hacks in Bergen county) and do fine. @Jonathan Greene is in Morris county and post content northern NJ specific, follow his YouTube channel. His short videos are gold. We've posted about it before but there are pros and cons to NJ. Quick list, pros- low vacancy rates, high rents, moderate/high home appreciation, high rents increases, demand is always there as people move/commute from NYC; cons- very competitive, pro tenant laws, high property taxes, some towns have rent control, high barrier to entry with expensive multifamily prices. James Wise is right, NJ is tenant friendly however it is not as bad in more purple/red counties. Eviction court and judges are more moderate and reasonable. Essex and Hudson county are blue (high property taxes too) and I would never buy there. The surrounding counties aren't as bad, talking with local attorneys and investors. If you're interested in reading the basics, read this. 

https://www.nj.gov/dca/divisions/codes/publications/pdf_lti/...

I'm not familiar with Morristown and Morris county specifically but made two offers on East Rutherford duplexes. Lost out on both but the proximity to NYC is very attractive and the town is decent. You need to pick at least a county in NJ IMO.. Also I'd say house hacking small multi is the best strategy to start building up (biased as that's what I did) but you have a primary so that's tough. If you don't have a ton of cash then NJ may be tough for you due to high price points (looking at 150k minimum for down payment and closing cost). Most people who are interested in NJ investing I meet never get started or invest out of state. The ones who do invest here seem to do very well. I always see people crap on REI in NJ without knowing specifics. On the surface it may look bad, but my portfolio is pretty solid for only house hacking. @Sunny Burns is even more impressive and was on the BP podcast way back when.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Bergen County NJ.

Purchase price: $1,050,000
Cash invested: $75,000

Three family house hack in Bergen County NJ using new 5% down product. Studio (occupied), 2 bed 2 bath and 3 bed 2 bath both vacant. Excellent neighborhood that commands high rents. Utilities are not separated as of now. Heat will be soon. Electric will be done in the future.

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

Wanted one more house hack before getting our SFR. The timing with the 5% loan product released was impeccable. Wanted more than a duplex as I already have two.

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

I saw it on the MLS/Redfin. It had been sitting for almost a month. Class A neighborhood. 3 unit amongst all single families. I couldn't believe it wasn't UC yet. Told my realtor and we think because it was priced too high, UST hadn't been removed and no separate utilities. We offered 10% off ask and seller removes UST. Seller accepted, wanting small amount toward UST removal. We agreed. They had other offers at the same time but my realtor developed rapport with sellers realtor and they knew we were serious and more likely to close. The seller was a contractor who lived in it with his wife and took excellent care of the house which makes us feel great about the purchase.

How did you finance this deal?

New 5% down product. Other house hacks I used VA loan and FHA so timing on this was perfect. 6.5% rate. Appraised at PP. I feel if we had to sell in a few years, after separating utilities, we could get more. Especially not listing in the dead of winter.

How did you add value to the deal?

Sellers removed UST (cost was $20k for them), already 3 gas meters and installing two other boilers to separate heat. Two vacant units need light updating; paint touch ups, updating light switches, outlets, lights, etc. Replacing 2 bdrm kitchen for max rents. Upping studio to market rent ($350 below market currently). Adding a washer/dryer for studio to use too. Made sellers fix a few important things and left us with the small stuff.

What was the outcome?

Starting reno now but expect to rent 2 bedroom unit at market. On the numbers, once we leave it will cash flow nicely especially once we refi down to hopefully a 5.5% rate next year as its owner occupied. Expect high rent growth and appreciation due to the excellent area. Went from 4 doors to 7. Very excited about this asset and have a high quality place for a close family member. Puts our total RE portfolio valued at 2.5 mil which is crazy to type after buying first duplex in 2020.

Lessons learned? Challenges?

First purchase with an oil tank removal; expect it to be more than quoted. Would not shy away from a UST as long as sellers remove. If using an attorney, get a good one. Sellers attorney was total trash and everyone hated them due to lack of communication. In the end, that attorney cost them thousands in negotiation (or lack thereof). Learned about time of the essence letter and how a seller can force you to close in 10 days. Always expect more reno when you do a walk thru of occupied unit vs. once they vacate. No biggie but still surprised on final walk through.

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

Lender communication was trash but fees were excellent (Universal Financial Mortgage Group). Attorney (had two different ones on previous transactions) was good and would use again (Jonathan Lasser). My realtor/mentor as usual was aces (Thomas Corrente of Terrie O'conner Realtors).

1. Jorge answered this question in an indirect, or direct I can't remember, way. AHP pledged $65 million in assets as collateral. IE they gave all of the mortgage collateral files to Oak Harbor and its being held by a bank. Gotta put up collateral to get a loan. And it was $19 million and change that Oak Harbor loaned to AHP. Not $3 million. I don't think 60 mil against 20 mil is unrealistic but this isn't my specialty.

2. Once AHP has possession of the assets back, they can continue to collect payments on some (Oak Harbor has been illegally collecting them thru violated POA) and start to work thru the foreclosure or resolution process on the rest. I believe the value of those assets are more than $60 million once sold. I could be wrong but remember, AHP isn't collecting payments on those assets which is reoccurring revenue or if they pay off. And it's not netting 60 million in cash. It's just receiving the collateral files back from a bank so they can be dispo'ed.