All Forum Posts by: Matt Faircloth

@Trevor Ewen thanks for the mention.

@Scott Weaner - Your name sounds familiar, not sure if our paths have crossed in Trenton yet.  Shoot me a line on BP and I'll get you some names.  

Take care,

Matt

Hi Victor,

Residential tenants have many protections including the benefit of the courts during eviction, a limit on how much security you can hold, and on what you can base a rejection of their application.  

None of these things, and many more factors, apply to commercial real estate.  You can reject an applicant for your commercial space for any number of reasons including that they would not be a good fit for your building.  I also get more security from my commercial tenants, most of the time 2 months rent.

I would not make this a deciding factor for your purchase.  What I would do is target buildings with a successful business on the first floor.  Once they are established and successful in that location, it's very hard for them to move.  People know where they are located, and as long as the space continues to serve them and you don't jack up their rents, they will probably stay for as long as you will let them.  I would look for a building with an established retail presence but dilapidated or under market residential units that you can rehab and increase rents on to increase cash flow.

Take care,

Matt

Hi Victor,

@Trevor Ewen thanks for pulling me into this conversation!

Things can change when you get into larger buildings but it depends on how you are currently structured.  If you are laying very little down and getting Fannie Mae backed money for your purchases of 2 to 4 unit buildings, you won't be able to do that moving up in size.  That being said if you are using financing from a bank (I prefer small banks based in the area around the property) you will be paying 25 to 30% down even for a duplex and it's the same on larger deals also.  We purchased an 18 unit building and a 10 unit building last year, both at 25% equity.  Rates were very comparable too, in the low 4% range.  You won't get a 30 fixed mortgage on these types of properties though, most loans have a rate adjustment every 5 years.  If that was the type of financing you got on your smaller multis, there is little change in larger deals.

With regards to building a building with a storefront, as @Sean T. said it depends on the business.  This is true both because people may not want to live over certain businesses and also because you want to evaluate the stability of that business.  A retail tenant is completely different than a residential tenant.  The business itself is what is paying the rent.  If the company is well run, well marketed, has a solid track record and following, and a solid lease, good for you.  Filling a commercial space can be challenging as you need to get the right tenant.  A vacant storefront can sit for months while you wait for the right occupant. And, unlike an apartment people don't just "move in" to a storefront. They need to setup the space to accommodate their business, this is called "fit out".  A savvy retail tenant will want to pay you a small portion of the rent while they get the business ramped up.  

And one more thought - larger buildings require more work to keep them healthy and a more complex budget.  Make sure to include a "capital reserve" to set aside money for larger improvements like boiler or roof replacement.

I hope that helps!

Matt

Hi All,

We are ramping up our fix & flip business and we are looking for more General Contractors in the central New Jersey area - specifically Trenton, NJ.  

If anyone has any good recommendations for us, we would greatly appreciate it!

Thanks!

Matt

Hi Frank,

 The price in Trenton versus the rent is one of the best spreads I have seen making it a great cash flow play.  There is also potential for upside as some of the larger projects in the pipeline come to fruition.

We do a ton of work in Trenton and have found that it is all about location and management.  Do you plan on doing the management yourself?  Be sure to research areas thoroughly also.

Good luck!

Matt

Hey Jeremy,

I have heard that Harrisburg is very similar to Trenton (where I do most of my investing).  As it's a state capital the state occupies alot of the prime real estate and doesn't pay taxes to the municipality on the parcels.  I have also heard that like Trenton there are areas that are solid and there are war zones to stay away from.  For demographic info go to www.CityData.com, I've found that to be useful for evaluating towns.  I would also suggest you find a local property manager as there is nothing like a local presence.  In NJ, you are required to have a local building "super" for anything larger than 10 units.  We own an 18 unit in Philly and have not been required to provide that so I would say that rule doesn't apply in PA.

Best of luck!

Matt

Hi Bradford,

It all depends on your goals and what you want to do in the future.  The biggest question is how can you use that $70,000 to get some momentum towards your goals? 

If you want more SFH's and like being a landlord of that type of investment I like the idea to buy a house free and clear as long as you can get your equity back out with a line of credit or refinance.

A fix and flip would go good too if you have the time to manage it and good contractors to do the work. 

There are also passive investments if you want to keep your day job and make a solid return on your money without much time investment from you.

Bottom line, there are  hundred different types of investments you can get into with the money.  I would get clear on where you want to go long term and the path will become obvious.

Hope that helps!

Matt

Hey Steve,

I have two thoughts for you...

@Jon Holdman I agree with you - I've had luck getting construction financing from local, small community banks.  Make sure they are close to the deal geographically.  They will want a depository relationship as well.  I have a few lenders in Central New Jersey I can recommend also.  They take a while to close but can get the deal done.

Why not private money? I have negotiated deals with private money lenders in the 8 to 10% range that are win win for both parties. I'm sure there is someone in your network that either owns real estate free and clear, has an IRA that is not performing well, or has some extra cash they would love to invest in real estate if they only had the time. I do most of my fix and flips or buy fix and refinance deals with private money up front and bank financing on the back.

I hope that helps!

Matt

Hi Jay,

Here's my guy:

Jason Dubnik, CPA

Dubnik & Associates, LLC

17 Broad Street

Freehold, NJ 07728

Tel 732.625.3752

Fax 732.875.1183

[email protected]

He owns real estate himself and works with several other investors I know.  Very creative and was able to get me some money back by reviewing my prior years returns.

Good luck,

Matt

Hi Jaago,

I have a guy that has been awesome for me over the last few years.  He also owns real estate so he is on both sides.  Tell him I sent you.  Here is his contact info:

Jason Dubnik, CPA

Dubnik & Associates, LLC

17 Broad Street

Freehold, NJ 07728

Tel 732.625.3752

Fax 732.875.1183

Good luck!

Matt