All Forum Posts by: Natalie Schanne

@Natalie C. - Where did you see it's been in preforeclosure? Remember the A in Zillow stands for accuracy. In many towns in NJ, you can view sheriff sale information online on the county website. This will tell you what properties are due to come up for auction. When I went to sheriff sales in person, about half the properties would be delayed until the next sale (or later), a quarter would have upset prices so high the bank would take the property back and sell it as REO, and the other quarter, the bank or owner would have a low upset price and investors would bid against each other in a live auctioneer format. When you buy an REO, most if not all of the title problems (liens, etc.) have been handled by the professionals and you will get a fully marketable title. If you buy at a sheriff sale or anytime without title insurance, you may not be buying a property with marketable title.

The tax assessors website will share the owner’s name and mailing address. Most agents can also pull this for you. There are other websites like listsource where you can buy lists to target non owner occupied homes, probate properties or long-time owner homes in order to buy a deal. Because inventory is so low right now, going direct to seller may be your smartest move.

@Devyn Caraballo - I love your strategy and I hope it works out as well as you desire. I also was able to live in a “too big” house for free while renting rooms. I would advise you to not have any obvious beds in the basement at the time of any permit inspections for your new bathroom unless it has egress (Bilco, walk out or egress windows). You should verify you have egress anyway for safety purposes in case an upstairs tenant starts a fire with a candle or pot left on the kitchen stove. And/or if you want to rent out the basement to a roommate later - it’s ok to risk your own life but not that of a roommate or future tenant imo. I would classify any permitted sink hookups as a basement wet bar instead of a “kitchenette”. Covid has really slowed down approval, acceptance and inspection of permits, so keep that in mind. My neighbor had over six months of abnormal delays in central Jersey. It helps if you are using licensed contractors that the inspectors know and like. Oh Jake did this job? Ok you pass.

Also a 3 bed 2.5 bath seems pretty bathroom heavy. Are there any bonus rooms you can turn into extra bedrooms like a formal dining room?

@Sal Orlando - what's your current house hack situation? Is there any reason why you don't want to move into the new duplex for the next year in order to get lower lifetime interest rate, lower downpayment, etc.? (Let's say 3% 30 year fixed 80-95% LTV vs 4% 75% LTV). It's easier to fix up a place you're living in so it's well positioned when you're ready to move onto the next one.

@Shawn Madir - why are you interested in New Jersey if you’re in England? SW Jersey is usually not inclusive of Monmouth county.

@Erica L. - it’s a good sign the property seems well maintained. Pride of ownership and tenancy is a very good sign. obviously you will be in a pickle in NJ if your inherited tenants don’t pay rent. However you face the same risk if you lease to new tenants who don’t pay rent. I would ask (perhaps via my attorney) for proof of payment on time for the past 6-12 months (deposits to them in venmo, not withdrawals from venmo to their bank account). I would also ask for a letter (estoppel?) Where the TENANT signs directly with you that they are paying x rent and have Y security deposit parked with the landlord. I would also interview tenants and see if any seem to be pains in the butt. (Why is landlord selling?) I would also ask for the original application / including Ssn info needed for pursuing for a judgement (at closing for any PII) and copies of the leases. Also when you are closing, ask for payment of the rent. So you close on Month Day 2, ask for 30/31 days of rent prorata from both tenants because he’s already received it. (Versus closing on Month Day 29 and being responsible to collect Next Month Day 1 rents. Good luck. Let us know how it goes.

@Salomon Romero - I bought a too big house (5 bed 3 bath foreclosure, 2400sf) in semi decent shape, put 30k into it and rented furnished rooms to roommates. Their income paid my mortgage and 4/5 of utilities and I effectively lived in my house for free while earning about $6000/year above the mortgage (plus let’s say $3600/year of mortgage paydown). I think this is the best model but some people do not like sharing common spaces like kitchen, living room and laundry. Check out BP podcast episode 392.

In almost every area, buying a 2-4 unit will not pay all of your mortgage and monthly house maintenance expenses when you are also living there. You will just be subsidizing what you would have normally paid (so like $700/mo instead of $1500/mo for a studio apartment) while building equity (fingers crossed). In many areas, the available 2-4 units are much older stock (1950’s), often with funky layouts or tiny rooms, than the large single family homes. All else equal, I’d rather have 3-5 roommates and an awesome big kitchen with two fridges than 4 tiny studio apartments with four kitchens (and potentially 4 Hvac systems, 4 hot water heaters, 4 washers and dryers) to maintain. The income from a roommate isn’t so much less especially in comparison to a tiny apartment.

In NJ I got $700-900/mo per 12x12 room (utilities included) while my friend said he was renting tiny apartments in his 10 unit building down the street for $900 and paying some utilities. I was all into my shared house for about 40-50% of the per bedroom apartment price with probably 80% of the net income.

I know in NYC I paid $100 on Airbnb for one night to stay in a girls makeshift tiny bedroom (I think she had 3 roommates) in the financial district when I was in town for a conference. A lot of people have made bank on Airbnb type models when owner occupying the building (less restrictions than investor owners). I don’t know what the current skinny is in terms of nyc regulations. Obviously peak season tourism is not what it was. Ultimately it’s up to you. Do you want to own real estate or just throw all your money in Tesla, Bitcoin, s&p500 tracker or whatever and live at home where it’s probably pretty comfortable?

@James F. - welcome to real estate investing. Look into joining a reia like SJREIA (non profit) for support and help from other investors. They used to have monthly Princeton area (rt 1) meetings but have moved their education and networking to zoom temporarily. In the average month we’ll have 8-12 meetings on wholesaling, landlord tips, newbie topics, ask anything veteran investor mentoring, etc.

It’s a pretty tough market right now for newbie investors. If you’re doing a house hack (renting rooms or sharing a multifamily), you’re more likely to cashflow than if you want to buy a condo or single family for a rental. With the increase in materials prices and contractor costs (higher labor, limited availability, slow permits), I’m relatively bearish on flipping right now. Any newbie investor is going to make tens of thousands of dollars in mistakes like I did on my first project and the purchase prices are getting bid up dramatically.

@Ivan Correa - sorry to hear about your situation. Are you able to rent / Airbnb it furnished / staged while you file the claim? Or do a lease to own type plan? (Remember to disclose fully).

Will the title company pay your legal fees as part of your claim? If so, I would hire the respected attorney. I’m under the assumption that if you buy a property with title insurance and when you go to sell it, you don’t have marketable title, then you can sue title company 1, which should have alerted you of these issues and/or resolved them before allowing the deal to go through.

I have a friend who got a sheriffs sale property with unmarketable title and while he works out the problems, he is renting it for a good cash flow.

@Tasha Profit - do you live nearby? What issues have you had with PMing your property yourself? I’ve found self PMing to be easy and allow for more profit and writeoffs.

@Michael Kovacs - I’ve seen some of these work as good house hacks where the family living in it rents out the upper or lower part of a split level, ideally with a walk out basement. However, as an official two family you are unlikely to get the zoning variance to convert it and get two water/electric/gas meters. Most old conversions are grandfathered in. A few places allow it with planned zoning mostly along business roads with existing commercial use, and your zoning office and code officials can tell you more. In a single family neighborhood, it is unlikely they will let you officially convert it to a duplex. My husband used to live in a fake converted house in Piscataway but his rent was under market and included utilities because there was only one meter. He says the landlord rented to two sets of tenants probably illegally.