All Forum Posts by: Sarah Shockley

Hi Justin!

So you're wanting to buy a duplex in New Jersey, live in one unit for a while and rent the other, then hold on to the building when you move to Florida? Sounds like a solid plan, as long as your rental income is high enough. 

I'm not familiar with the markets in New Jersey (sorry) but if you can find a property where one rental unit covers your costs - that would be the way to go.

Expenses to keep in mind: 

Mortgage, Property taxes, Insurance

Utilities (Water/sewer/gas/electric) - pay attention to whether the building has separate meters, or not!

Vacancy and ongoing maintanence are difficult to budget for, so make sure you keep some cash in reserve.

An FHA loan can be a great tool to use - very low down payments required. However you may need to pay mortgage interest if you're putting less than 20% down - talk to a lender. Also FHA loans have fairly strict requirements about the condition of the property - needs to be top-notch!

I purchased my first property using an FHA loan - so if there are more details you'd like to know about, I'd be glad to help.

Your buildings sound amazing!

I also dislike the term "landlord" and the negative connotations it has- right up there with "slumlord". For that reason I usually call myself "property manager" in my interactions with my "residents" (not tenants.) 

In general I look at property ownership as more of a "stewardship" role - focusing on the care and upkeep of the property that is my responsibility, and treating my residents fairly and with humanity - instead of nickel-and-dimeing them. Sounds like you take a similar approach - doing most of your own maintanence and property management.

You could say "local real estate investor", or "small-time real estate investor" if you want to keep it more down-to-earth.

I've had several tubs re-glazed - there's a lot of variation in price and quality so be careful!

Mine were around $300 as well.

What @Ryan Monier said is very important - you have to do some additional "tenant education" about not using harsh cleaners. I actually include a bottle of appropriate bathroom cleaner with my move-in care package so they're off to a good start!

@William Hochstedler I'm curious what your experience has been dealing with similar situations. No one wants a call from an angry client two months after closing.

Seems like it could be difficult to prove misrepresentation, or failure to disclose - at least without getting more details about this property and the transaction.

A lot of your ideas and requirements are excellent, and show how much thought you've put in to this so far. Keep it up and I'm confident your goals are acheivable! You've certainly done your homework - which is necessary to become a successful investor.

"Passive" real estate investing that's profitable is difficult to achieve - often the more passive the investment, the lower the rate of return! You are absolutely right - many REITs just don't yield a high enough return, and most "turn-key" providers operate in C/D class neighborhoods - which can kill your returns with vacancies, evictions, and turnover. In general owning properties in crappy areas just isn't worth it, long-term, even if they can be bought cheaply.

So although finding your own team is hard work, long-term you should be able to get ahold of better quality properties, and achieve higher long-term profitability. Finding quality realtors and quality property management companies is key to investing successfully this way, for sure, and it's hard to find people who are trustworthy. But if you're not content with the lower returns that REITs and "Turn-Key" providers offer, that is your best option.

You should check out Pittsburg, PA and Philidelphia, PA. Pittsburg is a pretty affordable city to get started in, and both cities have made lists of "profitable cities to own rentals in". I'd also recommend Jacksonville, FL. It is definitely possible to buy houses that meet your criteria - usually you can get a 3/2 in a B neighborhood around $120k-$130k, close to move-in ready, that will rent for about $1200/month. Full disclosure - I'm a little biased towards Jacksonville since all my rental properties are there, and it's where I live.

Wow that sounds like a terrible situation! I'm really sorry to hear you're having such a difficult time with your first investment - sometimes the learning process is not fun at all. Hopefully some people in the BP community can make some good recommendations.

1. So the unit BELOW yours flooded in the past? Unfortunately the seller disclosure only includes information on the specific unit owned by the seller, not anything else. Legally the seller doesn't have any obligation to tell you about other people's condos.

However if YOUR condo had flood damage previously that the seller did not disclose - that is very bad and legal recourse may be an option. If that is the situation, consulting a real estate lawyer could be worthwhile - they can advise on what remedies are possible.

2. It's not your agent's job to verify the condition of the property- it's yours. There are two things to look into with the swamp cooler/AC situation - 1. the seller's disclosure and 2. your inspection report.

Does the seller's disclosure include information about the swamp cooler? Technically the sellers are supposed to include all information they are aware of. If they left that section blank, that can be construed as them being aware of a problem and not disclosing it, but since you already closed on the property, that constitutes you accepting the property in that condition and accepting their omission of that information.

What does your inspection report say about the swamp cooler? From what I understand, a "swamp cooler" is an evaporative cooling system. Normally you would only use a cooling system when it's hot outside, but that doesn't mean you can't turn it on to test it at other times. Did you talk to the inspector to ask about the system? Most inspectors are happy to go over their report and give more information if there's something you're not familiar with.

It sounds like there are two different issues - one is you thought you had central ac system, but you actually have a furnace and an evaporative cooling system.

The second issue is -were the furnace and evaporative cooler systems operational at the time of inspection, and did the inspector test them and report accurately on their condition. If the inspection report says both systems were operational and in good condition, but they broke down shortly after inspection - you may have cause to complain to the inspector, and have cause to get your inspection fee returned.

Ok I have a few new ones to add:

Lek with Cool-R-Us (heating and air conditioning) - I've hired him three times in the past year for A/C system repairs. They're SUPER busy so they can't always do a repair the same day, but he does quality work and prices are in-line with what others charge in the area.

Also I finally found a good handyman!! Yay!! Joe Nordin 3845089. Hired him to install a garage door, and a few other small jobs. He's very meticulous and prices seem reasonable.

So you own a unit that you want to rent out, and you want to self-manage? 

This is definiately do-able in the Jacksonville area - I manage my own rental apartments here. These days most people don't use a realtor to find rentals anyway- at least in Jacksonville.

The main thing is advertising, so as many people as possible get the information about your rental unit as is possible. I recommend posting on several websites - craigslist and zillow will let you post for free. I'm not as familiar with postlets, but from what I understand you can make one post on their site and it will post on several different websites for you.

Also I recommend putting a sign in the yard or front window of your unit. What I've done in the past is I just write a few very basic details about the space on the sign (usually just square footage and number of bedrooms and baths), and a phone number. When someone calls the number it goes to a voicemail message that gives more detailed information, and they can leave a message if they're interesting in seeing the space.

Since your apartment is geared towards an older crowd it might be a good idea to take out an ad in local newspapers. Also if this specific community has a community newsletter or paper that could be a good option as well.

Good luck with your rental!

Hi Ryan!

I like your plan! It's pretty ambitious, but not impossible.

I agree with several of the other posters - you will probably need to wait for the bank to list it for sale, although it never hurts to try contacting them and ask.

One thing to keep in mind - if the property is a good deal in a great neighborhood - you may have a hard time getting your offer accepted since it's a 203k loan. In a multiple offer situation usually a cash offer will win out, unless you're willing to offer a higher price.

The longer a property sits on the market, the better your chances are of having a 203k offer accepted; even better if you can avoid competing against other offers.

House-hacking is an excellent strategy and a cost-effective way to get started. You should check out HUD and Fannie Mae foreclosure listings (hudhomestore.com) (homepath.com) in your area. Both have a several day period where only owner-occupants can make offers, which is a great opportunity to avoid competing against investors who are offering cash.

Also they usually list below market value to sell quickly.

I feel your pain. Current market conditions make finding worthwhile investment properties difficult at best - inventory is low, prices are high and going up, and most neighborhoods in my town (Jacksonville, FL) are firmly in a seller's market. From what I understand about other markets around the country, this situation is fairly common.

One thing you can do is keep an eye on HUD properties in your area (hudhomestore.com). HUD purposefully lists their properties significantly below market value to sell quickly. If you buy and actually move in to the property (house-hacking), HUD properties can be a great opportunity because there's a period of time that only owner-occupants can make offers, before investors.

Fannie Mae has a similar program for their foreclosures (homepath.com) - where only owner-occupants can make offers during the first 15 days the property is on the market, so those can be a good opportunity as well.

If you are purchasing as an investor, then HUD and Homepath properties are still good deals, if they don't get snapped up by owner-occupants first.

Other options - save up and pay cash for auction properties, look into other cities, look for off-market properties, consider different investment strategies like vacation and executive rentals, etc.

Happy Hunting!