All Forum Posts by: Rick C.

Given that this tenant's lease ends in December and that he/she has always eventually paid the rent, it would probably be cheaper and less of a hassle to keep the tenant. However, if the late payments still bother you that much by December, then either do not renew the lease or simply impose stricter penalties for paying late.

Does your lease contain a late fee? If so, do you normally enforce it?

I would speak with your lawyer on this. However, as an investor who is NOT a lawyer, I would recommend creating the LLC now, because if you flip with your personal name, all of your assets will be exposed. Yes, there is insurance coverage to help mitigate that, but that does not give nearly the amount of protection that an LLC provides. You are already risking a significant amount of money on this flip, so for a mere few hundred dollars more, I would say it is worth creating one.

Welcome to BP @Tanika Buckner! This is a great place to learn more about evaluating property deals. Initially though, it will be easier to educate yourself if you narrow down your focus. Which types of deals are you referring to? (buy and hold rental, fix/flip, wholesaling, etc)

Are there any issues with his apartment that would lead you to believe that the maintenance expenses will be signficantly higher than the other units or is it simply dated/messy? If the latter, then I would keep him. No sense incurring a vacancy and renovation expense, only to re-rent it to someone that is going to pay a similar amount.

I believe you are over simplifying your numbers. Yes, the income after taxes and insurance will be just under $600, but there is so much more that goes into the ownership of this property. There may be a special assessment by your HOA, a plumber may have to come over to fix the toilet, the stove might come to the end of its useful life, there will be a vacancy, etc. All of those little expenses can and will add up, so be sure to account for them as you do your research.

I ran the numbers you gave, and come up with closer to $360 per month. This assumes that you set aside $150 for maintenance and 5% for vacancy, that you self manage and that your HOA fees cover the issues outside of the walls. This also assumes a cash purchase, which means there is a greater chance that you will have to pay taxes on some of your income, which will potentially lower your $360 per month profit. This could still be a good deal, if you are simply looking to park your money somewhere, but just be aware of the cash flow you will actually end up pocketing.

Buy and hold can be tough in South Jersey, especially in towns with good school districts, because the high taxes often eat up your rental income. I would recommend looking at places closer to the PATCO stops, because that is where there will be a better chance for appreciation, even if your cash flow ends up being mediocre. Let me know if there is anything I can do to help.

If purchasing a property in $350k range is going to make you tight on cash, then I would go for a lower cost property, because you are going to need extra cash on hand for unforeseen expenses. Who would manage the property if you purchased in Texas?

Another option is to look for properties further away from where you live, but still in driving distance. There are plenty of lower cost areas within less than 2 hours of Fort Lee, NJ that could meet your cash flow criteria.

Be patient with your search. I understand that you do not want your money "sitting around", but if you make a poor property selection, you are going to be wishing all it had been doing is sitting around!

Hi Mark - On paper this does not seem bad, especially for something in Northern NJ. I do have a few questions though:

1. Does this "up and coming" part of town have easy access to trains and/or buses that go to NYC?

2. Are there any major improvements that would need to be done (besides possibly splitting the second unit into an additional unit) or is the property turnkey?

3. When you plan to move from this property and into an single family home, would you self manage or hire a management company?

Good luck, @Brian Miller! What areas are you targeting to invest in?

Sorry to hear that @Brandon P.. I am going through a similar issue on a few properties. In my case, the properties should appraise above the bank's price threshold, but because I purchased them too recently, they are only allowed to go off the purchase price. Is there a chance that your property could appraise higher in the next few years with market appreciation and/or improvements?