All Forum Posts by: Ryan H.

@Ruel Baliong What is the thinking with respect to newly filed probate cases for marketing purposes?  That you could then contact the executor or administrator of the estate and gauge interest in selling the property before they list with a real estate agent?  Not a bad strategy.

Feel free to tell me to mind my own business.  No offense will be taken.  I understand that investors put a lot of time and effort into their proprietary marketing strategies.  Just interested to know what others are doing.

@Ruel Baliong I live and invest in properties in Bergen County.  I am not familiar with the concept of a probate list.  What type of information is on the list (e.g., list of estates actively in probate)?

@Johnathan Boyle I am curious why you said that owner financing is typically not preferred in NJ?

@Stephen Earley, subject to the standard disclaimer when answering this question (i.e., "there are sooo many variables; cost per square foot is not a reliable metric..."), I typically use $150/sf as my "ballpark" estimate for purposes of quick, back-of-the-envelope, math to decide whether a particular project warrants more detailed consideration. That $150/sf is my number for new construction / addition / very significant rehab. I'm in Northern NJ. 

I am wondering where my fellow NJ rehabbers/flippers are getting bathroom vanities?

I have attended the sheriff sale in Bergen County several times.  I have bid on a couple of properties, but have not won any properties yet (other people in the room seem to be willing to pay A LOT more than I am).  A couple of things I have learned:

1.  The list of properties to be auctioned changes until the last moment.  No new properties are added to the list for a particular auction date, but many properties are removed from the list.  This could be for any number of reasons: the homeowner and the bank may be trying to work out a deal, the homeowner may declare bankruptcy, the bank may decide to reschedule it, etc., etc., etc.  This can make it difficult and time consuming to do your due diligence for a particular sale.  For example, a week prior to the sale date there may be 60-100 properties on the list.  I would typically narrow that down to maybe ten that met my investment criteria.  From there, I would drive by the properties, do my due diligence online, go to local town halls and building departments and pull any relevant records.  The trouble is, by the time you actually get to the date of the sale maybe only one or two of the initial ten remain on the schedule -- and everyone else is bidding on them too.  It ends up being a lot of leg work to bid on one or two properties. 

2.  There are typically just one or two attorneys there representing all of the banks/plaintiffs.  They have a special 'pooling' arrangement with the banks so that each bank does not need to spend the money to send their own attorney to cover the auction.

3.  The attorney representing the bank will announce the maximum amount the bank is willing to bid for the property.  This essentially sets the bidding minimum.  It would be fruitless to bid an amount less than the bank's maximum, because the bank will just bid against you.  All the auction regulars seem to know and understand this.  If no one is willing to bid more than the bank's maximum, then the property is sold back to the bank for a nominal fee of $100.  (Note: The bank is not actually 'paying' additional funds to 'bid' on the property.  Instead, the bank is permitted to 'credit bid' up to the maximum amount of the foreclosure judgment.  So... you may ask, 'why does the bank not just bid the maximum amount of the foreclosure judgment on each property?'  Good question.  Remember that the bank does not want to own a whole bunch of residential properties.  The bank does it's own internal analysis and essentially determines at what price it would let the property go.  Less than that amount, the bank should just 'buy' it back.  More than that amount, the bank is content to let someone take it off their hands.)

4.  There are different meanings for the term "upset."  The sheriff's officer will generally use the term "upset" to refer to the total amount of the foreclosure judgment plus allowed fees and costs -- i.e., the total amount owed to the bank.  The attorney for the bank may use the term "upset" to mean the maximum amount the bank is willing to bid.  In Bergen County, at least, the bank's attorney generally avoids using the term "upset" and just says "the bank will bid up to a maximum of $xxx,xxx" in order to avoid confusion.  If the bidding starts and someone calls out "upset!" or "minimum bid" it means they are bidding the maximum amount the bank is willing to bid.

5.  You have to put down a 20% deposit RIGHT THEN.  The sheriff's officer conducting the auction will typically ask the winning bidder if he/she intends to bid on the next property in which case the sheriff's officer will take a short pause until the bidder is finished putting down their deposit so they can participate in the bidding on the next property.  Because a bidder does not know in advance the amount of their winning bid, many bidders seem to bring a stack of cashier's checks in varying denominations so they can hand over their 20% bid (e.g., if a bidder wins a property with a bid of $300,000, then a deposit of $60,000 would be due immediately, and the bidder may have cashiers checks in the amount of $20,000 + $20,000 + $10,000 + $5,000 + $2,500 + $2,500).

6.  You are required to pay the remaining 80% within 30 days.  This would seem to make it nearly impossible for someone to use traditional bank financing to purchase a property at a sheriff sale.  You would probably need either have cash or access to hard money to complete the purchase within 30 days and then refinance thereafter.

@Brian Stike, I am in the process of closing on an all-cash, private sale, in New Jersey right now.  This is a flip; it will not be rented to tenants.  I cannot speak to whether this is the norm for every deal, but so far the process has been as follows:

1.  Attorney.  My attorney drafted the contract and sent it to seller's attorney for review and comment.  There were various negotiations.  Contract was signed.

2.  Inspection.  I had my general contractor do the inspection and prepare a scope of work and cost estimate.

3.  Due Diligence.  I went to the town hall and pulled the tax/water/sewer balances (this will also be done by the title company) and I also went to the building department to confirm no open permits or violations.

4.  Title.  The title company was engaged to conduct title and lien searches and to issue an owner's policy of title insurance at closing.

5.  Survey.  This was required because the project involves an addition and we will need the survey for the town's building department.  But for the changes to the footprint of the building, I would not have needed a survey.  If you have bank financing the bank may require a survey.

6.  Insurance.  I obtained quotes for "builder's risk" coverage to cover the property while it is vacant and under rennovation.  It will be ready to bind on the date of closing.

7.  Closing.  Because this is an all-cash transaction the closing should be relatively simple.  The attorneys and the title company make sure there are no open issues and that buyer and seller get appropriate pro-rated credit for any prepaid taxes, sewer, etc.

@Marcus Johnston mentioned an appraisal.  If there is bank financing, then the bank will require an appraisal.  In a cash deal, I am not sure why an appraisal would be required.

@Mike McCarthy mentioned a certificate of occupancy.  I would imagine a CO may be required if there is bank financing (and it is not a renovation loan that anticipates an initial vacancy).  Again, in my all-cash deal, I am not worried about the CO because I will get it after my renovation is complete. 

Recent thread on this topic, here:  NJ Rehabbers - Best Source for Kitchen Cabinets?

@Helena Chen send me a message.  My brother owns and operates a dumpster/container business.  He has some small dumpsters that are ideal for the situation you are describing.  Every once in a while I go out with him on a drop-off (mostly because it's fun to ride in the truck!) and we happened to drop-off a container in Newark last week for a town house rehab project.

Wondering where my fellow NJ rehabbers are getting their builder's risk policies and what they are paying?