All Forum Posts by: Steve Schulman

@Julian Coleman Hudson County

Congrats again, @Alci Martinez. Big thing ahead for you. Stoked to be apart of it and to see where your REI journey takes you.

Hey @Patrick Cadieu Welcome to BP and congrats on beginning your journey to financial freedom! I bought my first investment property at 26 y/o and like you, I read all the books — Rich Dad Poor Dad, The Millionaire Real Estate Investor, Build A Rental Property Empire, BRRRR, The Book on Rental Property Investing, to name a few — read all the blogs, articles, forums, etc., listened to the podcasts, watched the videos, you name it. Google was my best friend ha. But there came a time...

My advice, continue educating yourself and never stop. Analyze every property that comes your way in your desired market— learn market rents and values, craft your own ROI spreadsheet, keep running the numbers and checking comps. Practice this as much as you can in the beginning so when the time comes to buy you are ready and confident. Do this but do not hesitate to take action and use all that knowledge. Period. Choose a niche/strategy, double down on your criteria, then hit the ground running. Best way to learn is by doing and in most cases from failing. Don't let that stop you. You're young, ask yourself what's the worst that can happen… You have time on your hands which is everything. Surround yourself with the right people who are where you want to be. Ask a ton of questions and learn from their experiences and better yet learn from their failures so you are two steps ahead. Get after it and get to work with this attitude and you will be more than fine. I will leave you with one of my favorite quotes by neo-Confucius philosopher Wang Yangming "To know and not act, is to not know." Let that resonate.

What's the scope of work/rehab going to entail? Larger or smaller? Rehab or smaller cosmetic reno/upgrade? Do you have contractors lined up? How long will it take them? What's their schedule like? What are the tenants plans-- do you have a ballpark time frame for the MTM lease? Actually month to month or will they be there longer? These are all questions to ask yourself and variables to weight.

Last thing you want is to not renovate/rehab or do what is necessary on the place now if it needs for example new boiler/water heater updated HVAC or electrical and then have to deal with it while a tenant is inside. I like to do all that is needed rehabbing mechanicals then touch up on the renovations (since I am already paying for labor), on the front end. Lower CAPEX, lower maintenance upfront, less headaches down the road.

Vacancy now vs Vacancy later: What if the tenant only needs 2-3 months? Is it worth it? If it's a light renovation that will take 1-2 months probably not -- you don't want to have to worry about finding a tenant in the down/winter season. However, if it's going to take a few months to get the place right, I'd recommend signing a 6 mo. lease or at the very least have an idea of the tenants intentions/time-frame, so you can spend the winter days renovating then have a newly renovated unit for spring. I think you get the idea. Kudos to jumping right in! No better way to learn and I respect that.

With any investment, measure the ROI/ROE and CBA (Cost Benefit Analysis) to see if it makes sense. Right now, I am positive I can get a better return with my $$ adding the carport then putting that money elsewhere (stocks, real estate, debt, etc.). Feel free to reach out with any other questions! @Julie Verardi

"To know and not do, is to not know" -- one of my favorite quotes from Neo–Confucian philosopher Wang Yangming

Before I bought my first rental, I read Rich Dad Poor Dad, The Millionaire Real Estate Investor, Build A Rental Property Empire, BRRRR, The Book on Rental Property Investing— numerous books. Not to mention I read all the articles, forums & blogs; I stopped with the music, listened to the podcasts, watched YouTube videos, you name it. Google was my best friend… But it came to a point after reading I believe my 6th or 7th REI book and learning nothing new where I realized the only way to truly learn was from the experience aka the school of hard knocks or getting out and buying my first property. I had paralysis analysis, as I am sure you heard of. Fortunately, thanks to my realization and mentor who gave me a good push, I did just that. And briefly put, I got just what I was looking for. After a whole lot of showings, analyzing properties and putting offer after offer in throughout Hudson County, I landed a deal and closed on my first investment property in March 2020. I house-hacked and full-gut rehabbed a 1920s built two-family in Bayonne, NJ using an FHA 203k loan.

You want a story? I can probably write a book for you from the experience. From gutting the place right before peak COVID and the lockdowns and having to push through the extensive full-gut reno… To finally finishing the 6+ month long rehab and having to click the reset and start over (two weeks out from renting the place) thanks to severe smoke/soot damage from a neighbor’s house fire. Sure— manure happens or the “balloon went up” during unprecedented times and I had my setback from things out of my control. But not only did it all work out in the end with the investment/rehab, but I got 2-for-1 experience with my first-house hack, forced over 150k+ worth of equity and learned 10x as much as I did from any podcast, forum, blog or real estate investing book I read prior.

Don’t worry about what the markets doing. If you are young or at least have time by your side and plan to hold for 7+ years, what’s happing with prices doesn’t mean much. Look at the data, history will tell us that— there has only been four true real estate crashes going back to the early 1800s. There’s your strategy, find a distressed, buy & hold 1-4Fam that needs a little work so you can add some equity and cushion for peace of mind. The more work needed, the better I learned— as cash investors tend to avoid them (they want quick returns, money in money out) and traditional homeowners we know stay away.

Ask yourself “what’s the worst that can happen” and get over it (remember everything you want is on the other side of fear). Then go and learn by doing— and by learning from other people’s failures/experiences along the way. Leverage that so you are two-steps ahead and truly know what to expect investing. 

Two words: FHA 203k Loan (or is that three?)

Then, since you have a good deal at your finger tips, renovate the place -- aka cosmetic upgrades and modern finishes and in six months refinance and sit pretty with your newly found appreciation and forced equity. Thank you, HUD.

Hi @Michael Basile - Congrats on taking the first steps! There's no better way to jump start your REI career than via house-hacking -- unless you house-hack via FHA 203k.

My advice: Find an older property (which Monmouth County and I know Hudson and Essex County have an abundance of) that needs some work, preferably in need of all new Plumbing, Electrical, HVAC system etc., the more work the better (just make sure you account for increase in prices and demand for lumber and materials). Then purchase it with a 203k loan and borrow add'l $$ for the rehab. 

That's what I did... Not only did I find it easier to land a deal in a hot market [these big players and cash investors tend to stay away from these 100 y/o pre war built homes-- which on top of cosmetic upgrades, need new mechanicals-- and they want quick returns, money in, money out] but I gained valuable, hands-on experience w/ the full-gut renovation and forced some decent equity in the process. All with 3.5% down and the banks money for the rehab... You can't beat it. Any questions or if you just want to pick my brain, don't hesitate to reach out. I'd be more than happy to jump on a quick phone call and chat further. 

Hi @Julie Verardi  - You will need to get a survey on the property to confirm the property's boundary lines then hire an architect to assess and provide then provide drawings. Depending on the property type, space available, zoning regz, etc., you might have to submit a variance to proceed... You also might have to plant a tree. A local architect or even engineer can give you all the details prior to paying for any drawings or survey for that matter.

I own a 2Fam in Bayonne and am in the middle of adding a carport myself. After I got the survey, my architect took measurements and confirmed, since I wasn't doing anything new (most 2Fams on my block has the parking space) and my space was wide enough for carport, I would not need to submit a variance. So I paid him for drawings and now can submit them to the municipal, pull permits and begin excavating laying concrete. Hope that helps!

Hi @Chris Giuseppini - I have a few hard money guys I can refer you to. I work with a lot of investors in north Jersey and am one myself so over time developed a solid list of HML's. Few do ask I qualify first before sending their way. I also have a pool of investors who I am sure would be interested, depending on the location, and your overall investment strategy/plans with property if you were looking for a partner. Shoot me a DM when you get a chance and we can jump on a quick phone call.