Buying Multi-Family in/around Newark, NJ

[Djimitri Celestin]

Hello everyone!

Rookie investor here, in the process of buying my first multi-family. I've seen quite a few properties and am doing my analysis to make an offer.

For Context, there are two specific properties I am considering on an FHA (Pre-Approval Secured)

1) A legal 3 Family with a "bonus unit", that is fully renovated, and all units are leasing at or very close to market rent. Considering the 4 units, it is a home run, with the 3 "legal" units, it cashflows maybe a couple hundred a month. 

2) A legal 4 family with partially finished basement. All units are far below market rent, but all tenants are month to month, with one eviction happening in the next month. At Market rents, this would cashflow quite nicely, without even counting the possibility of utilizing the basements.

- Does anyone have experience with these "bonus units", specifically pertaining to renting them out?

           From What I understand, I could live in them but it's a risk to rent them out to tenants. One website I saw, mentioned that if the local authorities find out, the landlord could be liable for a                    relocation assistance payment to tenant equal to 6 month's rent. 

- How much can a new owner raise rents? 

           It seems NJ state does not have rent control, but certain municipalities have their own rules in place, although I couldn't find conclusive information on what the current rules as of 2023 might be or if they still exist

Thank you in advance for your help!