New Jersey market (Essex county)

[Anthony Ocasio]

I have been trying to get into real estate for a year and have had trouble getting deals due to losing bids to cash buyers , me being a FHA buyer. Any tips by anyone on how to win deals or find deals.

[Steve Schulman]

Hi @Anthony Ocasio. There are ways to make your offer more attractive. Full or partial waivers on contingencies like appraisals, inspections, etc. However, with FHA it is hard since there are more guidelines, restrictions and hurdles if you will. This doesn't mean you are hopeless. Despite the many naysayers who originally claimed it impossible to get an FHA accepted over a conventional or cash offer in such a hot market, I was able to do it and do it well with an FHA 203k loan which is even more comprehensive. You just have to play the cards you are dealt and know what to look for.

Have you considered adding some value and utilizing an FHA 203k construction loan? One thing I've realized, for RE investors like us especially, the opportunity is in the older houses. You want to look for property's built in the 1900-1940s which Hudson & Essex County have a handful of. If you are willing to take on the project, not only could you force some serious equity, but IMO find it easier to land a deal in a hot market. Flippers and cash buyers tend to shy away from them built in era, which they need closer to full-gut renovations, because of the time and money it takes. These investors want quick rehab and returns so they can flip and get their money out the deal; and with these types of houses, it's not worth their attention since on top of minor cosmetics work and upgrades they usually need new electrical or plumbing, HVAC, etc. Money in money out… This is so important to know during a sellers' market like this. Those controlling the "COVID era" market are not investors (investors just pave the way), but it's your forever home buyers who are borrowing almost free money with interest rates near levels of inflation... Those dream home and traditional homebuyers are NOT buying these properties that need half to full guts rehabs. So, who is? A handful of investors like me or you who are ready to take on the work, maybe house-hack and put in some sweat equity via FHA 203k!

With the 203k rehab loan, you’d want to make sure you have a competent real estate agent by your side to guide you (one who is familiar with the extensive 203k process who can inform the seller/listing agent of the pros/benefits here to all parties), along with a trustworthy contractor and experienced lender who have both serviced these types of loans before. It is all about your team! Hope this helps.