what kind of property I should aim?

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Omar Ismael · Answer

Hi Johnny Tsu welcome to BP . It's possible to get that kind of returns investing in Newrak Nj , but you wil have to know what you are doing because Newark is a rough town . You would have to buy at a very deep discounted price like $40-50 cents on the dollar if u buying cash so these will have to be REO properties that need some cosmetic repairs for example I am buying  1 families out here for $26k cash (4beds 11/2baths )rehabbing for 10 k . The ARV on these properties are $110k on average . These properties are renting out for $1450 after expenses which include property management and capex I cash flow $800 a month I own 3 of these properties giving me the same cash flow in Newark , I have a 6 unit which I bought in the same area for $270k ( appraised value $360k) I put down $70k   financed the remaining $200k . I had some tenant issues the first 3 months after closing on that property but now it's fully rented out and giving me cash flow of $3000 a month , I own 2 three units properties which are financed $130k and $216 ( Appraised value $180k and $290k  also gives me $1000 and 1300 a month in cash flow all in the same area. Under contract as right now for 2 two unit properties for 29k and 25k needs about 35k Rehad each ARV on both averaging $ $130k . These properties are in Newark and Irvington.  last year I partnered with a friend and started buying one family (3beds 1 1 /2 baths ) homes in Darby PA and South Philly which is 1hr 15 mins from newark Nj . We bought 4  of these  homes average price $27k cash ,rehab cost on each property was 5k The ARV on these properties are averaging $65k . we are cash flowing $600 per door which gives me $300 because we are 50/50 partners on these houses. We were just introduced to a small bank out there which gives mortgage as low as $25 k  on  these properties out there. Shared this info to show you it's possible to make much more than $6000 a month cash flow with $500k in cash. It's depends on what  your comfort Zone is

Hem Kumar · Answer

@Johnny Tsu , firstly welcome to BP. where you will be able to leverage the wealth of knowledge and experience available here. It's like getting a college education with the huge costs affiliated.

Anyway it is extremely laudable that you took such a bold plunge into real estate investing without the relevant experience, not a major issue though as there are many here that would be willing to guide you.

Your goals are extremely challenging but attainable over time . Obviously for you to have refi your DCR would have to be substantive for the equity to have been available to you. So you currently have income that you can rely on to get you to you goal of financial independence .

This is what you can do , leverage that 500k windfall that you now have , look at getting 3 duplexes in the 550k range, put 25% down on each , a mortgage of approx. 400k won't be unmanageable , hopefully after debt servicing and operating expenses, your net should be about 1k on each , and if you can manage these yourself maybe you can maximize your return. This gets you 50 % of where you want to be, while simultaneously apprecating in value, not to mention the tax shelters that would become a major benefit to offset your income. Be patient and in2 years you will have enough  equity in those properties to allow you the opportunity  to add some more units to your  portfolio and on the road to eventual financial independence.

Feel free to reach out should you need any assistance. Happy investing.

Regards

Adam K. · Answer

@Johnny Tsu Are you looking to buy with all cash or do you have room to find more financing?

I can tell you right now that you're not going to cash flow $6000 a month on a $500K cash purchase anywhere close to NYC (or maybe anywhere, I mean, that's a 14.4% cap rate). You'd be incredibly lucky to find a place that generates close to $6K/month in rent for that price -- I'd be happy with $4K/month on a $500K property and that would cash flow (after taxes, insurance, maintenance, water, etc) at best $2500/month. And that'd likely be in the Bronx or NJ.

Joseph Scorese · Answer

Hi @Johnny Tsu,

Welcome to BP!

First Question, did your LO evaluate your purchasing capability, based on purchase price, potential rents & etc. Need to identify that amount based on your current reserves and capital. You could be looking at the incorrect inventory or not maximizing your purchase power if that is not addressed.

Any questions, please let me know.

Regards,

Joe Scorese

Sandro Hagenbuch · Answer

Hey Johnny,

I am relatively new as well in the way that I have not yet purchased my first rental property. I have been reading quiet a lot about REI and listened to podcasts etc. As I do not have as much cash on hand at the moment and am looking for an attractive return, I am looking into the Newark area, some parts of Jersey City and Trenton NJ.  Bronx seems to have still open deals too which would be possible for me personally. As you have more cash on hand you are able to look into more expensive areas too.

Generally though, the returns in Manhattan and Brooklyn are rather low (I assume because of "stable" property values and appreciation) but with some digging you might find a very good deal.

Hope to get some insights from this thread too and wish you of course successful investing.

Sandro

Omar Ismael · Answer

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what kind of property I should aim?

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