Foreclosures/Bank Owned the only way in Northern NJ?

Question

Hello everyone my name is Sean and I'm still learning everything I can about real estate investing. I live in northern NJ and I'm trying to get into real estate investing but feel like I should start somewhat close to home so I can be fully hands on since this would be my 1st investment. Anybody familiar with the northern NJ market knows that prices are high and I feel can be tough to invest in unless you get a foreclosure or bank owned property? Is that really the case? I'm still trying to navigate my way through these early steps and could use any advice on this topic and also on hard money lenders. Also looking for local meetups that aren't trying to sell you on things but are actually helpful for newbies. Looking forward to your responses and I thank you in advance.

Kevin Hill · Answer

The Northern New Jersey market is high. Even the REO properties at times are priced at full market value. You could cash out some of your equity in your home to invest with or contact your lender and see if you are able to get approved for a mortgage on an investment property. You could use conventional financing on an REO property if its habitable. Otherwise, you will have to go the hard money route.

Plan on doing your own prospecting to find off market deals. Driving for dollars in areas you are interested in and contacting a home owner directly will often get you a better deal if they interested in selling. The MLS has been dry for awhile for potential profitable flips.

Otherwise, stack your cash and wait for the market downturn to scoop up your first property when the home values settle down. Right now, its a competitive market in many areas, depending on the price point.

Malik Gray · Answer

@Sean Guzman Well just know that real estate is a marathon and not sprint. Giving that it’s a life of learning so don’t feel bad things you don’t know yet.

Take your time every market is different and north jersey has many markets . Try Nick Tangs group very informative and NJRSN  both are on NJ Meet UPS..

Also Steve Salaami groups for networking.Good luck Chuck!!

Samir Goel · Answer

Hi @Sean Guzman - Welcome to the community. I am also beginning to look at deals in northern NJ but more so Newark, Orange, etc. areas. I will let you know if I come across any particularly helpful meetups or partners in the area.

To @Abel Curiel's point would it be possible for you to explore the same concept with with a duplex or triplex? That way you can have your own space for your family & kids while getting started and building in the area? If not, totally get it but thought I'd toss it out there.

Abel Curiel · Answer

Hey Sean,

Foreclosure and bank owned properties typically go to all cash buyers. Hard money may be possible for these deals as well. The downside is you'll be paying a higher interest rate since you have no recent investment experience.

I recommend looking into house-hacking. You can use traditional financing to get a low down-payment loan, occupy a multi-family residence and get your feet wet. The benefit to this is you'll have acquisition experience AND property management experience since you'll be renting the additional unit(s).

Although the price-point is high, the risk is considerably lower if it is an owner-occupied property. PLUS, the added benefit of having a tenant help pay down your mortgage will help you save more $ each month and help you get into your next property sooner.

I am licensed in New York but will shoot you a PM as I have a partner in Northern NJ.

Best of luck to you moving forward!

Abel

Sean Guzman · Answer

Kevin thank you for your response. I actually just refinanced back in August to start my process in investing. I wanted to utilize the equity in my home for this purpose but didn't necessarily want to use all of it at once. Figured I could use hard money lenders instead to start off and have my funds for security. Based on what I'm learning now I don't see hard money being an option for 1st time investors so I'll have to reconsider my strategy.

Sean Guzman · Answer

Samir,

Thank you for your response. Moving my family at this point wouldn't work. We've lived in this house for 7 years now and my daughter will be graduating high school in 2020 and my son in 2023. Not really looking to move them into another town or even into another house at this point. After they graduate my wife and I plan on buying another home elsewhere and we can probably work on the house hacking approach then.

Good luck with your searches in Newark and the Oranges. There are plenty of deals there I'm sure. Keep me updated on any meetups. Thank you for your time.

Sean Guzman · Answer

Abel,

Thank you for the response . I'm 41 yrs old and I'm starting out late in the game. I've been interested in real estate investing for many years now but never got involved due to lack of knowledge and money. I now have some of both so I'm trying to get in now. I have a 18 and 14 year old and own my own home so house hacking wouldn't work for me at this time unfortunately. I think that would've been the ideal way if I started many years ago. I'd like to fix and flip but again the market I'm in is hard to find deals that are cheap enough to make money on that aren't foreclosures. Also from my understanding conventional loans aren't an option on those type of investments so that's why I was thinking of hard money. I'm trying to network now and build relationships so maybe I can get on the right track. I was talking with a Real Estate agent that was supposed to connect me with someone at a bank so I can possibly get notified of some possible foreclosures before they actually go to auction. That hasn't happened yet so I'm not really holding my breath.

Again thanks for the feedback and I'd appreciate any connections you may have.

Foreclosures/Bank Owned the only way in Northern NJ?

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