Househacking multifamily for Newbie in New Jersey

[Betty Xin]

Hello! 

My name is Betty and I’m a brand new aspiring real estate investor. I’m so thankful to have found the BP community. Nice to meet you all!

My boyfriend and I have been looking to settle down and purchase a home. At the same time, we hope to get started in real estate investing.

After listening to various BP podcasts and doing some research, it seems like our most viable option is to house hack a multifamily (duplex/triplex). We hope to have the privacy of our own homes while renting out the other units.

We moved to New Jersey recently, and are currently living in Union township. We are very new to New Jersey and real estate market. Are there any guidance or advice you could share with us in terms of:

1. Are there any preferable areas for multifamily investing in NJ? We are currently looking at any location that’s close to transportation to NYC since one of us work in the city and thought this could attract high-quality tenants (eg. white collars working in NYC).

2. If you house hack or invest in multifamily, what is the demographic of your tenants? We are having a hard time defining what type of tenants would be most inclined to rent in a multifamily.

3. Based on my research thus far, most multifamily properties are old and run-down. Does most multi-family require a lot of up-front rehab? 

4. If you own a multi-family, what are the long-term appreciation of this type of property? Does it appreciate at a slower pace relative to a single-family?

Lastly, is there a real estate agent you recommend? We currently do not have an agent and really hope to find an experienced agent to work with. 

If there’s any advice or resources you could share, that’s much appreciated!!

Thank you so much for your kind guidance!

[Max Vishnev]

Hi Betty, welcome to BP!  As a NJ house-hacker and real estate agent, I would love to help you.  We bought a 2-family in Bayonne last year (check out my blog post on house-hacking) and found great tenants within a week of me listing the rental unit (after we finished renovations).  There are lots of people getting priced out of more expensive neighboring areas looking to rent in parts of Hudson County with a relatively short commute to NYC at a lower cost than Brooklyn, parts of Queens, Downtown Jersey City, etc.  That's part of the reason Bayonne has been booming.  You can still rent a nice 1-bedroom for $1400 or a 2-bed for $1600 (on average).  The kinds of tenants you can attract will be driven by many factors, but the most important, I think, are:

- Condition of the unit (is it old and beat up or renovated?) and amenities provided (i.e. washer/dryer, dishwasher, central air, etc.

- Proximity to public transportation to NYC.

- Block and neighborhood safety and amenities (can they walk to a grocery store, for example).

I don't think you have to limit yourself to "white collar".  You can find some terrific tenants in the healthcare industry, as well as respectable "working class" professionals.  For example, wouldn't it be great to have a tenant who is a licensed plumber or electrician?

Now, as to your other question as far as agents, here is my subjective opinion as an agent:  Make sure you choose an agent that is also an investor (whether house-hacking or owns pure investment properties).  You want an agent on your side that understands the investment side of it.  Secondly, you want an agent that actually wants to help you as a first-time home-buyer.  Some of the "top" agents (i.e. most sales) focus solely or mostly on sellers (aka. listings), so they will simply pass on onto someone else on their team that works with buyers.  Lastly, a great agent will put your interest first, ahead of any possible transaction, and connect you with great professionals to help you with the purchase process (lender, lawyer, inspector, contractors, etc).

The questions you should figure out before starting the search:

- What is your budget?

- Would you rather buy something already renovated or mostly renovated and lose out on most if not all of the "value-add" but not have to deal with permits, contractors, and the cash outlays and stress involved with rehabs, or would you rather buy something that needs work and "make it yours" and deal with renovations?

Happy to chat offline, if you're interested.  Feel free to PM me.