First Timer- Bergen County NJ - Seeking Out of State SF or 2-4MF

[David Spangenthal]

I'm a new investor. Like so many others, I've read loads of books (Including Bigger Pockets, of course), read tons of blogs and listened to heaps of podcasts. The final hurdle has been accomplished: My wife is now on board!

I've got lofty goals, but need help with the first step. I'd like to start with either a SF or 2-4 unit MF property and am confident I could secure financing. 

That said, I live in a very expensive part of the country (Bergen County, NJ) where home prices and rents don't align well, so my first deal will need to be out of state. I'm comfortable with this and am open to all parts of the country. I'd love to hear where in the country people are seeing success now.

I'm looking forward to being a part of this community and sharing (once I have what to share). 

[Larry S.]

Hi @David Spangenthal, I would challenge your statement "my first deal will need to be out of state".  I live in Hudson County, but the same idea applies to all of northern NJ / the NYC suburbs.  

Let's say you find a house the MFR out of stat that you are looking for and it's $120,000. Since it's an investment property, you'll need to put down at least 25%, and I'm not sure if that will be higher since it's a MFR. 25% of $120,000 is $30,000. If you were to buy a MFR here in north Jersey, as an owner occupant, you could put down 5% or even 3.5%. That $30,000 as a 5% down payment would buy a $600,000 house.

There are benefits to this more expensive house in NJ. Any appreciation is on a property worth 5x as much.  For each mortgage payment, the principal paydown is much larger as well. It's hard to quantify exactly with interest rates on the two loans (and you generally get a lower interest rate as an owner occupant), but it could be $700 per month right from the get go.  

I was in a similar situation as you. Two years ago I thought I had to go out of state and had a transaction on a SFR fall through at the last second. I'm so glad it did, because I now have a duplex in Hudson County and I benefit from everything mentioned above.