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Updated over 3 years ago, 04/14/2021
Househacking in East Rutherford/Carlstadt Advice
Hi All,
I am a first time poster and first time buyer. I have been listening to BP podcasts, Googling acronyms, reading forums, and searching Zillow/Redfin/Realtor/etc for about a month now. I am searching the Northern Jersey area - so far I've specifically been looking from West New York down to south Weehawken/Union City, then out west from Carlstadt down to northern Lyndhurst.
My criteria is as follows -
1. <$600k - min 2 units at least 1 bed/1 bath
2. Turnkey or close to it
3. Low crime
4. Commute to port authority 1 hour MAX
5. Able to walk everywhere - I will not have a car. Open to biking around.
6. Some semblance of a downtown area within a couple miles
7. We are a couple - enjoy nature, going out to eat/drink maybe once or twice a month.
As of now, I plan to do a 30 year FHA owner occupied - after 1 year I will move out so all units will be rented out and I should be cashflow positive around $500 or so. For that one year, I am willing to pay up to $1k (PMI, tax, mortgage, repairs, etc.) and the tenant rent should be able to cover the rest. So if the average rent is between $1.6k and 2.2k, I can probably get away with between total cost per month @$2.6k and $3.2k.
With all this being said - my favorite town is East Rutherford which seems to hit all of my criteria (+low property taxes) based on my initial internet research. I plan to do a drive-by this weekend and walk around to get a better feel. However, I wanted to ask you, BP NJ community, can you 1) let me know if my thought process and criteria's sound reasonable - I am hoping to get my first deal ASAP, but not before my due diligence and 2) can you offer what other towns may fall within my criteria?
Thanks a ton!!!
Hi Chow,
You're head is in the right space. Those areas are very competitive due to the proximity to NYC. Most 2/1 duplexes are between 480k and 600k. Low end is usually outdated and may need work, high end is usually basic reno'ed. Some are going for over 600k. So I think under 600k is reasonable. Personally, drop the "I want to pay 1k" thing. Make the numbers work and it will all work out. You said you want to cash flow $500 after you leave, I think that is a solid goal to shoot for.
All depends on your goals and situation for CF. A lot of people on BP want lots of cash flow and hey dont we all, but in Northern NJ it is so difficult to get that CF (unless you BRRRR). My criteria is $1k CF after PITI (yes I'm aware i'll have cap ex, repairs, maint, utilies but my situation is different). So I don't worry about what I'm paying while I'm living in the house hack, I care about the numbers after I leave.
As far as other townships, all of the smaller ones around that area are good minus Paterson. They're all solid IMO, Wallington, Rutherford, Hasb. Heights, etc. Rutherford and E.R. are very competitive fy, Good luck!
Originally posted by @Mark F.:
Thanks for your responses, very helpful!
I am definitely open to a 5% conventional for a duplex, I've been thinking in terms of FHA because the requirements are more clear when I Google around than a 5% conventional. I have pretty solid DTI and credit score, so if it's available I would think I should be eligible either way. I haven't shopped around for lenders yet, but when the time comes, I am hoping a few of them offer low dp conventionals.
Originally posted by @Chow Ahmed:
Originally posted by @Mark F.:
Thanks for your responses, very helpful!
I am definitely open to a 5% conventional for a duplex, I've been thinking in terms of FHA because the requirements are more clear when I Google around than a 5% conventional. I have pretty solid DTI and credit score, so if it's available I would think I should be eligible either way. I haven't shopped around for lenders yet, but when the time comes, I am hoping a few of them offer low dp conventionals.
Fha is definitely an option but id ask about 5% conventional. Yes you a re putting 1.5% more but i believe you don't pay pmi (someone correct me if I'm wrong) and no strict appraisals. Both of those are good enough IMO to put 1.5%, more. Personally I'd skip FHA in our market. I haven't had luck with it and I think I got lucky with my VA loan since I was able to offer a lot more.
Originally posted by @Mark F.:
Originally posted by @Chow Ahmed:
Originally posted by @Mark F.:
Thanks for your responses, very helpful!
I am definitely open to a 5% conventional for a duplex, I've been thinking in terms of FHA because the requirements are more clear when I Google around than a 5% conventional. I have pretty solid DTI and credit score, so if it's available I would think I should be eligible either way. I haven't shopped around for lenders yet, but when the time comes, I am hoping a few of them offer low dp conventionals.
Fha is definitely an option but id ask about 5% conventional. Yes you a re putting 1.5% more but i believe you don't pay pmi (someone correct me if I'm wrong) and no strict appraisals. Both of those are good enough IMO to put 1.5%, more. Personally I'd skip FHA in our market. I haven't had luck with it and I think I got lucky with my VA loan since I was able to offer a lot more.
Believe with conventional, anything under 20% down, you pay the PMI until the LTV reaches 80% but FHA the PMI is there for the lifetime of the loan unless you refi - which is the original reason I wasn't too crazy about an FHA. I'll be sure to push for a conventional, the extra 1.5% certainly won't break the bank.
Originally posted by @Chow Ahmed:
Originally posted by @Mark F.:
Originally posted by @Chow Ahmed:
Originally posted by @Mark F.:
Thanks for your responses, very helpful!
I am definitely open to a 5% conventional for a duplex, I've been thinking in terms of FHA because the requirements are more clear when I Google around than a 5% conventional. I have pretty solid DTI and credit score, so if it's available I would think I should be eligible either way. I haven't shopped around for lenders yet, but when the time comes, I am hoping a few of them offer low dp conventionals.
Fha is definitely an option but id ask about 5% conventional. Yes you a re putting 1.5% more but i believe you don't pay pmi (someone correct me if I'm wrong) and no strict appraisals. Both of those are good enough IMO to put 1.5%, more. Personally I'd skip FHA in our market. I haven't had luck with it and I think I got lucky with my VA loan since I was able to offer a lot more.
Believe with conventional, anything under 20% down, you pay the PMI until the LTV reaches 80% but FHA the PMI is there for the lifetime of the loan unless you refi - which is the original reason I wasn't too crazy about an FHA. I'll be sure to push for a conventional, the extra 1.5% certainly won't break the bank.
I just with my lender and the 5% conventional is not an option. Apparently there's an income limit and a property value limit that ill be over on both. So I think its back to FHA for both of us.
Originally posted by @Mark F.:
Originally posted by @Chow Ahmed:
Originally posted by @Mark F.:
Originally posted by @Chow Ahmed:
Originally posted by @Mark F.:
Thanks for your responses, very helpful!
I am definitely open to a 5% conventional for a duplex, I've been thinking in terms of FHA because the requirements are more clear when I Google around than a 5% conventional. I have pretty solid DTI and credit score, so if it's available I would think I should be eligible either way. I haven't shopped around for lenders yet, but when the time comes, I am hoping a few of them offer low dp conventionals.
Fha is definitely an option but id ask about 5% conventional. Yes you a re putting 1.5% more but i believe you don't pay pmi (someone correct me if I'm wrong) and no strict appraisals. Both of those are good enough IMO to put 1.5%, more. Personally I'd skip FHA in our market. I haven't had luck with it and I think I got lucky with my VA loan since I was able to offer a lot more.
Believe with conventional, anything under 20% down, you pay the PMI until the LTV reaches 80% but FHA the PMI is there for the lifetime of the loan unless you refi - which is the original reason I wasn't too crazy about an FHA. I'll be sure to push for a conventional, the extra 1.5% certainly won't break the bank.
I just with my lender and the 5% conventional is not an option. Apparently there's an income limit and a property value limit that ill be over on both. So I think its back to FHA for both of us.
Dang, that's what I was worried about. So really the only alternative is 20% and I think the first time home buyer conventional loans also have similar limitations, right?
Originally posted by @Chow Ahmed:
Originally posted by @Mark F.:
Originally posted by @Chow Ahmed:
Originally posted by @Mark F.:
Originally posted by @Chow Ahmed:
Originally posted by @Mark F.:
Thanks for your responses, very helpful!
I am definitely open to a 5% conventional for a duplex, I've been thinking in terms of FHA because the requirements are more clear when I Google around than a 5% conventional. I have pretty solid DTI and credit score, so if it's available I would think I should be eligible either way. I haven't shopped around for lenders yet, but when the time comes, I am hoping a few of them offer low dp conventionals.
Fha is definitely an option but id ask about 5% conventional. Yes you a re putting 1.5% more but i believe you don't pay pmi (someone correct me if I'm wrong) and no strict appraisals. Both of those are good enough IMO to put 1.5%, more. Personally I'd skip FHA in our market. I haven't had luck with it and I think I got lucky with my VA loan since I was able to offer a lot more.
Believe with conventional, anything under 20% down, you pay the PMI until the LTV reaches 80% but FHA the PMI is there for the lifetime of the loan unless you refi - which is the original reason I wasn't too crazy about an FHA. I'll be sure to push for a conventional, the extra 1.5% certainly won't break the bank.
I just with my lender and the 5% conventional is not an option. Apparently there's an income limit and a property value limit that ill be over on both. So I think its back to FHA for both of us.
Dang, that's what I was worried about. So really the only alternative is 20% and I think the first time home buyer conventional loans also have similar limitations, right?
He said 2 unit conventional is 15%. I know 3 and 4 units conventional is over 20%. I didnt ask on loan limits or anything like that. Id reach out to your lender for more info.
Originally posted by @Mark F.:
Originally posted by @Chow Ahmed:
Originally posted by @Mark F.:
Originally posted by @Chow Ahmed:
Originally posted by @Mark F.:
Originally posted by @Chow Ahmed:
Originally posted by @Mark F.:
Thanks for your responses, very helpful!
I am definitely open to a 5% conventional for a duplex, I've been thinking in terms of FHA because the requirements are more clear when I Google around than a 5% conventional. I have pretty solid DTI and credit score, so if it's available I would think I should be eligible either way. I haven't shopped around for lenders yet, but when the time comes, I am hoping a few of them offer low dp conventionals.
Fha is definitely an option but id ask about 5% conventional. Yes you a re putting 1.5% more but i believe you don't pay pmi (someone correct me if I'm wrong) and no strict appraisals. Both of those are good enough IMO to put 1.5%, more. Personally I'd skip FHA in our market. I haven't had luck with it and I think I got lucky with my VA loan since I was able to offer a lot more.
Believe with conventional, anything under 20% down, you pay the PMI until the LTV reaches 80% but FHA the PMI is there for the lifetime of the loan unless you refi - which is the original reason I wasn't too crazy about an FHA. I'll be sure to push for a conventional, the extra 1.5% certainly won't break the bank.
I just with my lender and the 5% conventional is not an option. Apparently there's an income limit and a property value limit that ill be over on both. So I think its back to FHA for both of us.
Dang, that's what I was worried about. So really the only alternative is 20% and I think the first time home buyer conventional loans also have similar limitations, right?
He said 2 unit conventional is 15%. I know 3 and 4 units conventional is over 20%. I didnt ask on loan limits or anything like that. Id reach out to your lender for more info.
I am early enough on my adventure that I don't have a lender yet :) (or a Realtor although I started dialogue with one).
I am open to recommendations if you or anyone can offer. I was planning on spray/pray different options and shop around soon.
Wouldn't recommend spraying and praying. Find a good one or two and stick with it. These are my guys and gals I use. Small shop. Work very hard for me.
Originally posted by @Mark F.:
Wouldn't recommend spraying and praying. Find a good one or two and stick with it. These are my guys and gals I use. Small shop. Work very hard for me.
Awesome, I'll check them out. Thanks!
That amount of cashflow is really hard to find! You must be a pro haha. I just got started and bought in Boonton, NJ (my first property) close to Bergen County. I'm househacking!
Hey Chow - I am currently house hacking in Wood Ridge, NJ. I love the area spanning Carlstadt, East Rutherford and Lyndhurst for lots of reasons. Mark is correct in saying it is very competitive and has been since at least 2017 when I got in. Happy to chat about the area and provide some recommendations.
Hey Chow - I am currently house hacking in Wood Ridge, NJ. I love the area spanning Carlstadt, East Rutherford and Lyndhurst for lots of reasons. Mark is correct in saying it is very competitive and has been since at least 2017 when I got in. Happy to chat about the area and provide some recommendations.
Hi All- I'm also a first time poster but have been listening/reading to BP material thus far. Am also looking to invest in MF in this general area over the next year. Just wanted to say thanks for the post & all the information shared here thus far.
Chow- Have you looked at Ridgefield Park? Very short commute to NYC & town has a good amount of MF housing. Taxes not as low as East Rutherford / Carlstadt however.
Hey Chow,
FHA with PMI is not always bad. If you think about it, if your cashflowing, and your planning on buy and hold. It won't really matter that your paying PMI, because its not really you paying PMI, its covered under rent. The good thing is with FHA, your only 3.5% into the deal of your own money instead of 20%, where you can use that 16.5% into your next deal. I did FHA in boonton for a SFH (3bd/2ba) for 315k, and my househacking is bringing me $1800/mo. Once I stay the year and rent it out fully, I'll be cashflowing, but for now my PITI is 2150.
Thanks everyone for the comments, I've been doing a lot of homework for the past couple weeks.
@Marios Hoppas, I have considered Ridgefield Park but I was turned off by the high prop taxes as you mentioned. From my view, such high tax would eat up the cash flow that is already incredibly hard to acquire in this market as others mentioned. For the same reason, @Shivam Patel it is more reason I am avoiding the FHA/PMI double-trouble, especially considering @Mark F. was having no luck getting his offers even considered with an FHA.
All this combined with the fact that these townships in general appreciated something like 20% since a year ago, I am reconsidering altogether if it is better to look in NYC area as people flee or get even more exotic and look around Upstate NY, Connecticut, or Pennsylvania (Philly?). I am halfway through David Greene's BRRRR book and I'm now compelled to deploy my cash for a BRRRR instead of a house hack and it doesn't seem practical to BRRRR in Northern Jersey (or NYC, of course) with my capital (probably reach $100k cash by summer 2021).
I gotta say, my plans keep changing fairly drastically week-to-week; I'm excited to see where my mind is in another couple weeks :) Thanks for bearing with me!
Hey @Chow Ahmed,
Thanks for sharing these insights. On top of what you laid out, as an investor I recommend that you know your numbers, cold.
Whether you hire out everything or are more involved, plan from the beginning to be able to step away from the business if you need to.
That requires careful analysis of the property BEFORE you buy, to determine if it meets your financial goals AFTER including all expenses.
If any turn key company sends you a cashflow analysis without at least TIMMUR:
1. Taxes
2. Insurance
3. Management
4. Maintenance
5. Utilities
5. Repairs
Then run for the hills.
In Bridgeport, Connecticut and many North East regions we also include Snow Removal and Pest control.
Explore all markets but do your research, as to where net migration and jobs are heading.
@Danial Qureshi this might help you too!
Drop me a message if you want to discussed further.
Craig
Hey @Chow Ahmed , would love to hear an update. I'm very interested in this area too, looking to do a deal inside of a year, maybe 6 months. Anything pop out about these communities that changes the way you rank them or a difference-making factor?
Originally posted by @Ralph Bednarczyk:
Hey @Chow Ahmed , would love to hear an update. I'm very interested in this area too, looking to do a deal inside of a year, maybe 6 months. Anything pop out about these communities that changes the way you rank them or a difference-making factor?
Sorry for the long gap in response. I've been debating what I should do for the past few months and I think I've adjusted my plans fairly significantly since 6 months back. I am now putting Northern NJ into the backburner if I decide to invest in the local market later (I reside in NYC). Instead, I've decided to take a trip down south to NC and GA and spend a couple weeks looking at some properties in these areas. The reason for this drastic change is that in Northern NJ, prices are very high and I get no where near the 1% rule. It's also not clear how much upward room there is for appreciation (but that's anyone's guess, right).
However, in NC/GA there are many more options including brand new homes for much cheaper e.g. < $300k, hence I want to give this a try.
Of course, if this doesn't work for me, then Northern Jersey is still in consideration. Rutherford, East Rutherford, Hasbrouck Heights, and area were my favorite in terms of grocery convenience/distance to city/property taxes. My cousin recently closed on a property in Maywood.
Hope this helps.
Sorry to join this discussion late but I had almost the exact same requirements as you @Chow Ahmed.
It seems like the property tax + PMI is a killer in new jersey. To cash flow on a 500k + property after paying 1-1.5k in taxes and PMI alone seems challenging. Add in a mortgage, property manager (for the future), CAPEX, maintenance, insurance etc and I have found most properties I have looked at are falling well short of any positive cash flow. Obviously, if I exclude CAPEX and Property management deals Intitaly looks enticing, but from everything I read this would be a foolish way to analyze a property. Most books also discuss appreciation as the "Icing on the cake".
I'm curious to hear from others and see how they found their deals, and what the numbers look like. Feel free to connect or reach out as well!