SFR in Nutley, New Jersey

[Simcha Davidman]

Hello All!

I've been looking at properties within driving distance of me, because I want my first investment to be easily accessible.  However, because I live in northern NJ, I run into the high market prices, and I almost immediately shoot down any deal.  So, I figured I should bring one to the community and have people tell me where I'm wrong and what I'm missing.  Thank you in advance!

3 BR/1 bath asking $170k.

Taxes are $9,062 (although I saw at least one other figure on a different website, I went with the highest)

Here are my assumptions:

closing costs - $4,000

rehab/initial improvements - $5,000 (this is a blind guess because there are no pictures of the inside available, but let's not focus on this number right now...)

Rent - $2,000

vacancy - 8% ($160/month)

property management - 8% (the calculator I used (downloaded from BP) uses net rental income for this, so it's about $147.16/month)

maintenance - $1,000/year

capex - $160/month

insurance - $1,000/year

with a 25% down payment and 4.5% thirty year financing for the balance, I net a whopping -.82%.  That's a negative sign, not a dash!

If I bring the price down to $150k, The return climbs to positive 1.06% return (annual! :( )

What assumptions above are off, for better or worse?  If my rent assumption is off and I get $2,400/month, then my returns (assuming everything else (even the $170k) stays the same, it returns slightly over 7%.

This is where I'm stuck right now, and I'm seeking advice from those who've been there who can tell me that my assumptions are good or bad.

Thank you!