MillHillionaire House Hack 01 Getting Started

On Trenton

Trenton is the state Capital of New Jersey right off the Delaware river in central NJ. Mill Hill is a nice part of town near the capital where I've just bought my first house hack in. Trenton's been kind of a rough city as long as I've known it, growing up 15 minutes away in Mercer county.

 Trenton's motto "Trenton Makes The World Takes" isn't exactly gleaming with positivity. (More like the hurt accusations of an abused employee.) Trenton like many other manufacturing cities went downhill, leaving really great buildings and nice properties to fester while the crime soared.

Trenton's always had a good social scene sports, concerts festivals, cultural events, artist communities and more, but a lot of drive in - drive out much like Camden. I grew up 15 minutes away from Trenton in Mercer County and moved to Philly to go to Temple University in 2006. 

Moving to Philadelphia

In 2006 when I moved to philly for college at Temple Philly had a reputation as a failed angry city. It still had cheap real estate and a big chip on its collective shoulder. The 2008 Phillies win seemed to help cool us off a bit, and heat up the real estate prices. In the 13 years since living there I've seen real estate prices skyrocket and the city transform into a far more prosperous version of it's former self (look at this wawa for christ's sakes). 

I am glad Philadelphia is improving but that doesn't mean I want to pay for it's inflated real estate. Prices in Philadelphia have gone through the roof, you can barely buy a dilapidated house in a gang neighbourhood for under 100 grand unless you want to live way out in the middle of nowhere or right on the Heroin blocks.

Success partnering In Hamilton, NJ

 For under 200,000$ in Philadelphia you can buy a rundown shoebox in an OK-Bad part of town that would require a ton of work. Good trustworthy contractors are in short supply, especially the affordable ones.

After being discouraged by the market I felt priced out of I decided to change my approach a bit. It seemed too easy to get in over my head, especially when trying to buy my first rental property. I decided to partner with one of my good friends from high school on a rental in Hamilton, NJ and we went together on a rental house which I owned a small percentage of. 

It was a good learning experience to get my feet wet, and I learned about buying a house, and went through the process of rehabbing it first hand without all the risk on my shoulders. After discovering the hidden "pain points" of home ownership (Such as 5,000$+ for new windows, which really set the budget back, knob and tube wiring, and other surprises.) 

Going in with a partner was very valuable for me got a good understanding of how simple yet tedious and difficult buying real estate could be. After the return on the Hamilton investment with a little bit of experience and a thirst for "the deal" I started looking in my city Philadelphia. 

My first failed solo real estate deal - Lasalle Lasucks

After my success in Hamilton, NJ I decided to try and look in the city and maybe expand my search a bit to the edges of the city where I could afford. As someone who'd lived here for 12-13 years now, there are some parts of town just not worth venturing... ever.

There are lots of nice little "pockets" where I would have been OK buying and living for a while until I could rent it out... but I soon discovered that there a few more factors than just price and location.

I was referred to a property near LaSalle University that looked like a good opportunity to buy an unrenovated quadplex next to a newly renovated university. It looked pretty promising, I went pretty far through the process talking to banks, talking to contractors and more.What I found out after a month of going down the rabbit hole driving back and forth with contractors I found online was that I would have had to spend 80-150K to convert a quadplex.

it would take several months and a shitload of money... Not something I had the stomach or the budget for. I did some real research found some more comps down the street barely worth 75 for the same burned down house for 100k. Despite really wanting to go through with the deal, I had to pull out.

I looked again for houses in my price range in Philly for a while but a whole lot of nothing. A lot of heavy fixer-uppers or houses in neighbourhoods in the middle of nowhere that I wouldn't want to live in.

One of the biggest problems of my Renovation strategies was getting a contractor I knew and trusted that I could afford. Philadelphia, a booming real estate market, didn't seem to have enough good cheap properties or available contractors. Fortunately, I did know an available contractor I trusted but he was just out of state.

 I was starting to get discouraged, but my real estate investor friend who I went in on the Hamilton house with suggested I look in Hamilton. I was a little thrown off by the idea of commuting that far to work (45+ minutes away from my office in downtown Philly) but the more I thought about the long-term financials of it it seemed like the best plan.

Starting over In Trenton

The sweet deals of Hamilton a year ago had started to thin out as the housing market was heating up a in that area. Booming Hamilton real estate prices meant fewer opportunities for me. The idea of living in a suburban neighbourhood, after living in Philly for the past 13 years didn't altogether feel right, so I looked north to Trenton.

If I was going to own the house and live there for a year while I "house hacked", it seemed important that it feels right, part of that was enjoying or at least tolerating where I lived. The more I thought about it owning and living in the city of Trenton felt like a better and better idea. More doable, both financially and sanity wise.

One of the things I like about Trenton, it's still very much Trenton I grew up living 15 minutes away from. Trenton has not yet experienced a massive upswing of hipsters like Philly did. In nearby Hamilton, NJ prices have been steadily rising in property value so Trenton is getting a bump too. It started to look increasingly like a better option.

It was less safe, more crowded and dirty... but I guess I'd gotten used to that after all my years living in Philly. I started looking all over the city with a real estate agent my friend used for the Hamilton house and it made a huge difference having someone I can trust (and get a hold of) on my side. 

My experience trying to get agents to show me "bottom barrel" houses in Philly was a pain in the ass . Not a lot of agents were very interested in touring the houses I was looking at. Having a real estate agent who gave a shit made a world of difference in my looking process.

Living in Trenton

After a few weeks of driving around looking at abandoned buildings and dumpy duplexes, my buddy suggested I try to go for single-family homes. I wasn't too thrilled about that idea at first, but soon realized it was either a single family in a decent neighbourhood or living in a tiny piece of crap duplex in an area I wouldn't want to live in. 

As a first time home buyer with ambitions of buying multi-families, it took a bit of convincing for me to realize that it wasn't the right move for my first purchase given I wouldn't qualify for much money. Looking around at all these dumpy homes for weeks, the reality that I would have to be parking and living there for at least a year as an owner occupant.

Trenton has some pretty rough neighbourhoods, and while I'm no stranger to danger (or stranger danger) I wanted my friends or family to be able to visit without worrying about them getting robbed. I also wanted to be able to park my car in a place where there isn't glass from broken car windows littering the streets.

Despite wanting to get into multifamilies I wouldn't be able to add much value and most importantly... would have trouble getting refinancing on a sketchy property... the crucial second to final letter of my BRRRR plan.

On Mill Hill

There are nice neighbourhoods in Trenton, it is the capital of the state after all. One of the best neighbourhoods in Trenton is Mill Hill. I'd visited it during college and was impressed at how nice, quiet and different from the rest of Trenton it was.

Tucked away and close to the capital buildings Mill Hill is safe, quiet and important for home buyers: on a hill (hence the name) which seems to help with the flooding caused by Trenton's proximity to the Delaware River. It's got a little artsy vibe with some festivals, some local bars and music venues like Mill Hill Saloon and Trenton Social.

Mill Hill is a nice quiet family neighborhood with parks, street parking and a bunch of amenities like a nearby church and very short walk from an NJ Transit and Speta train station making it possible to Philly or New York and back without dealing with the gridlocked traffic, tolls, and worse yet... NYC parking rates.

Mill Hill, home to my future home.

I finally settled on a house in Mill Hill, a nice part of Trenton near the capital, train station, downtown and importantly for someone commuting to Philly like me: close to the highway. Most of the houses were out of my price range in the 200ks, but I was able to find the cheapest house on the block with the seller asking 79.

The house wasn't a complete dump but it was certainly ugly, sorely needed painting, purging that disgusting carpet (which I ended up doing myself.) It needed painting, flooring, new appliances for kitchen and bathroom, new porch and a third-floor window leaking water down to the second floor. 

I put an offer of 65k on 79k and we agreed on 70k with the seller taking responsibility for the certificate of occupancy. I decided to go through with it, and got a hold of a local lender a credit union that had a lot of red tape (I would soon find out how much...) but with acceptable rates (5.125% 30 year on 54,000$) but no pre-pay penalties and a good "relationship builder" ideally.

After a few stressful weeks of waiting for the bank to go through underwriting and give me my commitment letter, I charged ahead with getting a home inspection, hiring an attorney and more.

When I finally got my commitment letter and thought I was out of the woods and ready to close but I discovered I was in a much bigger pot of hot water than I'd ever anticipated... and the plot thickens... in the next instalment of MillHillionaire House Hack 02!