All Forum Posts by: Jon Lafferty

@Michael Hartman welcome to BP. Before you get started in this wild ride of real estate investing please take some time to read the Ultimate  Beginners Guide right here on BP. It will give you a good primer on all things real estate investing. I love the idea of you getting a multi family and living in part of it while renting out the other unit. That would be called house hacking in BP terms and is a great way to get some very low interest long term financing on an investment property. You can go all the way up to 4 units in an owner occupied investment and still qualify for traditional financing.

Best of luck to you and feel free to reach out with any questions.

@Jessica Stiner welcome to BP, as everyone else has mentioned you have found the greatest real estate investing site on the internet. In addition to the ultimate beginners guide, podcasts and blog / forum posts make sure to visit your local reia. DE REIA

I invest right over the bridge in the southern NJ markets. If I can be helpful in any way please don't hesitate to PM me.

Great job! It looks like a you did quite an extensive renovation as well. Are you a full time investor?

I am approaching the time of year when I am able to appeal my real estate taxes on rentals. In my county that is from Jan to March. My hope is to appeal the taxes on all of my units. My question is I have seen several online tax appeal services that help build a packet and then connect you with lawyers who work on a contingency basis. This packet is around $175 and covers a special tax appraisal, local comps, county tax records etc. Am I going to get a better result by having a lawyer appeal the taxes on my behalf or does it not matter? I know sometimes local relationships between lawyers and local officials can grease the wheels so to speak. Does any one have experience in this area? I am based out of NJ if that matters.

Thanks!

@Mike D.  @Doug Minton @Joseph Romero 

I have battled this for quite some time and still don't have a good answer. As a newer investor I thought it was important to at least get a school of hard knocks education by landlording. I have looked into many other markets to include Philly, Cleveland, Indy, Wilmington, etc. 

For now I own 4 units that are cash flowing between $150 and $250 per month. This is after debt service, insurance, 5% vacancy and 10% capex. My properties are in Southern NJ near Wilmington DE. Typical taxes on a 3/1 - 4/2 are $3000 - $4000 / annually. These are C class areas that do require decent local management (I manage these myself). When you figure it all out please let me know :)

@Joseph Romero welcome to BP. Be sure to check out the podcast's and ultimate beginners guide. This site is a great site for information and networking.

I am finding deals in the Southern NJ area at around 40-55k that rent between 950 and 1050. If they need a large rehab I can be all in at 50k and have a great product. Of course our taxes eat up a chunk of cash flow. Our tax rate is at $25 / $1000.

@John Cimino I am with you on Wilmington. The tax rate is around $6 per 1000 and numbers look stellar, of course they did just make the news being dubbed murdertown USA. Murder Town USA .... no thanks

Thanks everyone for the replies. It seems like a very welcomed recurring theme is make sure I have enough cash reserves to handle the big capex items when they happen. I have to be honest and say that since these properties have been middle of the road as far as investments I have been leaning heavily on my personal savings / income to solve "problems" as they occur. As an example I had to do a quick bathroom fix for a tenant that turned into a $1500 tub surround replacement. I had to lean on my personal income for that 100%. I have been recording it meticulously in my expense spread sheets and will pay myself back when I am able.

I think this lends to another point for newbies: Track ALL expenses per unit. You cannot manage something that isn't being measured and we measure our investments by recording receivables (income) and expenses. I have an excel spread sheet with a tab for each property. Each tab then feeds a master reporting tab letting me know my high level results.

In addition to these things I forgot to mention I was able to network with a few BP members, some as far away as CA. I also took some time to find and start building some relationships with a local portfolio lender. 
I even built a cheezy web site that hopefully I can use to generate leads in the future.

Its like Rocky said Life aint all sunshine and rainbows

I would say that is my outlook on being successful in life and business.

@Jon Gom I am investing in a very localized area and have a good idea of local taxes based on the home type. Of course I check the local county tax assessment web site as well to confirm taxes. 

For insurance I try and get three competitive quotes. I have found that once I settled on an agency the discounts grew with multiple policies.

I use rentometer and craigslist to check on rental rates. In addition I have setup ghost ads on craigslist to get a rough idea on the demand for rentals in my market. Generally things have gone as planned. I would say as @Nathan Emmert eludes to I have seen a decent amount of my cash flow disappear on capex items but I'm working on that :)

@Nathan Emmert thanks for your reply, I agree with you about our NJ taxes and struggle with the idea of continually investing in this area. I think as I continue my landlording education I will diversify into more landlord and REI friendly area's. In NJ we have to wait until the new year to try and lower our property taxes. Today I take out 10% of GOI for capex and 10% of GOI for vacancy. I will be starting to pay 'myself' in 2015 a 10% management fee as well :)

Thanks so much for the comments

I have been a member on BP for a little while now and thought I would share what my first year of investing has been like.

I have been interested REI for 5-10 years. Prior to the bust in 2006-7 I had attended a few REIA meetings and was ready to start until 2007 when I was deployed to Iraq. Investing was not at the forefront and when I returned it took some time to settle back into normal life.

Fast forward to 10-2013

The day job was really taking it's toll on me stress wise and re ignited my passion for REI again. March 10, 2014 enter Bigger Pockets and my greatest education in REI. I listended to every podcast, read many forums and studied what others were doing. I slowly devised my plan.

I should say this isn't necessarily the right or best way to do things but for me it was a way to get involved and start to learn. It was time to take action! I did the unthinkable and took a withdraw and loan on my 401k to fund my first buy and hold property. Everyone likes numbers so here they are mistakes and all:

4/2014 – First purchase

Property 1 SFR

Price 40k

Taxes 3000 / annual

Rent 1000

Insurance- 2200 /annual - Oops I didn't think to check flood plains

cash flow – 100 / monthly on a good month

Not a stellar investment by any means but it does cash flow and the home is very easy to manage with few issues...... so far, but I knew I could do better and the only way to do better was to fix this less than perfect investment with more less than perfect investments so I negotiated a deal to purchase 2 homes in a neighboring but run down town. Yes I was being a little sarcastic in my last sentance :)

I took out a 50k HELOC on deal 1 to purchase deal 2

7/2014 – Second purchase

Property 2 and 3

71k for 2 SFR homes

Taxes – 6000 / annually

Insurance – 1300 / annually

Rent – 2000 / monthly

cash flow – 400 / monthly on a good month

To sweeten this deal I was able to negotiate partial seller financing of 26k due in 15 months from closing.

I have also just closed on my 4th property in 2014. This will be a decent rehab before it can become a flip or rental but more about that in another post.

The numbers for deal 3 are:

11/2014 – Third purchase

Property 4

20k for 1 SFR home

Taxes – 2200 / annually

Insurance – 400 / annually

Projected Rent – 1050 / monthly

Projected cash flow – 450 / monthly

So there you have it. . One year in the life of a new investor netting an infitite return on education and $500 monthly in cash flow. I am learning daily in this business and plan on scaling my business until I hit my magic number. Of course I wont be quitting my day job anytime soon.

This has been a fun, frustrating, sometimes stressful and rewarding journey to date and I am looking forward to more of these small successes in the future.

Thank you BP Community!