All Forum Posts by: Alex V.

I have a 3 family under contract in Bloomfield, NJ. We just did a tank sweep as underground oil tanks are very common in this area for houses of that age. Sure enough the tank sweep turned up a massive underground oil tank. The report states that they found a 1k gallon tank with approximately 8 inches of fuel and 1 inch of water. Obviously this tank was never properly decommissioned. Normally I would happily negotiate a price for us dealing with it but given the size and water in the tank indicating a leak, we are prepared to walk if the seller refuses to remediate. This is the first time I'm dealing with an oil tank so I was curious what other investors experiences have been. How much has your worst case scenario cost you? What about your best case? 

Hi @Vincent Villani. You should contact your attorney and have them contact the sellers attorney in order to discuss renegotiation or remediation of the issues. If the tanks were removed and properly remediated there should be a No Further Action (NFA) letter from the state. I think this should show up in the OPRA request but you should confirm with your attorney. Otherwise you should definitely have a tank testing company do an oil tank sweep at the very least. I just used one this week and they found a tank. If you need a recommendation for a tank testing company in Northern NJ I can pass one along.

Gotta agree with @Bill F. on that last comment.

It really all depends on your risk tolerance. I can't make any individual recommendations without sitting down to review goals, financial situation, and putting a ton of time into analyzing the strategy (CFA ethics violation otherwise). 

Personally I would never invest acquisition funds in anything other than cash equivalents, or a AAA FI instrument that provides cash flows that match my desired draws. Laddered investments could work, doesn't all have to be short. But I am conservative and I want to know that my funds will be there when I need them. I don't want stock market returns to drive my acquisition schedule. Also to quote Buffet again in this thread, when it comes to broad market passive investment, "my favorite holding period is forever." Most of these reasons are behavioral though, and betraying my quant background.

With all that being said it's really awesome that you tested the numbers to challenge conventional wisdom! I'd refine your returns a little bit as they are overstated, test out what starting at different horizons look like, and take a sober look at whether you can stomach it. I can help you fix the formulas to automate the $25k draws so you don't need to recompute them every time you change the date.

@James Krahula in order to refine your math a little bit you should incorporate fees into the stock market investment assumptions. Both trading costs (for every monthly buy order, and for each sell order) plus reduce all your returns by management fees. Maybe find a low cost SP 500 fund and use M/M returns from that instead of the broad market which a retail investor can't gain access to.

Also, in order to really get a better sense of comparing strategies, you would have to do it after tax. You would be incurring a fair amount of cap gains tax over the life of the the stock market strategy by trading in and out so much. The HY accounts interest income would be taxed at ordinary income (a CPA can fact check me on that), which is a higher rate but you would have less in absolute gains to get taxed on.

In general, your 2007 sheet highlights the main argument for using a fixed income instrument or HY savings account over investing in an ETF/Index Fund to save. Volatility. Is acquiring 1 extra property worth sitting on the sidelines for an extra 8 months? It depends on your goals, what returns you'd be getting on your property, and many other factors.

Timing and frequency also make a huge difference. Your sheet assumes that this is a long term rinse and repeat strategy which benefits more from long run averages. Playing around with various months in start date and time horizons can paint very different pictures.

@Michael Peralta welcome to BP! For $250k you're going to have a hard time finding anything other than a very beat up 2 fam. There's plenty of MF housing stock in southern Bergen county (Garfield, Wallington, East Rutherford, Lyndhurst, North Arlington, Kearny), Essex (Newark, Harrison, East Orange, Bloomfield), Passaic (Clifton, Passaic, Patterson), Hudson (Harrison, Union City, parts of JC) and Union (Elizabeth). 

Out of the ones I listed, Newark, East Orange, Passaic, Harrison and Patterson are probably your best bets for finding properties under $250k. Good luck with your hunt! 

Here is a search on RedFin that has your criteria:

https://www.redfin.com/city/6627/NJ/Garfield/filte...

Thanks for posting this thread! Been meaning to ask this question myself.

@Matthew Fullam BLS is a good place to start: 

https://www.bls.gov/regions/subjects/employment.ht...

Same here actually

Welcome to BP @Chris Silver as many here have already said, there are quite a few active NJ investors on BP who are more than willing to help (looks up). I'm pretty new myself but feel free to reach out if you have any questions.