All Forum Posts by: Jen Anderson

Hi all, I've been reading BP and listening to the podcast for a while now, so when a recent opportunity came my way I knew it was too good and I had to jump on it. 

Though I live in California, my immediate family including my mother and her brother live in NJ. Her brother (my uncle) has been getting solicitations by developers to sell his house- which is in a really nice, upscale NJ suburb on a direct train line to NYC. His house is very close to downtown, less that a 10 minute walk to the train station (where people commute to Manhattan in ~35 minutes) and the schools are some of the best in NJ. Net/net- high demand and high home prices in this area. 

So several developers are approaching my uncle and want to buy his property, completely demo it and build a duplex on the lot. My uncle is older and doesn't even use the internet so when I got him to tell me the offer prices he was getting, a quick Zillow search showed he was about to get taken advantage of.  Also, this house has sentimental value to me as it's been in the family for generations and my mother was raised there.

So instead of selling it to hungry developers, I want to buy it, I want to demo it and I want to build the duplex- but keeping it in the family and renting the units out (maybe one day I'll move back and live in 1 unit).  It's a golden opportunity because my uncle is also willing to sell it to me for a small amount upfront, as long as I structure it properly so that he'll get the full value over time or gets made whole through the rental income once we have tenants in. I am thinking there are ways to structure this deal so he benefits from a tax standpoint as well. 

So anyway, I hope you all see that I have a great opportunity here but I need HELP!  I've only done buy and hold to date with minor repairs.  This house needs to be completely demo'd and rebuilt from the ground up. Not only is it extremely old, but he is also a hoarder and it's FULL of junk. I'm sure there's also asbestos and many other "surprises" to be uncovered. 

So I'm posting here to get advice- 

• Anyone on here I should talk to, get advice from?
• Anyone that can help me find a good, trustworthy contractor in NJ? 
• Can I handle this remotely from California or do I need to be on the ground in NJ the entire time?
• Any recommendations for reasonable lawyers that could help me structure the agreement with my uncle to ensure all our bases are covered, it's optimized for taxes, and that he eventually gets the income he is due over time for selling the property to me.

As you can see, I have many questions and I know this is a huge project, but I'm committed and I know it's an amazing opportunity.  Thanks for reading!

Great conference @J. Martin! I learned so much and can't wait to do it again. Would be happy to help organize next year too as a fellow Oakland-ite

 Thanks Jenifer! Do you also know much about tenant laws, tenant buyouts and eviction processes in Oakland, Berkeley area?

 Yes it's very tough.  From my perspective I will not cash flow- this is an investment in my future that I will hold for 30+ years and the rents I get from the triplex will just cover the mortgage. But that means I live effectively for free and can rent out my current primary residence which I will cash flow on.  I couldn't make the numbers work on Duplexes. That extra 1 unit rental income is everything.  I also can't make it work on Triplexes in Berkeley- unless it's a total rehab.  This one is in a nice area of Oakland. Berkeley is insane.  A triplex that was listed at 975K just went for 1.25MM. Crazy!  It was nice but 1 unit is rent-controlled at 2,000 (way under-market), which just leaves the last unit to make up for the difference and it's not enough.

Hi all,

Was hoping for you some advice/answers to my many questions.  I am planning on House Hacking by buying a Triplex in Oakland and then occupying 1 of the units, renting out the other 2. I found the perfect property, but of course the price is quite steep given it's Northern California. Here's my questions:

1. The lender I have gotten pre-approved through says federal law requires a 25% downpayment on triplexes. This alone is a HUGE chunk of cash. Any way to get a loan without this much of a downpayment (and please don't suggest FHA or VA loans. FHA will not make me a competitive bidder).

2. He is saying I have to have 6 months' worth of P&I + Insurance and tax payments in a reserve account. Again, that is a LOT of extra money I'll need in addition to a hefty downpayment

3. Closing costs are VERY high- transfer tax is estimated at $9K.  Why so high?

Does anybody have any suggestions for alternatives lenders that might have more flexibility?  Particularly around this 25% downpayment rule?  Any other creative ideas/suggestions?

Or should I just walk away from this and focus on lower cost markets instead?

Thanks so much!
Jen

 Thanks Chris!  I haven't done any direct marketing yet but after listening to many BP podcasts about driving for dollars, I am now starting to notice opportunities as I drive around Emeryville.  I have 2 big questions thought:
1. Why would an owner sell to me? If I send him a DM and it triggers a thought in his head: "Hey, maybe I should sell". Then would he just list on the MLS where he's all but guaranteed to get a much better price given how crazy real estate is out here?

2. Another thing I'm wondering about is the tenants.  The likelihood that the tenants are paying anywhere near market rate is very low. Plus, I would want to live in one of the units.  So how much will it take to buy them out?  What if they won't take the buy out?

Appreciate your thoughts!
Thanks!

 Thanks @J. Martin for this incredible message!  I will indeed be at both the even on the 11th and the weekend Summit at the end of the month. Already bought my ticket.  I look forward to meetig you there!

 Hi @Starla, I"d be happy to chat further.  Sounds like there are some great networking events coming up - want to plan on meeting at one?

But they'll require PMI even at 20% down?

Also, I'm afraid my offer won't get accepted if it's FHA. Doesn't that slow down the process?

 wow- 25% for a triplex even if it's owner occupied?  Why is that?