All Forum Posts by: Brandon Morgan

Everyone is going mad for NJ right now and especially cities like Paterson, Newark, East Orange and Irvington. Personally, I am not as bullish on those areas. However, I do think Elizabeth, NJ has lots of potential! 

With that being said though, I think the bargains to be had now are in NYC. Previously, people would buy 3%-4% cap rates just to get the appreciation ticket. With prices at lows now, you can get 5%-6% and even higher appreciation (due to lower basis). NYC investing requires more patience and you must have the perspective of an asset accumulator vs. a clipper of coupon. 

Hi Mark,

Welcome! There is a wealth of info here and I only wish this place existed when I Was cutting my teeth getting into multi family investing New Jersey!!  :)

To better answer your question I think the answer depends a bit on what you want and your comfort zone, also the rate of return you are willing to accept....

I have been investing in Union county and Somerset county. I use to live in Union county and began acquiring properties that were in my backyard so to speak as I was very familiar with the market and what I can rent these properties for. The other thing which is huge to me as I self manage, is being in close proximity of my properties as the thought of managing something far away does not sit well with me and I prefer to self manage VS give to a management company.....

NJ is a tougher state by default to invest in and generate good returns due to very high taxes and high price points on properties but along with this comes fantastic rental income if you buy the right property and buy it at the right price.....

Don't let that discourage you it definitely can be done. I have a portfolio of multi families, single families and condos all of which produce great cash on cash returns.

Where do you live?  Do you know the market in your  immediate general area? When I first started out I bought a Mother/Daughter - very similar to a 2 family and lived in 1 unit and rented out the 2nd unit... My tenant paid 3/4 of my mortgage and I thought I was a 22 year old genius!!! lol  This allowed me to bank a fair amount of cash and but something else and I was off to the races!!

(EDIT) Just saw you were from Teaneck, that is Bergan county right? my mom has family up that way, nice area!! 

regards,

Chris

@Brandon Morgan We're still going higher than list price in my area. I'm closing on a deal that was just too good to me to miss out on that I bid over asking before it went on the MLS. The listing agent showed it several times but a month went by and he didn't process the listing paperwork so I instructed my agent to draw up an offer over the list price he told me when he showed the property to me and submit it. Just like an off market listing and the early bird got the worm.

I have four thoughts to share.

1- You can bid higher than list price.  Bid to the point that you will have no regrets.  If you feel that the property is worth $10K over then bid $10K over.  If you would regret not getting the property if it sold for $10,100 over then bid to that number.  If you feel like you only want to go to list price and you would have no regrets if it sold $100 over list price, then stick wtih your gut

2- Ask your Realtor if an escalation clause would be approriate.  They may or may not do those in your area

3-The numbers are the most important.  Mak sure that it cashflows- even if that means you have to miss out on a lot of places.

4- You do have a protection for a higher bid.  If the property does not appraise, and you have a financing contingency, you will not be required to buy the property.

I hope this helps.  I can base my answers on years of experience- but not years of experience in your area.  The best thing you can do is find a good local Realtor to help you out and offer local guidance.  Good luck!

I'm still buying and looking to buy, but my criteria has changed a lot. During thet low rate period there were so many good deals, now they are a lot harder to find! I'm in Denver, so I look for cash flowing properties out of state, and I'm looking for our next house hack here in the Denver Metro that I can add some significant value to. 

With high rates I'm looking for more creative options like off market properties, seller finance deals, loan assumptions, or properties I can add value to, especially in an expensive market like Denver. I also look for and encourage my clients to pursue properties that would break even or cash flow now and hit an ideal 8-12% cash on cash return after a conservative refi of 4.5-5% interest rate down the road. 

@Brandon Morgan a 203K can be a complicated and frustrating experience if you don't have an experienced team - contractor, realtor, lender. Once you have your team in order you want to make sure to be pre approved so you know your budget for acquisition as well as renovation funds. I agree with what @Wayne Brooks mentioned in regards to the self sufficiency, this is incredibly important to be aware of while shopping for an FHA financed property. NOTE** the self sufficiency only applies to 3 and 4 family purchase, so if you stick to a 2 family you can avoid that head ache. This is what many house hackers do on their first purchase.

Hope this was helpful! 

Your offers should be based on what the property is worth to you. Bidding up the price just to win is a sure way to lose.

The market hit a peak last year and people are still throwing cash into investments like the money is burning a hole in their pocket. Everything I see indicates we have not paid the Piper for all that free COVID money and that bill is going to come due. I still expect property prices to drop another 10%, maybe more, before we really normalize. I would hate to pay 5% over asking price in an inflated market, then lose another 5-10% in a correction, and take ten years to recover my equity.

I would bid to where your numbers work the way you want them to

Put in lots of bids and get used to hearing no more than yes - this means you're doing it right

Now for the first one...GETTING STARTED is the main goal I feel. Above almost all else you need to get started. So take a little less of a return on the first if you need to, just to get started. Make sure PITI, PM and all budgeted expenses (repairs/maintenance/CapEx) are covered. Maybe you end up with lower cashflow - ok no problem, you got started. You'll get a feel from the process and be able to go farther from there

@Brandon Morgan The most important part of a 203k, other than qualifying for the loan at the total price, meeting the self sufficiency rule….is picking the right contractor.  Any decent licensed and insured contractor can be approved rather easily.