All Forum Posts by: Derek Lamonde

Every property that gets my attention in Hunterdon County, NJ is under contract before I can get an appointment. Everything else is still available because it's overpriced. I monitor Trulia, GSMLS, Realtor.com and Zillow and am not finding anything in time to get a deal. I work with 2 separate realtors and they both suck for different reasons and to be honest, once a property is listed getting a deal is even harder because of their commission. I see wholesalers on here, but they have nothing in my area and/or their websites don't even work...

There has to be some trick that these flippers, rehabbers and/or buy and holders are using to find them before everyone else...SO WHAT IS IT?

I would argue that  appreciation factors in heavily as well. I will take a lower Cap rate for a strong appreciation potential as I've seen many places "under-rented" or in need of some cosmetics that would bring in a higher rent and/or sale price. 

I'd be interested in the Morris county meet up as well as anything in Hunterdon county.

Hi All,

Does anyone know a pro-active NJ-based Realtor that is used to dealing with investors? 

I've been looking for MFH in Hunterdon and Morris counties w/ little success. I'd consider other areas that were similar in demographics to these. 

Thanks,

Derek

Even if there are recent renovations, I would make sure you get a full inspection to include radon and mold  if you haven't already. I just recently had a deal fall through on a "fully renovated" because of issues that came up with the basement, roof and some of that renovated plumbing. As you probably know, radon has to be mitigated by the seller, so it's good to pay the $50 as the system could end up costing you $1900 later. Mold can be obscene in mitigation costs. 

I'm gathering from Rob's question on location that the quality of tenant, renter traffic, etc. have been part of your consideration. If you have any plans for the second lot, you may want to do your due diligence to make sure things are zoned properly for your plan. Otherwise the numbers look great. I will say single bedroom units and studios can be a challenge to keep rented depending on the area, but the closer you to desirable things the easier renting a cardboard box becomes.

Hey Sean,

If you can dump the condo without a loss, I'd bail on it. I've had two since 2005 and am just now at a break-even point for a sale. Between the ever-increasing HOAs, competition to keep them rented and updating I'm only generating a 4% Cap. Since your's is a single bedroom, my experience between the two that I own is the single bedroom gets a lot less traffic and has had more down-time than the multi-bed/bath. 

Your plan to live in one of the units in a MFH is genius, if your situation permits. However, I would still advise finding the best deal possible in terms of Cap Rate, appreciation prospects and rental traffic for starters. You'll also want to understand the area, especially the type of tenants/demographics for your market. Since you're living there the type of tenants can/will have a dramatic impact on your quality of life...

On another note, everyone wants to "pay down debt"...which is great...but if you can carry the debt at a lower interest (say 4%) while putting the funds you'd use to pay it off into a higher interest earning scenario (say 7%-8%)  it doesn't make good fiscal sense to pay it off. So run the numbers and figure out the best approach for employing your available funds. 

If you have any access to financial advisers at work, e.g. 401k Managers, etc. I'd strongly advise asking them for advice or referrals to folks that can review your situation. You'll have to suffer through some pitches, but you'll get some insight into personal finance strategies that you can research and cross-reference. Building wealth takes time for most of us...good luck.

I use a pretty simple model for the debt I carry:

If any particular debt is at...say 4% and I can put my available funds into anything that nets me >5%, I carry the debt vs. paying it off. 

For example, I currently stick to the payment schedule on ~$50K in student loan debt at 3% because I have the $50k that I would use to pay it off sitting an REIT netting me 7%...before taxes. I also use other funds to continue to buy rental properties w/ >8% Cap rates (along with other attributes, appreciation, etc.) vs. paying off my primary home loan (3.7%), student loans (3%), etc.

Obviously if you have any bill(s)/debt(s) that are at a higher interest rate than you could possibly generate a return on with the funds that you would use to pay off that debt, it would be advisable to pay off the debt.

I hope this helps. 

If you're in NJ it's not as easy as some of these folks are indicating, but putting it in their names would be a great start as suggested above. If there are kids in the home I'd caution against having it turned off without a certified letter of notification with a 30 day warning. I own 4 units here and even if it's in the lease it may not qualify for an eviction. In NJ you have to have "good cause" even at the expiration of the lease for not permitting tenants to remain on a month to month basis, so I'd consider us a "pro-tenant state". I'd advise working something out with the tenants if they're current on rent before going down the path of eviction. 

N.J.S.A. 2A:18-16.1

Why the need after so long? Are you changing something, e.g. Rent, utilities, etc.? If you've had them for 2 years and they're current on rent, why rock the boat?

We own units in NJ as well and I had to do some research regarding leases for a property that we are purchasing with pre existing tenants. It's interesting to say the least, so I'd highly recommend boning up on some of the landlord tenant laws. 

Boston's great because the tenants either pay the realtor fee or a portion of it. Not the case in NJ.