All Forum Posts by: Derek Famulari

Hey BP Fam,

I am currently in attorney-review for a 2-fam in West New York, NJ. I will be using a 203k Rehab Loan to fund the renovations that the property needs. 

Is there anyone who has recommendations for a 203k licensed contractor and 203K Consultant? Are you aware of anyone I should absolutely stay away from?

Thanks!

Hi Tom - 

Your understanding is correct. This will be a "house hack." I will be occupying one unit while renting out the other. The fact that lender is only accepting 203k loans is what has me so excited given in my area, I am frequently competing with "conventional" investors with significantly more resources than I have at the current moment. 

Hey BP Family! 

I am hoping to pick your brains on a strategy when negotiating a deal with a REO property with an inactive, underground oil tank on the property.

Here is some background: The property is REO 2-Fam and located in NJ. The bank is only accepting offers for FHA 203K (SCORE!). The property, however, has a buried oil tank. The property is vacant for I don't know how long; and I have no idea whether the tank has been properly maintained.

Here is my issue: The property is REO - so the odds of me getting the bank to agree to remove or pay for the removal of the tank is slim to none (closer to none). Personally, I have no problem pulling the tank myself since this will be a 203k project (the entire home required a full rehab) and I can budget the removal into my rehab costs (Right now I am estimating $150k rehab). However, I don't know how costly the removal will be until I get the tank inspected; and if the tank is not sealed and clean up is required - a painless oil tank removal could potentially result in a $100k removal/clean up. If I experience the latter - this deal is dead and I have a nightmare on my hands.

Here are some thoughts/questions:

1. Since I am in NJ and we have that "lovely" attorney review period - would you suggest I try to get an oil tank inspector to check out the oil tank before we conclude attorney review, and if the tank is a deal killer - I can walk away clean?

2. Would a general inspection contingency in the contract cover an oil tank, and allow me to inspect after attorney review and still walk away if the removal is too costly?

3. Should I put a carve-out into the contract that should the removal exceed $10,000 (or some other number) - the contract is void?

4. Could I simply have my lender send me a mortgage denial letter due to the inactive oil tank (I have read that some banks and insurers won't mortgage or insure a home with an inactive oil tank)?

5. Any other ideas?

Ideally, I want to put as little contingencies into the contract since I am dealing with a bank, and they just want to be sure the home will sell.  

I feel as though this post can fit in quite a few other Forum Categories so if you know of one that I can find some additional input - feel free to suggest.

Thanks!

Hi all, I am searching for an investor-friendly agent in the Hudson Count area who is particularly familiar with the West New York area. Any suggestions would be greatly appreciated. 

I have to agree on @Michael Fiducia's comments. I have been living in the Waterfront area of JC - and you do have high rise projects breaking ground almost once a month now. I have received info from local RE attorneys that over 40 high rise projects are cleared to break ground within the next 5-8 years. Now, with the new construction any owners of  rundown brownstones or MFs know what they have and are pricing their properties on the value of the land knowing that whomever buys it up is going to gut it and rent/resell it. Journal Square, specifically Bergan-Lafayette I hear is blowing up. I personally haven't looked to go there since my first deal will be a house-hack, and I don't think the area is turned around yet enough to feel comfortable living there. Anyone have thoughts on Union City, Weehawken or West NY? Those are the three areas I have been focusing my search. I know Weehawken has very little inventory, and I understand you pay a premium for the zip code, as well has being subject to rent-control, but I don't think it can be denied that the higher-price point brings in a higher-quality tenant. I think West NY you get the most bang for your buck, but I don't hear anyone talking about it which makes me apprehensive. 

@Jay Orlauski - you make some great points. I did calculate prop. management because my plan was to live in it between 18-24 mos. and then get out. As far as a partner, I have not entertained it - however, I am exploring the possibility of private financing which will assist in substantial upgrades/repairs and account for initial vacancy. 

Has anyone here have a FHA Loan and hard money to finance repairs and assist with vacancy?

I am sure there was - but even at a significant discount - two of three units (not including the owner occupied unit) would not yield enough rent for it to CF after I left. Realistically - At this point - I don't have the resources for a complete gut job and 100% vacancy for such a long period of time. 

@Judy Parker - The showing went really well. Beautiful property and great area. A lot of potential - but needs too much work for what they have it priced at and being sold "AS IS".  The basement and "attic" units would not yield the rent necessary to make it sustainable. Realistically - I wouldn't be able to move any tenants in for a minimum of 3-6 months after taking possession. Great start, and excited to find another! 

@Brent Coombs - Thanks for the perspective - I am certainly curious as to where this owner went wrong...

@Ryan Goldfarb - thanks for the insider info, and the rent control info - Definitely something I need to educate myself on. It's good to know that the vacancy rates are so low - that was something I was curious about. Having only lived in the JC Waterfront, I am only familiar with supply and demand around here, and as I am sure you know, properties are flying off the MLS faster than they are going on.

@John Errico - thanks for the detailed input. Very valuable to get local insight. I did calculate the CF for three units as opposed to 4. I will viewing the property tonight - so I'll be sure to keep an eye out for those indicators you mentioned. Also, I am told it is not a short sale, and the owner has not been foreclosed on. I suspect that the owner is in default and anticipating a foreclosure proceeding happening soon. 

@Nick M. - thanks for the info. I am told now that all of the units are vacant - will the rent control prevent me from initially listing the the rent in line with the market, or am I handcuffed to the rent controlled properties in the area as a floor or ceiling? 

Does anyone think I am crazy if I considered offering seller financing?