All Forum Posts by: Dominic Rosato

Hi Patrick, I agree with @Simon W.. It's hard to make suggestions without seeing the property, but he did some upgrades that appeal to renters the most.

You might find it useful to take a look at similar units for rent and compare size, features, and quality. For example, compare photos of the kitchen & bathrooms of active rentals v.s. yours. Do they have any upgrades that you are lacking? I have lots of experience in the JC market and would be happy to give an impartial opinion, if you would like.

Save yourself the time and energy and reach out to local accountants. Tell them your plan and they should be able to lay it all out for you in one phone call.

It's way better to have professionals who you can turn to, rather than try to learn everything yourself.

I faced the same problem here in Jersey City, NJ when my girlfriend and I bought last year. Living in an "appreciation market" (as opposed to "cash flow" market) is tough because 80% of the strategies talked about on BiggerPockets don't work well here, especially if you want to live in a half decent area.

We looked at 2-family properties, but ended up buying a 2BD/2BA fixer-upper condo in an area that still allowed us to live life how we wanted. We rent out one of the bedrooms to a friend and currently have a 7% interest rate (cash flow is still very much negative!). That being said, we are still slightly better off than if we had rented in the same area.

Additionally, our condo is somewhat of a live-in flip, since we may sell in 1-2 years after adding some sweat equity. Overall, will this be a smashing success? Maybe not. BUT I gained tons of experience and was able to get in the game.

Sounds like you won't find something cheaper than what you have going right now, but have you looked at the live-in flip strategy yet? Or what about FHA 203k on a small run-down 2-family?

One thing to be aware of regarding insurance- Once you submit the claim, no matter the dollar amount paid (even $0), it will be on your record for 5 years. That could greatly increase your premiums or even get you dropped, so don't make that decision lightly! Determine if the payout (post-deductible) would even be worth it. This is coming from someone who worked in the insurance industry.

Hi Evan- I have a lot similar feelings, as I'm a younger investor as well.

I'll say this- We live in a world now of instant gratification. We can hop on our phone and look up the answer to any question, be entertained on social media for hours, and essentially do anything without delay. It's only natural that us young investors want that same gratification in real estate (at least I do). I got started a couple of years ago and I've started to learn that real estate, and entrepreneurship in general, does NOT give instant gratification. Building up funds, fostering relationships, and learning skills takes YEARS.

I think you have a great mindset and are asking the right questions, but take a deep breath and enjoy being young. You don't need to have all of the answers- things will sort themselves out.

I think the most logical place for you to start is by connecting with an investor-specific agent in Central Jersey. Perhaps scan the forums on BP or use the agent finder tool? A lot of the busy ones are not frequently on the forums, so you may have to do some searching.

Depending on the age of the house (majority of NJ homes are older), you should consider additional inspections on top of the general home inspection. A few good ones to consider are: an oil tank sweep if the property was built before 1980, a radon test, particularly for basement condos or units, a mold test, a sewer scope, and a termite or pest inspection.

General home inspectors often offer some of these as add-on's, but keep in mind that they might not be as thorough as a specialist.

For the new tenant you sign, aim for a lease that ends in the spring or summer.

For example, if a new tenant wants to move in on 11/1, try to secure a lease of 17+ months. If needed, you can even offer a small incentive, like a half or a full month of free rent on a 17-20 month lease. That might sound strange, but vacancies can easily extend for many weeks during the holiday season. The trade-off might be worth it in order to avoid this problem in the future.

Gross annual income. Make sure to verify all types of income with paystubs (or signed offer letter), bonuses, and 1040 or W2/1099. If it can't be verified, you shouldn't allow it to count. Many people like to overestimate their income on the application, which is another thing to look out for.

Hi Irene-

Our team works primarily in Jersey City helping landlords like yourself. We advise landlords to require two main criteria:

1) Household income should be at least 40x the monthly rent.
2) Applicants must have a credit score of 680 or higher.

It's also important to review credit reports for red flags like rental collections or high credit card balances. Additionally, you should examine the past two months of bank statements / investment accounts to ensure applicants can afford rent even if they lose their job. You'd be surprised just how many people are living paycheck to paycheck. If applicants don't meet these criteria, then we would typically allow them to use a US-based guarantor with an income of at least 80x the monthly rent.

One more thing- Don't make exceptions based on personal stories! In times of need, everybody becomes a master story teller. Just remind yourself that you are running a business and let the numbers speak for themselves. Occasionally an applicant comes along with income of only 30x the rent, but they have flawless credit and bank statements showing 250k in savings. In these (rare) scenarios, it makes sense to make an exception.

Happy to chat further if you think we might be a good fit! Best of luck.