All Forum Posts by: Eric D.

I am interested as a newbie in investing in buy and hold rental properties in NNJ or CNJ. I was wondering what others' strategies are in this regard. I ask because I find this to be a landscape that is filled with risks and potential pitfalls. On the one hand, I can put money into the stock market, and while there are risks, if I do earn money, it is very simple - you just invest and sit back and collect the profit and dividend.

On the other hand, with real estate in NJ, it seems like the prices are so high on the MLS that you simply cannot make money--certainly not by putting 20% down and getting a mortgage. The high prices, high R.E. taxes, insurance, repairs etc. eliminate your profit. You can make an all cash purchase, but then it does not seem worth the investment - after your fixed costs, you make a profit that is probably not much better than investing in stocks.

People advocate buying wholesale properties, rehabilitating them, and then renting them. But that seems risky because the $ you pay a contractor is a wildcard. You do not know if you will get screwed, or if there will be price overruns. And many wholesale properties are in a mess AND do not seem like good deals... and THEN you have to invest thousands in capital in them. And we are talking about properties in distressed areas, AND you are using capital that could be put in the stock market.

What is your strategy? It seems to me that investing in rental property may work in the midwest, where you can buy a decent house for 100k, but in most areas of NJ it does not work. Thoughts?  

Or is it better financially, if going ahead with these types of dynamics, to just put a higher amount down like 50%?

Still a bit confused. I want to buy and hold - just rent out a property to stable tenants. I see it as a good way to fund my retirement in 20 or 30 years. And the stock market seems pretty unpredictable right now.

I live in NNJ and do not want to buy a property more than 30 minutes away. What would probably be ideal is a condo so I do not have to worry about extra costs to the extent a homeowner does, i.e. replacing the roof or a clogged sewer line. When I do the math in my area of NJ, putting 20% down, or even 30% down, I am lucky to squeeze out a profit of $100-$300 per month. That makes me think - not worth it. I might as well invest my money in the market and save myself the headaches that potentially go with being a landlord.

However, if I pay cash, I can clear more per month -- but not like other parts of the country, because the taxes are so high. For instance, even with a $100-$150k condo, you are still paying $800 per month in taxes and condo fees alone with most properties I have seen. If I can rent it out for $1200 per month, at best I may be clearing $300 to $400 per month - which is, say, $4k per year. But $4k is only about 3% off the money invested, so I am only making 3% per year on my money, and in that case, I am not building equity in the property with tenants paying off the mortgage because there is no mortgage. I might be able to buy a single family house for that price in a distressed area with lower taxes, but then there is the issue of them usually not being in good repair and a more trying tenant population.

With all that said, any thoughts? Should I just try to find a place I can finance and eek out a profit? Or buy cash? 

People have recommended buying through wholesalers, but I am a novice and do not want a property in a bad area that I have to spend thousands on to rehab.

What are your thoughts about how much cash to put down on an investment property? I have heard some say you should only put down enough to get a mortgage for the rest, i.e. like 20%, while I believe others say you should only invest all cash so you do not owe any money on the property? With the former, you can get a bigger property or else risk less of your own money. With the latter, you are increasing your cash flow, but with an outlay of a lot of money.

[Furthermore, I live in New Jersey, and the numbers do not work to provide a cash flow if you finance 80% of a property, because housing prices and taxes are so high. So I assume the answer may be different for states like mine]

What are your thoughts?

Buying from a wholesaler means that you will have to rehab the property to a certain extent? Is that true?

How does one find a reputable wholesaler, specifically in Central or NNJ?

Just to be clear, I can put that $100-$150k in cash as a down payment and take out a loan for more. 

I agree with what you are saying about Maplewood/S. Orange. 

I was wondering if you can point me to where this "Underground" is located. Or does anyone have thoughts regarding location, type of property, and how much, if any, should be financed?

Is it that in other parts of the country, I could buy off the MLS and do well, but with NJ it is difficult given the high prices and high taxes?

First time on the site .... I live in the Maplewood/South Orange area and have $150k in cash to invest in a rental property. I am looking to buy and hold so that I have some cash flow, but importantly, it turns out to be a good investment in the long term. 

My area is pretty hot with people moving out here from the city for the (relatively) easy and fast commute. However, when I research buying a property here as an investment, the numbers do not seem very good, certainly if I put 25% down. The only way to make money seems to be to buy in cash, but even if I do that with a 150k condo, the taxes and fees are typically about $800 or so per month, with rent about $1200 or so, and so the numbers are not great ...

I have seen big properties in Irvington and East Orange and Newark for $150k,  but they look to be in disrepair and I do not want to become a landlord in a stressed area where I am dealing with various problems. 

I considered buying a shore house, using it a few weeks per year, and then renting it out, but that seems like a headache not to mention what if another Sandy strikes?

I do not want to buy a property more than 30 minutes from me.  Any advice? Am I onto something here and is being a real estate investor in North/Central NJ not practical? If it is something I can pursue, any recommendations for real estate agents who  can run the numbers for me? I used the agent who sold me my house 2 years ago, but she knows nothing about real estate as an investment as she just sells homes to people looking to move into the community.