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All Forum Posts by: Erik Pedersen

Erik Pedersen has started 7 posts and replied 86 times.

'It's a turnkey project, the house is going to be purchased after the house is fully renovated and populated with tenants.'

Why and How? How did this part of the deal come about?

I wholesaled a 2 unit 1800sqft on Bergen street for 75k and 5 of the 6 investors I brought there said the price was too high and guys are paying 55k max on 2 familys. Bear in mind this place needed about 20k in repairs.

If the tenants will pay you 1425 per month then I think the numbers would work. However 180k for a two family in that area is high no matter what it looks like. There are people on here who know Way more than me about Newark but that is just my two cents.

Post: Basement Apartment

Erik PedersenPosted
  • Bayonne, NJ
  • Posts 90
  • Votes 27

@Bill S. The area is zoned for 2 family houses(R-2), they are everywhere. There are also 3 and 4 unit multi's around this house too and throughout Bayonne also. I checked the zoning map and there are plenty of 3 and 4 families in this R-2 area.

The reason I didnt ask the current owner about making this a three family is because I want to buy it as a 2 family with a 2 family price. I just spoke to my local handyman, he said you really just need to file with the city, do the applications, have an inspector come in and fix any violation. Whatever violations those might be I dont know. I need to get him in there.

@Dawn Anastasi I dont know what you mean by the + or WITH lol. Its a legal 2 family with an undocumented basement apartment that had someone living there illegally at one time.

Thanks for your replies!

Post: Basement Apartment

Erik PedersenPosted
  • Bayonne, NJ
  • Posts 90
  • Votes 27

Hello All,

I am looking at a 2family house in Bayonne that has a large finished apartment basement. It used to have a tenant living there, butt he seller said since the prior tenant brought a girlfriend to live with him, he kicked them out due to it being an illegal apartment and too many people being there.

My question is, does anyone know a thing or two about a legal basement apartment? Now the first reply will be 'check with your town/city..' Im going to call them tomorrow (its Columbus day today) and find out. But what sort of questions do I ask?

I know the utilities (water heaters and two boilers) are in there. Would that be an issue?

There are two exits one in the front and back, and two windows are large, large enough for anyone to get out of I think. There is No stove nor would I put one in.

Im also wondering why the seller didnt try to get a CofO before. If I get this basement apartment rented it will increase the cashflow big time and really make this a homerun.

Appreciate it.

Post: Making Deal with Incarcerated Seller

Erik PedersenPosted
  • Bayonne, NJ
  • Posts 90
  • Votes 27

Maybe you'll be the first one to ever do this! See what his situation is. Maybe he owns his house outright and will sell it to you on the cheap. Im sure he could grant someone power of attorney Or there must be a way for him to sell his house from prison I would think.

I say listen to his situation, get the address, run the numbers, etc..

Post: First wholesale deal in Newark, NJ

Erik PedersenPosted
  • Bayonne, NJ
  • Posts 90
  • Votes 27

@Abdul R.

Yellowletterscomplete.com has a few packages and you buy the absentee owner list from them. I did my target county absentee owner as my criteria for the list, they did everything else. They send you the list after you confirm the letter so you can follow up and track calls.

So I bought my 2 fam house in Dec. and have a 221k mortgage on it owner occupied. Since I bought it, I updated both units - (paint, light fixtures, appliances, took out carpet hardwood floors throughout, all the odds and ends) and finished the basement putting in a 2/3 bathroom in as well. - put about 12k into it labor and materials)

If I had to guess, I would say my house in Bayonne would go for around 265k maybe more - housing prices have been going up lately.

Total rent per month is $2200. I had my taxes appealed and will see my taxes go down $2500 in 2014. The rental income completely covers the PITI and I have $90 casflow. After my taxes are lowered I will cashflow $300.

My question is, what kind of HELOC can I get for this house. Does my income matter? My debt/income ratio is ~ .5 What would help me get the highest possible line of credit? Should I shop around? I have a wells fargo mortgage, my bank is PNC. Any experience working with these two companies? Thanks!

How much is the loan for? Have you talked to Mortgage Originators / brokers to see if it's possible. If one guy says no keep trying - look to small banks or referrals from REI's that may know. Have your income statements and ALL your pertinent financial docs available so they can make a decision faster.

'I have cash to get to 5% down, I don't mind paying upfront PMI or slightly higher rate.' This being said, you may have a shot at doing this.

Is that cashflow WITH you living in the unit or if you rented out both?

Post: Owner Occupied blues in pricey northern New Jersey

Erik PedersenPosted
  • Bayonne, NJ
  • Posts 90
  • Votes 27

Have you tried looking in Bayonne? That's where I live, tons of multi families and many nice blocks. A lot of houses in the 200 range.

However, if you plunk down 250 for a home, you might want a three family to rent out two units if you want to cashflow. I bought a small two family (1br and a 2br) and I finished the basement and that is where I live. So I legally live with my first floor tenant. No big deal because I cash flow $260 a month now (after appealing my taxes)

Be careful around hudson county taxes are high, but I can refer you to my tax attorney who appealed my taxes - got them lowered $2500 - I paid him $500 to do it. @Jessica W.

Post: First wholesale deal in Newark, NJ

Erik PedersenPosted
  • Bayonne, NJ
  • Posts 90
  • Votes 27

@Ruslan Laranjo

Yellow letters complete.com mailing to absentee owners in Essex county (about a dollar per mailing x 250 letters - first round). The sellers were very nice. I think what put them over the edge is when I went over there to talk about offer. I did it in person which I know helped, I brought with me a bunch of similar listings that had been on the market for 6 + months that did not need rehab work. The prices were in the 100k range.

I told them well, you can either let me buy it for 70k and Ill close in a month with cash with no realtor commission or you can fix it up on your own and have it sit on the market for minimum 6 mos. to a year if its able to sell at all. Houses move slow in that area. We agreed on 72.5k.

Post: First wholesale deal in Newark, NJ

Erik PedersenPosted
  • Bayonne, NJ
  • Posts 90
  • Votes 27

@Darren Sager @John Horner

Hey guys, Sorry I didnt update this sooner have been extremely busy. Anyway, this story is ongoing but I made some progress.

So I got the house under contract for 72,500 - after exhausting my potential buyers from REI club friends, I BUY HOUSES ads and craigslist responses as well as meeting with a member from here - they told me the price was too high and that two families would typically go for 55 - 65k max in this area.

By chance I was meeting my realtor in Jersey City in a bar/restaurant where she happened to know the owner - and he does lots of buy and hold real estate.

I told him I had a house under contract in Newark for 75k and he was immediately interested. I Showed him the next day and he said he could make the repairs in a week with his crew and have this rented out very quickly.

I also was very up front with him and told him other buyers said that the price was too high, he didnt care because with 1k per unit rent each month the numbers worked.

I assigned the contract, he put 3k in escrow in his attys office last week and we close within 4 weeks.(he needs a few weeks to get his financing in order)

Could not believe that this worked and that Im going to make 2500 with basically a few days work. Learned so much from this. Will let you know when this closes. Im writing more mailings as we speak....