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All Forum Posts by: Hady Farag

Hady Farag has started 3 posts and replied 25 times.

Post: Newark Room Rental Illegal?

Hady Farag
Pro Member
Posted
  • Rental Property Investor
  • New York, NY
  • Posts 25
  • Votes 20
Quote from :

Newark NJ has some of the strictest rent laws in the nation,  it is very tenant friendly.    Eviction process is very difficult.   Towns will issue a CO unless people are living in areas considered illegal.  You can rent by room in NJ, it tends to be a town by town rule saying if you can or cannot but not exactly easy to prove one way or another. Newark has very specific laws and regulations I would look for someone very familiar with the city.   I have a very good real estate attorney but for the reason above I never close deals in Newark so I cant say that he is or is not the right person for the job.

 Hey @Shawn Mcenteer - Thank you for sharing. I'm in talks with a few attorneys at the moment but I'm always open to getting a 2nd opinion on this situation. I'll send you a DM if that's alright with you

Post: Newark Room Rental Illegal?

Hady Farag
Pro Member
Posted
  • Rental Property Investor
  • New York, NY
  • Posts 25
  • Votes 20
Quote from @Account Closed:
Quote from @Hady Farag:

Hey BP community,

I just recently purchased a 2 family in Newark in which I inherited tenants that the previous owner had. I wasn't 100% sure If I wanted to keep them or not but decided to keep them because they were all paying on time and were good tenants.

Now here's where my problem begins;

Each tenant is occupying a bedroom. Which is pretty common in New York City, however, upon consulting with a lawyer regarding a separate issue, It's come to my knowledge that having room rentals are considered illegal in the state of NJ. 

I made the decision to want to end everyone's tenancy and avoid any litigations later on down the line. But one thing is what I WANT to do and what I CAN do. It seems like I can't legally evict anyone without possibly running into trouble if the tenant decides to go that route. 

Has anyone in New Jersey experienced this? I'm not sure why my lawyer at the time didn't advise me that this would potentially be an issue later on down the line and I'm also not sure why the city even issued a CO. Any advice or recommendations on lawyers that specialize in this is greatly appreciated .


could an option be putting just one of their names on the lease and having only them pay you (they obviously collect $$ from the others)


 This is actually something that came across my mind this week! Glad to hear you mentioning it. Might be the best way to avoid any issues going forward.

Post: Newark Room Rental Illegal?

Hady Farag
Pro Member
Posted
  • Rental Property Investor
  • New York, NY
  • Posts 25
  • Votes 20
Quote from @Mohammed Rahman:

Salaam @Hady Farag - sorry to hear about your tenant issue in NJ! Also you're right, it is very strange for your attorney to not have brought this up prior to closing and only mention it after the fact (maybe it's not as big of an issue as we think, or perhaps the attorney just wanted to close a transaction?) 

I personally don't feel this is a glaring issue, although it may be against NJ law, a lot of people still do it (especially in college towns). The city may have issued the CO for the property but they don't necessarily verify whether or not each room is being rented individually. 

If I'm in your shoes, I would look up 'eviction attorneys' in your part of NJ. They're specialized for these matters and usually work off of a flat fee, so much cheaper than hiring a regular attorney. 

 Salaam! Appreciate your response @Mohammed Rahman

I discussed with an attorney that specializes in evictions and it doesn't seem to be as big of an issue as I think. The property is located in University Heights so you're right, most of my tenants are students from Rutgers & NJIT. Hoping the process doesn't get complicated. 

Post: Newark Room Rental Illegal?

Hady Farag
Pro Member
Posted
  • Rental Property Investor
  • New York, NY
  • Posts 25
  • Votes 20

Hey BP community,

I just recently purchased a 2 family in Newark in which I inherited tenants that the previous owner had. I wasn't 100% sure If I wanted to keep them or not but decided to keep them because they were all paying on time and were good tenants.

Now here's where my problem begins;

Each tenant is occupying a bedroom. Which is pretty common in New York City, however, upon consulting with a lawyer regarding a separate issue, It's come to my knowledge that having room rentals are considered illegal in the state of NJ. 

I made the decision to want to end everyone's tenancy and avoid any litigations later on down the line. But one thing is what I WANT to do and what I CAN do. It seems like I can't legally evict anyone without possibly running into trouble if the tenant decides to go that route. 

Has anyone in New Jersey experienced this? I'm not sure why my lawyer at the time didn't advise me that this would potentially be an issue later on down the line and I'm also not sure why the city even issued a CO. Any advice or recommendations on lawyers that specialize in this is greatly appreciated .

Post: Jersey City house hacking / room rental

Hady Farag
Pro Member
Posted
  • Rental Property Investor
  • New York, NY
  • Posts 25
  • Votes 20
Quote from @Drew Slew:

yes, it is illegal in JC to rent out rooms. had a very tricky situation at court but evicted, but i wouldnt want anyone to go through what i went through. 

you need a boarding house license, which they dont issue in jersey city


 Hey Drew,

Would you mind if I sent you a direct message? I'm in a similar situation you're in and would like some advice.

Post: Frustrated! Can't get offer accepted -- when will this end?

Hady Farag
Pro Member
Posted
  • Rental Property Investor
  • New York, NY
  • Posts 25
  • Votes 20
Quote from @Joseph Antwi:
Quote from @Hady Farag:

@Joseph Antwi

I get it. I finally closed on a 2-family in Newark last week after 10 months searching. It’s crazy how this market is but here are a few experiences I went through that I can share ..

My first offer on a property I got an accepted offer! I was ecstatic to say the least. Especially at a time where interest rates were at an all time low, I had a quote at 2.5% and the property was a legal 3-family. Then came the appraisal …

The property under appraised by $175k below the agreed upon price (Imagine a 3-family with 3 bedrooms and 2 bathrooms in each unit in Newark with no work needed appraising at 475K LOL). I was going through FHA and the hoops they make you jump to fight an appraisal is ridiculous. The deal fell apart and I was pretty bummed out but I wasn't giving up.

4 offers later I finally got the perfect property for me and did a conventional loan. Most of the time I was getting outbid by people, as much as by 50k over asking price, and that’s just the game. I lived with my decisions knowing I made my best offer and not basing it off on emotions. You’ll find something soon, just revisit your offers and stay competitive. In my experience the offers that were picked were the ones that offer the most money. Good luck and don’t give up


 Thanks for sharing your experience -- where did you end up buying? and also did appraisal come above the price? if so, how did you make up the difference? just cash? 


 I ended up buying in Newark, literally 2 blocks away from where the first property that under appraised for is. And get this, the 2-family I purchased appraised at $575k where the 3-family that I was under contract for appraised at $475k. Didn't make sense to me then and still doesn't make sense to me now.

From what I've been hearing appraisers are being very conservative in this hot market. I had to come out of pocket for my purchase. I would say go with the mindset of maybe coming out of pocket. 

Post: Frustrated! Can't get offer accepted -- when will this end?

Hady Farag
Pro Member
Posted
  • Rental Property Investor
  • New York, NY
  • Posts 25
  • Votes 20

@Joseph Antwi

I get it. I finally closed on a 2-family in Newark last week after 10 months searching. It’s crazy how this market is but here are a few experiences I went through that I can share ..

My first offer on a property I got an accepted offer! I was ecstatic to say the least. Especially at a time where interest rates were at an all time low, I had a quote at 2.5% and the property was a legal 3-family. Then came the appraisal …

The property under appraised by $175k below the agreed upon price (Imagine a 3-family with 3 bedrooms and 2 bathrooms in each unit in Newark with no work needed appraising at 475K LOL). I was going through FHA and the hoops they make you jump to fight an appraisal is ridiculous. The deal fell apart and I was pretty bummed out but I wasn't giving up.

4 offers later I finally got the perfect property for me and did a conventional loan. Most of the time I was getting outbid by people, as much as by 50k over asking price, and that’s just the game. I lived with my decisions knowing I made my best offer and not basing it off on emotions. You’ll find something soon, just revisit your offers and stay competitive. In my experience the offers that were picked were the ones that offer the most money. Good luck and don’t give up

Post: Converting a 2-family into 3-family

Hady Farag
Pro Member
Posted
  • Rental Property Investor
  • New York, NY
  • Posts 25
  • Votes 20

Hey BP community,

I just recently purchased a 2 family in Newark & I am looking at options to convert it into a 3 family. The property is located in R4 zoning and the house next door is a legal 3 family with a similar build as mine. It seems as if they managed to convert the ground level into a legal unit (2 bedroom 1 bathroom). The only difference is that the house already has fire exit stair cases in the back and it's on an oversized lot.

 The ground level unit on my property already has the following;
- ready means of egress through two accessible doors 

- fireproof partition / wall completely separating any boiler or furnace unit.

I was wondering if anyone has had any experience in this? Or can recommend an architect or engineer in the Newark/Essex County area familiar with the code. Based on what I've read, it seems like I would need an architects approval  before doing anything. 

Post: Newark, NJ Basement Conversions

Hady Farag
Pro Member
Posted
  • Rental Property Investor
  • New York, NY
  • Posts 25
  • Votes 20

I actually just closed on a property in Newark that is exactly how you described and I'm looking to make it legal. Previous owner stated he never bothered looking into it because of the implied cost associated to it. I'm looking into this as well ! I'll let you know what I find out.

Post: Home purchase severely under appraised ... Advise?

Hady Farag
Pro Member
Posted
  • Rental Property Investor
  • New York, NY
  • Posts 25
  • Votes 20

@Eric James

Quick update.

HUD approved another appraisal to be done by the original lender. They found discrepancies on the original appraisal that merited a new one. The main one being not taking into account that the property was rebuilt in 1990 and has a brand new foundation.