All Forum Posts by: Ian Livaich

@Mike Bonadies is your guy for all things Westville.  Good luck!

Thanks for weighing in, @Patrick Liska.  That's an interesting approach that I have not come across before.  If you don't mind, perhaps we can chat further about your experience with student rentals. 

Thanks for your input, @Karl McGarvey.  I acknowledged the extra wear and tear on the property, which is why I suggested using 10% (at the very least) if basing those expenses on the income of a single family home. I think using the gross rental income as a student rental, which is equivalent to the gross income of a 3-5 unit in my area, is a little excessive.  As you mentioned, I definitely want to be conservative and make sure that I have enough set aside for the issues that cannot be addressed with security deposits.

All,

I am under contract on my first deal -- a student rental property in New Jersey.  It is a single family home with 6 bedrooms and is fully rented for the upcoming academic year.  

I am trying to determine the best way to calculate CapEx and repairs with a student rental property. When I originally ran the numbers to evaluate the deal , I allocated 8% each for Capex and repairs based off of the gross income of the property (6 students x rent per student). However, I was recently thinking that using the gross income of a student rental is unnecessary because it is a single family home so the expenses should be similar to that of a single family home (subject to more wear and tear as discussed below). So, I considered allocating 8%-10% each for CapEx and repairs based off what the home would rent for as a single family home. For example:

Using the Gross Income as a Student Rental: $3000 x 8% = $240

Using the Gross Income as a Single Family Home: $1600 x 10% = $160   

The numbers are very solid even when using the income as a student rental. I understand that this is a very nitty gritty detail, but I want to be sure that I am setting the proper amount aside for these expenses. I am leaning towards using the gross income of a single family home but instead of using the typical 8% figure that I use for CapEx and repairs, I think it is best to use 10% (at least) because this is a student rental after all and there will be more damage and wear and tear compared to a single family home.

I appreciate any tips and advice on this question and student rentals generally.  If this goes well, I will likely shift my focus to acquiring student rentals in my target area.  

Thanks in advance,

Ian

@Bob Manning

Welcome to BP!  Always great to see new NJ investors on here.  I am a newer investor myself and on the hunt for a 2-4 unit as well.  I live in the Cherry Hill area, so reach out next time you are in town and we can meet to talk about all things real estate.  

As others have pointed out, NJ is tough right now, especially in South Jersey where the competition over multis is high and the property taxes are even higher.  But, stick to your numbers and be patient.  There are some opportunities out there but you have to act fast.  

@Jim K. @Dennis M. @Jason D. @Johann Jells @Nathan Gesner @Andrew Bergman

Thanks for your help everyone.  I will be calling the local Assessor's Office to confirm and also ask when the scheduled assessment is. 

@Joe P.  I have not looked in Gloucester City as I have heard very mixed reactions about the areas.  Perhaps I will start taking a look though with your endorsement... Thanks for the suggestion.

@Charlie Hampton It definitely is tough to BRRR in South Jersey... There are not many undervalued and distressed multi's in the areas I am looking in. Many of them overpriced and there is a lot of competition.

@Alina Trigub These are great recommendations.  I have been considering the jump to small commercial for some time now, so loopnet is a great source.  I definitely need to start direct mailing and networking as well.  Thanks for your advice.

@Stephen Kappre What areas are you finding those multis in?  I am not too familiar with auction sites -- don't most of them require a non-refundable deposit?  I prefer to walk the property as well.

Hello all,

I am currently negotiating with a bank on a REO over my first property. It is a triplex in New Jersey. This would be a BRRR deal. My question is this -- does a refinance trigger a tax assessment by the town?

The property next door is identical but is a single family home with two less bedrooms. After it was flipped and sold last year, its assessed value shot up $90,000, causing an increase of $4,000 annual taxes. So, I am assuming that a sale of a property triggers a new tax assessment by the town. Please let me know if that is an accurate assumption.

So, I then thought if a refinance triggers a tax assessment as well, our potential property, which would likely appraise at the same price as the house next door, causing a tax increase at a similar level and destroying cash flow and ROI post refi. If this is not the case for the next few years, the cash flow and ROI make this a home run deal. I understand that the town will eventually re-assess.

Two follow up questions

(1) If the town does not re-assess on a refi, does it just assess based on its pre-determined schedule for assessing properties?

(2) Does pulling permits for rehab trigger a tax assessment? The property mainly needs roof and HVAC work.

Thanks for your input,

Ian

(Note: I posted this in the Creative Financing forum but soon realized that this would be a more appropriate forum)

Hello all,

I am currently negotiating with a bank on a REO over my first property. It is a triplex in New Jersey. This would be a BRRR deal. My question is this -- does a refinance trigger a tax assessment by the town?

The property next door is identical but is a single family home with two less bedrooms.  After it was flipped and sold last year, its assessed value shot up $90,000, causing an increase of $4,000 annual taxes.  So, I am assuming that a sale of a property triggers a new tax assessment by the town.  Please let me know if that is an accurate assumption.

So, I then thought if a refinance triggers a tax assessment as well, our potential property, which would likely appraise at the same price as the house next door, causing a tax increase at a similar level and destroying cash flow and ROI post refi. If this is not the case for the next few years, the cash flow and ROI make this a home run deal. I understand that the town will eventually re-assess.

Two follow up questions

(1) If the town does not re-assess on a refi, does it just assess based on its pre-determined schedule for assessing properties?

(2) Does pulling permits for rehab trigger a tax assessment?  The property mainly needs roof and HVAC work.

Thanks for your input,

Ian

I am currently looking for my first small multifamily (2-4 unit) property in South Jersey, primarily in Camden and Burlington Counties. Ideally, I would like to find a distressed property to BRRR. As others have commented on the forums, I have been experiencing some difficulty finding any potential deals in South Jersey due to the high purchase prices and taxes.

Right now, I am only using the MLS to spot potential properties. Most 2-4 units are overvalued by my numbers and still seem to sell very quickly. How are some of you finding small multi's in South Jersey? I have automatic alerts set up on the MLS. I drive for dollars occasionally, but I don't believe it is yielding enough results as small multi's are not very common in my target areas. I may try Craigslist and sending property owners yellow letters even if the properties are not listed for sale.

Thanks for your input,

Ian