All Forum Posts by: John Errico

Hey @Shane Vince, welcome! There are quite a few NJ/Hudson County investors here on BP, particularly focusing on Jersey City and Union City. We have a (super informal) meetup group for Hudson County investors, we usually do a happy hour-like event at the end of each month. If you want to PM me I can send you an invite. 

We haven't set the date for this month, but it'll probably be the last week of the month or so, you'd be more than welcome to attend! Best of luck with investing!

I've been to a few, though have never purchased anything there, just sort of witnessed what happens. In general, you'll need to register at the sale (and usually there's a line of people registering) and give them a certified check, though I don't recall the amount (you also need to have a certified check for 20% of the purchase price of whatever properties you buy). You can get more info here: http://www.hudsoncountysheriff.com/#!foreclosure-s... and they have a link to the list of properties that are up for sale, although they'll give you an updated list once you get there. You can also call them and ask more specific questions about what if any requirements you may need (again, I've never registered to bid, just sat there and listened). If you bid more than you can "afford" they'll invalidate your bid, and you have to be quick to bid since the whole process basically happens as fast as possible (the judge and etc definitely do not want to be there). I've seen the judge snap at foreign buyers who, for example, were struggling figuring out what their next bid would be.

In general, a fair number of properties didn't sell (as in, no one bid), or for whatever reason were postponed or didn't happen despite being on the list. The properties that did sell were sort of like 80/20: 80% went to two or three bidders, who seemed very experienced, and the other 20% went to an array of people who were there. (This is also based on my experience at the end of 2015, I haven't been in 2016 yet).

Sorry don't have much more to add, but I'd bet that others on BP have actually purchased properties there. If may be worth your while to just go and sit and see what happens one time before you actually bid.

I should have PM'd you guys links to the Meetup group--we'll sometime the last week of this month (April) but haven't decided on the exact dates yet.

@Rikako W. it's a little bit of a complicated story but, essentially, the house was marketed and priced as a 2 family, although there were 3 separate units, all rented out and all above ground (there is no basement at all). Tax records indicate it as a 3 family, and it has a green card (from the state's multiple dwelling inspection) which is only required for 3+ families. It's identical to about 6 other homes next to it, all of which have 3 units rented out, and have up-to-date green cards. It meets all the state requirements for having a green card (fire escapes and so on), and the inspection for the green card is conducted by the Union City building department and its inspectors on behalf of the state.

Our lender appraised it as a 3 family which meant that the loan was processed as a 3 family. Seller went to get a certificate of occupancy which reflected it as a 2 family (which is a problem since our lender was expecting it to be a 3 family), and the city then refused to issue a smoke and fire certificate because of the presence of a stove in a unit that wasn't supposed to be a unit. The house is vacant (and has been for some time), but, regardless, the city decided, on the basis of the smoke and fire inspection, to begin fining the house at something like $10,000/week for having an illegal unit, and required removal of not only the kitchen but also the bathroom (which is non-sensical since I have no idea what having a bathroom has to do with fire and safety) and a number of other substantial changes. This is, obviously, from the same people who have inspected this house for the past ~30 years for the state New Jersey giving it a valid green card. Doing the changes the city wants would mean that the house couldn't get a new green card from the state, which believes it is a 3 family and obviously requires there to be a bathroom in each unit. We've been going back and forth with the city trying to resolve the issue, also complicated by our lender and its appraisal. The city's position seems to be based on the fact that the city's records are inaccurate. The current owners (now the estate, but formerly the people who owned it) were the original owners and did not modify the home (which the city does not believe, apparently). There are some additional complications but every time we think the issue is about to be resolved something else comes up. Still waiting to see what happens. We've been 2-3 days from closing now several times only to be derailed by something from the city.

For your situation: there's nothing obviously wrong to me if you, personally, want to live in the basement, and rent out the additional 2 units. The city will be very upset if they discover you renting out the basement as a separate unit and this is not authorized, but I don't think they'd do much of anything if you yourself as the owners are living there. Obviously not sure how you'd feel about this (and the reason the city is so anal about basement apartments is due to fire safety concerns), but I've certainly done it myself. You can call the state of NJ to determine if the building has an active green card (3+ families) and if it is current, but, as you found out, the city of Union City will tell you nothing until the open permits are closed (which is up to the seller, obviously, not you). If Union City believes it is a 3 family, you are fine. If not, it'll be a long, uphill process to convert it, if it is at all possible (I wouldn't count on it, unless you have fantastic documentation... like the original building plans or something akin to that). You might be able to sweet talk someone at the building department to give you information, but that's an uphill battle. Again, though, you could rent out the 2 units and live in the basement yourselves, if you wanted to go that route, and then possibly work on converting it to a 3 family in the future.

Hey @Rikako W. congrats! That sounds awesome.

I'd be cautious in Union City about the possibility of converting things (like 2 to 3 family or whatever) and I think a number of other Union City investors would be as well. The building department can be incredibly difficult to work with, and their records are shoddy, at best. In New Jersey, for 3 family buildings and up, both the state and the city are involved (the state does a multiple dwelling inspection every 5 years, the city maintains its own, not necessarily consistent, records of how many units a building has). I've been in the process of buying a house here for ~8 months, held up because the state of New Jersey believes it is a 3 family (and has inspected it as such... and, curiously, uses Union City's own inspectors to do this), while Union City believes it is a 2 family. It's functionally impossible to comply with both state and city laws simultaneously, so it's an absolute nightmare. There are many stories here on BP of of investors on BP that have encountered similar insanity. If Union City believes the building is a 3 family currently, you are in luck. If not, it will be a challenge (and not something that will likely happen before you close unless your seller is incredibly motivated and kind). Union City is also particularly sensitive about basement apartments: there was a program ~10+ years ago where many basement apartments were "legalized" to a third unit, but you'd likely not be able to get a certificate of occupancy today if you had to receive a new one because they don't comply with the current fire code (windows not large enough, no sprinkler system, etc.). 

Those numbers look pretty good to me, but I always count vacancy. Even if people are knocking down the door to get into your place you will have some vacancy just to account for cleaning/maintenance etc. between tenants, and, if people really are breaking down your door, you're probably not charging enough for rent. There's no additional cost for garbage in UC, but there is a sewerage cost which is related to but separate from your water bill, and will be a few hundred dollars per quarter for the house. I provide water to tenants--I'd be OK providing water, heat, hot water, but never electricity (can be astronomically expensive particularly if they're not paying, or in the weird situation where they pay for gas heat but not electricity they'll bring in a bunch of space heaters).

There are some miscellaneous things that you may or may not account for if you're living there, like snow removal (could be expensive depending on the property, but maybe a few hundred dollars), cost of finding tenants (if you use a broker or an agent), miscellaneous accounting and/or legal fees.

You said there are 3 meters: are there 3 separate water heaters and furnaces? If not, then you'll either have to pay utilities for one unit (because that unit is paying for the heat and hot water) or have a separate gas meter installed for the central furnace and hot water heater. A lot of 3 unit buildings we have 4 meters: one for each unit, and then a common meter for things like common heating, outdoor lights if any, etc. 

I think Union City is getting super heated, so it's hard to find quality returns, particularly in the 2-3 family range because you're competing with seasoned investors plus house hackers plus pretty much everyone who can afford a down payment. If you look deeper into Jersey City there are still deals, but you'll have to account for concerns with crime and lower quality tenants. You could also look into the Newark area but that has similar concerns as deeper into Jersey City. 

Best of luck!

Hey Sanket: got your message! Totally agree about JSQ/JC/Union City. 

Thanks a lot @Michael Lane and @Dan Leyden. Yea property taxes seem to be a big concern. I've seen MF properties listed in Mt Vernon for, say, $350k, that have taxes ranging from anywhere from $9k to $24k a year. Even $9k is a little steep for some of these places (although we also have relatively high taxes where I am in New Jersey), but $24k is absolutely outrageous. I think it may be an issue of the current owners never appealing or caring, but still strikes me as bizarre/insane.

Hey guys: I'm thinking about buying a property in Mount Vernon, NY (Westchester County, just north of the Bronx). It'd be a two-family that I'd be living in as a one family, so I'm not super concerned with making a return on this specific property, but I'm curious about the investment climate there. I own several places in Hudson County currently, and in New Haven, Connecticut, and have had a lot of success, but have never explored New York.

Does anyone on BP invest here? Anything super strange or concerning about the area? Seems to be a lot of inventory of cheap 2-3 families that require some work but would cash flow, and you're only ~40 minutes from Grand Central on the Metro North New Haven or Harlem lines. Have been hearing stories about a lot of all cash deals and investors moving into the area but haven't (yet) seen evidence of that myself. Some areas are even walkable to the last subway stop in the Bronx although that seems to be the more dangerous area of the city. Also have no idea about the quality of tenants you might expect.

I've heard stories about corruption, crazy tax hikes, etc. but only second hand or from news articles. It also seems like, for whatever reason, the area has been relatively economically depressed while being surrounded by incredibly affluent areas of Westchester County, so I'm wondering why/how that has happened, particularly when some of the houses particularly in the north are absolutely stunning--like, if they were moved 10 miles further into Westchester County would sell for 400%+ of their list price. I know schools are bad, but I feel like that's a reflection of the low tax base rather than vice versa, although I guess I really have no idea.

Thanks!

Hey @Sooyeon Kim--for sure. Would be happy to grab coffee or lunch and/or invite you to the meetup group (if you want to PM me your e-mail address I can add you to the chain).

My girlfriend and I bought our first property in Union City in late 2013/early 2014. It was a 2 family, bank owned foreclosure with boarded up windows, etc. so it looked like a disaster from the outside, but was actually not that bad inside (the property was winterized and had no electricity so it was *freezing* whenever we went to see it, and it snowed almost constantly in the ~week that it was on the market, which I think scared off a fair number of other buyers). We didn't have a lot of competition to buy it at the time. We lived in one unit and rented out the other, then ultimately moved to the basement and rented out the second unit. About a year later we did the same thing with another property, and have now bought a few more.

The city has definitely gotten significantly more expensive in the past ~12 months, maybe most notably in the past 6 months, particularly for properties in the 1-3 family range (inventory has also been super low compared to the summer). 4+ family properties are rent controlled, unless you owner occupy a unit (then they're not rent controlled up to 6 families). Unfortunately the housing stock in the city is pretty poor, except for newer construction buildings usually along Park Ave or Palisade, which is also, I think, an opportunity to buy at an affordable price, put in some sweat equity/renovations, and rent out long-term. The sort of work we've done has been on the order of renovating kitchens, bathrooms, replacing flooring, replacing roofs, etc. Nothing structural, but more than just aesthetic changes. You'll find that many buildings here are at least 40-50 years old, with the majority probably being ~100 years old, and many have not been renovated for at least 20 years.

Unfortunately, with prices where they are at the moment, it's becoming hard to find worthwhile deals. I saw a 2 family recently (unrenovated, but big in a good location) that had something like 20 offers on it in the first day, and went I think > $50k above ask to an all-cash buyer. There's also been a fair amount of foreign money: like all cash foreign buyers buying properties sight unseen. Hopefully (from a buying perspective) things will cool down in the summer when there's more inventory. 

Hey @Ed Mee! I live and invest in Union City. It's a fun place to invest but prices have gone (way) up in the past year or so. A few of us from BP host a meetup every month for local investors from Union CIty/Hudson County and you're more than welcome to attend. If not, I'd be happy to grab coffee or lunch at some point. Best of luck!

Hey @Nate S. I live and invest in Union City. I'd be happy to chat or grab coffee if you like. We also have a small group of investors that meet every month (mostly Jersey City, Union City, and Hoboken) and I'd be happy to invite you to that. 

Prices have definitely gone up substantially in the past ~12 months in Union City but, as Andrea suggested, there are still deals to be had, even despite the generally high taxes. Things were a little crazy over the summer but seem to be cooling off now (although inventory is down as well). I'd suggest targeting 2 families below $300k (decreasing supply of these), and 3 families in the ~350k range. Pretty much any property at that price is going to require a fair amount of rehab, but you should still be able to make good money.

The "nicer" areas of Union City are generally considered to be the more northern areas (like 30th St and north) and further east (along Palisade or Park), but, like many cities, it's very block-to-block. Just don't be scared off by the fact that a lot of the housing stock is not in the greatest of conditions. Best of luck!