All Forum Posts by: John Errico

Hi @Kim Forgione: boarding house/rooming houses in New Jersey are governed both by state law and local law. To legally operate a boarding/rooming house, you'd need both the approval of the state (e.g. a state license), and for it to be zoned appropriately by the municipality. The only legal boarding houses that I am aware of that currently exist in New Jersey have all existed for a very, very long time (like, before the current legal regime governing these places ~1979). I don't know what the process would be like to turn an existing structure into a boarding house--but I'd imagine, your larger problem would be with existing zoning, which likely would not permit a boarding/rooming house in a zone where you currently have a single family home.

The state maintains information about rooming and boarding houses here: https://www.state.nj.us/dca/divisions/codes/offices/roomingboarding.html but your municipality will have its own zoning laws about what is permissible. Similarly, just because a rooming house exists on a list maintained by New Jersey doesn't mean it's permissibly operating in the municipality where it operates. There are rooming/boarding house all over NJ that are licensed by the state, but aren't permitted in the municipality where the exist (and, possibly, vice versa). 

Having said that: there is likely nothing to stop your brother from, say, having roommates in his home. But, for example, putting locks on the doors, treating each individual bedroom as essentially a separate "unit" etc. would likely be impermissible. I know people do this all the time--but probably not legally permissibly. 

@Kait O. to followup on Ryan's post: is one of the three units you alluded to the illegal basement apartment/unit? I would *highly* recommend, in Union City, going to the building department or otherwise doing an OPRA request (at the city clerk's office) to ensure that the city sees the building as a 3 family, notwithstanding the green card issue (which is a state issue). 

I have a number of stories (that I've written about elsewhere on BP) where Union City believes that a, say, 3 family, even with a green card, is, in their eyes, a 2 family (or a 2 family is a 1 family, or whatever). Many investors have similar stories. Though, as Ryan alluded to, getting a green card from the state is a bit of a process, converting your home from a 2 family to a 3 family in the eyes of Union City is *extremely challenging* (and may be impossible) depending on a host of factors like the zoning of where the building is; the apartments (do you have fire escapes? a fire suppression system?); parking; and so on. In the past, it has taken me an entire year simply to get a variance/go through the zoning appeal process, notwithstanding the actual work, construction, and so on (and even minor repairs requiring permits have taken multiple, multiple months due to the building department).

Good luck!

Hi @Viet Hoang I'm an investor, but also run a construction company in north Jersey. In addition to the other comments here: do you have architectural plans for this project, and have all of the GCs you've spoken to reviewed them? I'm assuming, given the scope, that this is going to be a requirement for permits/the building department. In my experience on both sides of the table, it can be very hard to both describe the scope of the project, and understand the scope, without seeing it written down (and also very time consuming for contractors to come up with an estimate without the plans). Construction drawings will fairly clearly show what walls need to be taken down, plumbing, electrical changes, etc etc. 

Assuming when you say "full gut" that you mean new plumbing/bathroom(s)/kitchen, the $30k with materials quote is essentially impossible--materials alone would probably be approaching that number. So either the contractor doesn't understand what you're doing/requesting, or they plan to change order you significantly (i.e., charge you for additional work and labor) as the project goes along.

One important thing I would add re: contractors is--because one contractor is cheaper than another, this doesn't meant that you will actually spend less money. This is true for at least two reasons: first, as I alluded to above, there are (frequently) changes to the scope of construction as the process unfolds--either because you want something different, the building department requires it, or unexpected things are found. A higher quote will sometimes accomodate this, a lower quite might not--you should have this conversation with your contractor. Second, and probably most important, there are hard, tangible carrying costs to owning a property. If you're using, say, hard money (possible double-digit interest rates), or even your own cash (in which case you're looking at the opportunity cost of not investing elsewhere), there's an easily calculable "per day" cost to owning the property while vacant or not sold (interest/opportunity cost, taxes, insurance, etc). If a contractor costs, say, $10k more, but is able to finish the job 2 months faster, that quite possibly could be "cheaper" to you than the cheaper bid/GC, when you consider the carrying costs of the property. 

GCs are pretty notoriously bad at figuring out how long something will take, though sometimes this is because of complications/issues with permitting/the city. (By way of example, I had to spend about ~4 months resolving an electrical issue at a flip in north Jersey, simply because the electrical inspector was hard to deal with--that's FOUR months of carrying costs gone because of one issue). 

Anyways: long way of saying--the bids you received may cover quite different scopes of work, timing, and tolerance for unknown/undiscovered issues. That probably more accounts for the wide variety in prices more so than a GC thinking you are a "retail" or an "investor" client (though, frankly, I haven't gone out of my way, in my capacity as a GC, to charge more or less to clients based on if they are a "retail" or "investor" client). Beyond ensuring that they are all licensed and insured, I would ask them about some of the issues I suggested above and gauge their responses.

Hey @Andy Li hmm: I unfortunately don't know any plumbers or HVAC guys in that area of NJ. If you want to PM me I can give you some names of people in north Jersey. The logistics of them signing and sealing a permit from that distance may be a little rough, but they might know people local. 

In an absolute worst case scenario you could just approach contractors and tell them the scope of the work (and that you want them to do the work for you) without telling them that it's already done. If they feel compelled to re-do the entirety of the plumber and/or HVAC work and charge you for it, then, the absolute worst case is that you have to pay market for whatever that work is. If the scope is pretty straightforward, though, I'm assuming you'll be able to find someone to just charge you some amount for the permitting process, but not the actual work, particularly if you can still see all of the work (as in, no walls closed around it, etc.).

@Andy Li where is this project? I'm a contractor and own a construction business, but am located in North Jersey. Sounds like you mostly need a plumber and/or an HVAC contractor (depending on the township, the trade that signs for an HVAC could be a separate HVAC contractor, a plumber, an electrician, or even a general contractor) to apply for permits. You probably wouldn't need a "general" contractor, who (like me), would subcontract plumbing/electrical/HVAC work, though some towns permit HVAC work to be put on a general "building" permit.

I'm not entirely sure what plumbing and HVAC work the previous contractor did but you may (sometimes) have issues with plumbers and HVAC guys taking over or signing off on work done by previous contractors that they can't or don't want to put their name behind (or they may charge you more simply for doing this)... depends on the company/person, and on the nature of the work done. It may help if there is other/more work for them to do, beyond simply signing off on a permit. 

The process is probably going to take a little time: you'll have to apply for the permit, then (likely, depending on the nature of the work you did/are doing) have a "rough" inspection (that the contractor will take), and, then, after finishing the work, have a "final" inspection (that the contractor will also take) to close out the permits. I've waited multiple weeks for permits to be approved, multiple weeks for inspections to be scheduled, etc. In a worst case scenario, you may also need to submit plans for the HVAC or plumbing work to get the permit issued... but, again, depends on what you did.

Good luck!

To echo what @Lloyd Spencer said: it's a difficult business to make high margins in particularly managing disparate properties (like, a single family home here, a multi-family home there). The property managers I use generally have a fair amount of autonomy when times are good (as in, nothing really going on), and I usually am more "on top" of them when times are bad (as in, tenants moving in/out, emergencies, non-payment of rent, etc.). With some properties, the manager is solely there to collect rent and deal with tenants, with other properties, I expect them to essentially "run" the property for me (pay utilities, take care of accounting, insurance, etc.).--depends on the property, and also you and their inclinations.

In addition to using properties managers elsewhere (south Jersey, and Connecticut), I run a small property management business in northern NJ mostly servicing my own properties, but also a handful of other clients. I'd be happy to lend my thoughts or otherwise if you have a property locally.

@Samuel Garcia there's also a whole forum here on BP for events and happenings (https://www.biggerpockets.com/forums/521-events-and-happenings) where you can search locally. Hope to see you at a meetup soon!

Hi @Marcos Torres, not sure if you're still looking for one, but I run a construction company based out of south Bergen county, and am also an active investor. My construction company does work throughout Hudson/Bergen/Essex counties, mostly focusing on work for our own projects, and for other investors. Where in central Bergen are you (I live in Rutherford)? Feel free to PM me if you'd like. Best of luck!

@Andrew G Martinez there's a fairly sizeable group of northern NJ-based investors here on BP, many of whom invest in the surrounding areas (myself included). There are also a bunch of meetups posted on BP happening monthly in the area. I, myself, have house-hacked with an FHA loan (though not 203k) in Union City, and had a lot of success with it, and have many friends that have done the same (including with 203k loans). I think there are still opportunities to do so in Bayonne, or somewhat further west, and possibly even in some areas of Jersey City, depending on your tolerance for living in slightly less desirable areas.

If you'd ever like to chat about northern-NJ specific markets, definitely let me know--as I mentioned, there are a bunch of us on BP who are happy to give advice and thoughts about specific areas. Investing in northern NJ is, in my opinion, great, but definitely requires city-by-city and, frequently, block-by-block knowledge of these areas to fully understand the area.

Best of luck!

Hi @Ali Barcin welcome! I (and I think a lot of investors in the area) have experimented with Airbnb and similar strategies on properties. I think, at least in my experience, the regulatory environment for Airbnb/Airbnb-like renting is all over the map in New Jersey, ranging from acceptance (like in Jersey City, Newark), to banning (like in neighboring Union City), to neither banning nor permitting it (much of the rest of NJ). There's definitely some hesitation for landlords, in my experience, to operate in a (large scale) manner that might hypothetically be impermissible... and even to buy properties assuming they will be great short/shorter term rentals, but might, ultimately, not make sense as a long-term rental (and then have the regulatory environment change making their property way over-valued). I currently operate a number of short-term/medium-term rentals throughout the northern New Jersey area, primarily my own properties, and, to a lesser extent, for others, and also a bunch of long-term/traditional buy-and-hold type rentals.

Do you manage these properties for landlords/investors, or do you own any properties directly? What arrangement do you have with these owners (like, do you charge a traditional management fee/% of gross rent?). I know Jersey City is quite openly permissive about Airbnb, but I'm not so familiar with short-term management companies per se. Are there many?