All Forum Posts by: John Errico

Hey @James LaPosta welcome! I invest in both Union City, NJ and New Haven (though mostly Union City). I also live in Union City so it makes investing and managing stuff a little easier. We have 5 small multi-family homes (2-3 families) here, and are on track to close on another shortly

Hudson County is, I think, one of the more attractive places to invest in the greater NYC area. Union City, North Bergen, West New York, and Jersey City all have good opportunities, though stuff has becoming increasingly competitive, at least for the more desirable areas of all of those cities. New Haven is a very different investment location than Hudson County (in my opinion)--obviously much less driven by the proximity to NYC, and (in most areas) less of an expectation of rapid appreciation than here.

There are a couple meetup groups in the area--there's one in Hudson County that I host with another BP member that you're welcome to attend. If you'd like to PM me I can give you the details.

Best of luck!

Hey @Ryan Cheung--yea I think $1500 is a little bit optimistic for units that size in Union City. I think $1300ish is what I would expect or budget for as @Dan Rivera suggested. 

To second @Brent Coombs' point, I have definitely heard of/encountered lenders who will give you a hard time with determining rents. FHA for 3+ units requires a "self-suffiency" where you need to prove that the rental income you receive is sufficient to cover the monthly expenses for a property. Having not done this myself I am not sure of the exact requirements, but I know people who have gotten into trouble even with good deals and reasonable rents. I've known of appraisers that will nonsensically determine that the market rent for an apartment is 20-40% below what I would consider the market rent, so that is obviously very problematic. A lot depends on your appraiser/lender.

I wouldn't necessarily worry about rent control issues, only to the extent that the city may attempt to convince you to keep your pre-existing tenants for longer than you'd like when you move in (your old tenants may call the mayor and/or city when they figure out you are raising the rent, and the mayor/city is very proactive about trying to help tenants in need, etc.). Once your leave the unit, your rents should be reset to whatever you set them at when you were living there... however, knowing Union City, I would suggest that you be as proactive and on top of whatever issues may happen as much as you possibly can be. I've had (and many other investors have had) many, many, many horrible experience dealing with the UC building department and related departments.

One quick thought: I'm not a huge fan of coin operated "common" laundry in lower income areas like UC. I find that tenants will invite their friends over to use your laundry machines which inevitably leads to them breaking, etc. because you'll have the whole neighborhood using your laundry machines (plus random people you don't know hanging out in your basement). I suppose since you're physically living there you can monitor this a little bit, but the cost/time/effort it will take to repair your broken laundry machines and worry about strangers being invited into your building to wash their clothes versus the amount of money you'll make on it is, in my opinion, not worth it. Your mileage may vary though, of course.

Hey @Warren L. feel free to PM me, I have a few people I use and would be happy to recommend to you.

Hey @Ryan Cheung sounds very exciting! Here are some of my off-the-cuff thoughts (I own a number of multifamilies in Union City):

It looks like you're assuming $1500 for a 1 BR. I'm not sure where this is exactly in Union City, but that might be a little optimistic. If you're near 30th St, or in the 40s, or closer to Park or Palisade, you might be able to get that, but if you're somewhere else, I'd budget more like $1200-$1300/mo. to be very conservative. If you make the units up nice (which maybe you can do for $25k depending on the current condition of the property), maybe you can get more. I think it's fair when evaluating a deal to consider the worst case plausible scenario: so I think you'll be able to rent the units, but I would say, in a worst case scenario, you're getting $1300/mo.

I also usually budget at a month's vacancy in all units as a vacancy expense. Even in high demand you might lose a month's rent just because people are moving in and out, presuming you'll have new tenants every year (again, worst case though plausible scenario). So at $1300/mo/unit, that's $5200 in vacancy expenses. Repairs and maintenance etc. I budget for maybe $2000/year... again, that's a worst case scenario, but, particularly with these older homes, things will come up (not sure how much of everything you are replacing with the $25k, but, every single one of my properties has required some type of expense that I would consider non-trivial ever year: boiler breaks, central air conditioning breaks, roof leaks, bathroom and plumbing issues, electrical issues, etc.). 

You might also consider the cost of utilities. Not sure if everything is separate but I would be (pleasantly) surprised if each unit had their own furnace/boiler. If anything is shared, such as the boiler, you'll have to budget for heating costs for the whole house, plus, perhaps, other shared utilities (water, sewerage, etc.). Depending on what is shared and not shared, that might be $500-$2000/year. 

You'll also have insurance which will be an added cost, maybe $1500-$2000/year, oftentimes this is paid monthly with your mortgage payment.

Not sure what that all boils down to but, just back of the envelope, $445k for a 4 family in Union City is an OK deal... kind of depends exactly where it is and what investing $25k in improvements will get you. If it's mostly cosmetic stuff, that sounds good to me (although $25k is a lot to spend in cosmetic improvements). If you're going to gut renovate the units, replace the roof, etc. then $25k is probably not going to be enough (and the deal doesn't sound as good).

One thing to keep in mind about 4+ families in Union City is rent control. Because you'll be owner occupying the unit, your house will be exempt from rent control (rent control applies for 4+ families, unless you are owner occupying a unit, in which case, 4 and 5 family buildings are exempt). I mention it only because, unless it is vacant, there are likely below-market paying tenants in there currently. You can legally get them out and/or raise their rent, however the process of doing this may be somewhat difficult, given that the city will try to convince you to allow the tenants to stay until the end of their lease (or whatever). Moreover, once you move out of the unit, the amount money you can increase rent per year will be capped. This is less of an issue if/when you sent the rent to market rents, but the whole process of doing this is not trivial due to the insanity of the Union City building department and other agencies involved. Less of a long-term financial concern but more of just a general thing to consider.

Hey @Jonathan Aguilar if you'd like to PM me I can send you info on a meetup group that a few of us here on BP started a while back. Happy to invite you (and others)!

@David Smith feel free to PM me if you'd like, I'd be happy to recommend our agent, and there are many others that work in the area on BP.

I wouldn't rely on sites like Trulia, Zillow, etc. In general, their listings are stale and incomplete. If you're looking for available properties that are being advertised, your better bet is the MLS (multiple listing service), for example the NJMLS (http://www.njmls.com/), although there are several covering Hudson County. There are some sites or even broker websites that aggregate different MLS and other sources for you: for example, Redfin (http://www.redfin.com/), ColdwellBanker (https://www.coldwellbanker.com/). Any/all of these would almost certainly be a more accurate and complete source of information than Zillow or Trulia. Similarly, any agent should be able to set up an e-mail notification for you alerting you when properties that meet whatever your criteria come on the market. There are also, of course, numerous other ways to find properties that are not being actively advertised on the MLS, of which there are tons of posts on BP that might be of use.

Best of luck!

The title company isn't usually involved in this stuff. In a traditional sale, the seller is responsible for obtaining a certificate of occupancy from the city (most banks will not close on a mortgage without this, most attorneys would advise that you not buy a house without this). You may also need (your attorney on your behalf or bank may require) a smoke/fire certificate from the city. In general, a city won't issue a certificate of occupancy if there are outstanding issues (violations, open permits, whatever else). So if the city has issued one, this is pretty good evidence that none of those issues exist. For short sales, REO sales, etc., frequently you as the buyer are required to obtain these certificates--however, again, the municipality should (hopefully) inform you what if anything is required to obtain them.

Basically: either you or the seller will be obtaining a CO from a municipality prior to closing, and, if a CO is granted, that's good evidence that there are no open permits, violations, whatever else from the city regarding that house. I wouldn't close on a house with a CO, or without at least a temporarily CO detailing whatever may be required to get a real CO (like if you're buying a house under an agreement and understanding that you'll remedy or pay for whatever issues the house may have).

I'm not entirely sure what you are calling a municipality lien, but, no, in my experience, no office in Hudson County will have information about any issues that an individual municipality has on the property. Each municipality can and does impose their own laws, fines, violations, etc. So it's very conceivable (and has happened to me) that extremely pertinent information about a property (such as the presence of open, still-accuring violations) will only be obtainable by doing a records request at the municipality level. That sort of info certainly won't be disclosed on, say, a title search. Whether there has been an actual lien filed by the city is maybe less significant if a property has been accruing fines/violations in the city, and the city believes these issues will follow the property on sale.

As an aside, I'm not entirely sure if the clerk's office per se has any of this information--but the Hudson County Register's office, http://www.hudsoncountynj.org/office-of-the-hudson..., I believe maintains property records and etc. I've never had occassion to contact the Register's office myself, but presumably when you have a title search conducted, the data that the Register's office has is a large component of what will be used. I would trust a title search to reveal open issues that appear in the property records, but, again, municipal issues will, in my experience, not appear in the property records--it's up to you and/or the seller (usually in their capacity to present you with a certificate of occupancy from the city and whatever else) to find and resolve these issues.

I agree with @Ro Maga--the market has become so competitive, particularly in both of those areas, that you would be fortunate to get either. 

Obviously it's somewhat subjective, but I feel as though both areas are nice. The deeper (as in, further south and west) you get into Jersey City, the, very broadly, less safe, nice and pricey things become. So the Heights is pretty much at the top of the market (excluding downtown/Newport/Exchange Place), Journal Square is "next" in terms of price, safety, desirability, Bergen/Lafayette is after that, and Greenville is "last." Obviously there are a lot exceptions, but this also seems to be following the trend of investment dollars (lots of investor activity in Bergen Lafayette right now, for example). 

It may depend on what your expectations for an investment are but, conceivably, you'll get better appreciation in Journal Square, given that market prices there are generally still lower than JC Heights (although if you found a screaming and/or off-market deal in JC Heights, that changes the calculus). More so if the house is older as you suggested and you can do some work to improve it. It's hard for me to imagine a newly renovated condo in the Heights as being a great investment in the current market (again, unless you're getting a special deal), but I could conceive of good opportunities around Journal Square that need some work being good deals.

If you run the numbers on cost/expected rent/maintenance/repairs it may be obvious which is a better deal, although I subjectively feel that you'll probably enjoy more appreciation, at least in the shorter term, in Journal Square than in the Heights.

Good luck!

Hey @Arthur Goldstein, there are a fair number of Hudson County investors here on BP. I live and invest in Union CIty--I'd be more than happy to help out of I can and refer you to the people that we use. We also have a meetup group of mostly BP members every month (we're having a happy hour this Tuesday) that you'd be more than welcome to attend--feel free to PM me if you'd like.

My general take is that the remaining investment opportunities, at least if you're considering smaller buildings (< 5 families) are in Union City, and "deeper" into Jersey City--so like Journal Square/Bergen Lafayette/Greenville in Jersey City. Prices have gone up appreciably in all of those areas and in Union City in the past 18 months but I think there are still opportunities to potentially exploit, although you'll be competing with a lot of investors. Weehawken, other parts of Jersey City, Hoboken, etc. are already quite pricey, and it's, in my experience, more difficult to make the properties work financially--although, depending on how much you want to invest, may be worth checking out (particularly Weehawken). 

Most people that live in Union City and commute into Manhattan generally take the bus across the Lincoln Tunnel, or you can also take a bus to Journal Square and take the PATH in (this is also true of Jersey City heights). The buses are very convenient: either the NJ transit bus (which runs less frequently but is nicer), or the jitneys (private buses that run very frequently, are cheaper, but are generally less "nice"). Proximity to the light rail is, at least in my opinion, not super valuable in Union City, but proximity to the Lincoln Tunnel (approximately 30th St) is more desirable, and/or closer to Weehawken (Park Ave north or 30th, Palisade south of 30th).

Best of luck!