All Forum Posts by: Joon Hui Yoon

Hi BiggerPockets,

I am looking at a multifamily property in Flemington, NJ.

I am considering rent by the room, mid-term rental strategy. If you are a property manager who is specialized in that area, would you be able to let me know whether Flemington is a good area for mid-term rental strategy? I would need a property manager there.

Best,

Joon

Hi all,

I am looking at a property in POR (Professional Office Residential) zoning, in central NJ. It has an office space in the first floor and residential space in 2nd and 3rd floors. I have the following questions:

1. Is it possible for us to use the office space and rent out the residential units, preferably mid-term rental? 

2. do I need to ask for a permit for this strategy? 

3. can I get a conventional mortgage on this property?

I asked these questions to several brokers/agents but nobody replied so I will appreciate any of your help/advice.

thank you in advance.

Best,

Joon

Thanks everyone for your great advice. Now I am back to US with fund enough to kickstart my investing journey. Probably I will be staying in Central Jersey and will try for mid-term rental for a starter.

Quote from @Shawn Mcenteer:

Quote from @Joon Hui Yoon:

Quote from @Shawn Mcenteer:

Hi @Joon Hui Yoon long story short I have never purchases a property that cashed flowed on day 1.  All of my investments did not look good the first few years.   But I can consistently say the rent increases my properties have are jaw dropping to the point where they all have massive amounts of equity and cash flow.   If you understand buy and hold is long term and your open minded to learning how to get to financial freedom in NJ via house hacking I am happy to chat. 

Thanks Shawn for your point. I own my home so house hacking is not an option, but if the house hacking can be applied to a second home that would be an option, in that my wife need an office now.

and yes, the rent increase may compensate the mortgage rate but there will be a rent control or cap, perhaps 4% a year which will take a very long time to get to the massive amounts of equity and cash flow, and how I manage/jconvince/retain the resistance from tenants who definitely won't like the rent increase? I have seen so many multifamilies on the market with very irrelevant actual rent, e.g. monthly total rent of 2500 but asking for 500k. if you apply the 4% annual rent increase, then to achieve 1% rule it will take about 18 years.

for other benefits such as depreciation paper loss, appreciation, principal paydown, I kinda agree with you but in my central NJ area most of the multifamily buildings are about 100 years old or more, so they may need consistent maintenance. so the depreciation may be a real loss, not a paper loss. and the appreciation and principal paydown increase are not the same as single family homes, but more like commercial real estate, which value is defined by the discounted future cash flow. but the price level is too high for its meager cash flow, so very hard to justify the future appreciation.

sorry for ranting here but those are what I need for any expert's advice. let us keep going on this conversation.

 one of the biggest mistakes I see being made in New Jersey are analyzing deals for what they are currently.  The majority of properties on market have rents that are below market value.  looking at deal for what it currently is producing tends to not work well with numbers.  Next is looking at property without putting work into it, purchasing turnkey in my opinion is sort of like stepping over a dollar to pick up a dime.  Finding properties that need work, updating them and attracting desirable tenants paying top dollar is what allows me to increase rents substantial each year.

Take a 2500 per month rental, 4% is $100 increase in rent.  Now lets say tenant moves out,  this allows you to raise rents to whatever you want.  Believe it or not I don't attract tenants that stay for long periods of time, most stay 1-3 years.  This past year one of my properties where both tenants left, I increased rents over $500 with zero vacancy on top of it.  

Most properties I find for clients are in 500-800k range and require renovation.  I just got one rented for a client.  In under 6 month of owning he has over 100K worth of equity (did about 30k of work) and we just got one of the units rented for $1400 more than what the previous owner had it rented for.

If you toss MTR into the mix simply put its 20-40% increase in rent for spending 6-8k more furnishing a property.  

I own many homes and have house hacked them all, what's stopping you from renting your existing home and your next property is a house hacking? I have clients doing right now. As I type I have bidding war for his primary that is now being turned into a cash cow rental. 

Hi Shawn, thanks again getting back to me, and thanks for clarification on rent increase when new tenant comes in. 

I just wonder though - why tenant would bother renting 2 bed 1 bath multifamily unit when they can buy the same bed/bath condo or townhouse with that rent? I mean that there is a virtual but clear cap on rent increase. now the 7.5 mortgage and current multifamily price and even renovation on top of those, I imagine the rent should be a lot higher than just an OK condo's mortgage payment, and I would choose to buy a condo than renting multifamily unit if I were a renter.

and I feel that my home is just too big to rent it out (4bed/2.5bath) just to cover my PITI, and I am not sure the house hacking may make better lifestyle than the current single family home of mine.

Thanks.

Quote from @Shawn Mcenteer:

Hi @Joon Hui Yoon long story short I have never purchases a property that cashed flowed on day 1.  All of my investments did not look good the first few years.   But I can consistently say the rent increases my properties have are jaw dropping to the point where they all have massive amounts of equity and cash flow.   If you understand buy and hold is long term and your open minded to learning how to get to financial freedom in NJ via house hacking I am happy to chat. 

Thanks Shawn for your point. I own my home so house hacking is not an option, but if the house hacking can be applied to a second home that would be an option, in that my wife need an office now.

and yes, the rent increase may compensate the mortgage rate but there will be a rent control or cap, perhaps 4% a year which will take a very long time to get to the massive amounts of equity and cash flow, and how I manage/jconvince/retain the resistance from tenants who definitely won't like the rent increase? I have seen so many multifamilies on the market with very irrelevant actual rent, e.g. monthly total rent of 2500 but asking for 500k. if you apply the 4% annual rent increase, then to achieve 1% rule it will take about 18 years.

for other benefits such as depreciation paper loss, appreciation, principal paydown, I kinda agree with you but in my central NJ area most of the multifamily buildings are about 100 years old or more, so they may need consistent maintenance. so the depreciation may be a real loss, not a paper loss. and the appreciation and principal paydown increase are not the same as single family homes, but more like commercial real estate, which value is defined by the discounted future cash flow. but the price level is too high for its meager cash flow, so very hard to justify the future appreciation.

sorry for ranting here but those are what I need for any expert's advice. let us keep going on this conversation.

Hi all,

I am going to start investing in rental properties from this fall/winter 2023.

I have a full-time job and will keep it so my strategy will be as passive as possible, such as buy-and-hold.

with 7.5% mortgage and much inflated prices I am in trouble finding the best location for rental property investing near my town.

I live in Bridgewater, NJ. I have been looking at properties in Somerville, Flemington, Somerset, Highland Park, Edison. in those areas there is no way to expect any cash flow after expense and mortgage due to the high price levels. 

I couple of real estate agents recommended mostly north Jersey area, such as Linden, Elizabeth, Rahway, but those are also expensive and the neighborhood seems to be too tough for me to manage with minimal available time.

I had lived in Quakertown, PA I drove around that area before, and I found Easton area is also affordable and enjoying lower property tax. I also think Trenton/Hamilton area is also affordable, though its neighborhood is tougher than Easton.

So my question is: Is Easton is good place for small multifamily investing? if you have any experience, is it better than Trenton area? in general in those areas are good starting points for newbies? my very rough target is achieving 1% rule with minimal involvement.

Any advice will be very appreciated.

Thank you.