All Forum Posts by: Jordan Gregg

Hello BP community - I am getting ready to make an offer on a REO and will be going with FHA 203k financing. I have a couple contractor referrals from my agent but BP has been great for finding quality people in the business.

At this point, I'm looking to talk with contractors in the area to get a feel for experience etc.  Once I have the property under contract, I will be looking for formal bids.

The property is in Bloomfield, NJ so anyone in Montclair, Newark, Orange, East Orange, Belleville, Glen Ridge, Nutley Clifton, Passaic, Lyndhurst would be great (sorry everyone for the keyword alert blast!).

I am also looking for an inspector.  Thanks!

Thanks @Tim Pagano for pointing me to the master plan.  I will take a look and see if I can draw out any analysis - I'll be sure to keep you in the loop on what I find.

Thanks @Darren Sager for the input, good to hear that investors are having success in that area.  Any chance you have colleagues investing in the area who might be willing to share their experiences and perspective?  I would be grateful for any extra help/introductions.  Thank you!

@Tim Pagano Thank you for the reply Tim, I really appreciate the info!

That makes sense that new development may not always be a sign that things are turning in the near future.  I've read people's comments on the Parkway Lofts and how the building is nice but the area is still awful.. however there's really nothing there, whereas to the east there are at least some restaurants, new Aldi supermarket, etc.  

I was thinking that the apartments aren't targeting tenants with local jobs, but NYC commuters since the ride from Watsessing to Penn Station is ~30 minutes during work hours.  I currently live at the 9th St Light Rail in Hoboken and they are marketing the hell out of the new apts at Watsessing and Bloomfield Ave.  Advertising 1-2 br apts "Starting at under $2k".

Ideally, I'm looking to rent to NYC commuters/professionals who are priced out of JC/Hoboken or just want a little more space for their $...  i.e. I want to rent to myself :)  I'm not opposed to families and would ideally like to be ~2-2.3k/unit for a 2-3br/2ba, ~1600 for a 2/1, ~1300 for a 1/1.  I know you can easily get those numbers further north, but the cash flow just isn't there based on purchase price.  I am looking along Bloomfield ave, and a few blocks north/south of Watsessing.  There is also a pocket just west of the parkway, east of the park and north of Watsessing where I'm seeing some listings that look like they could cash flow.

That's terrible to hear your daughter's friend was exposed to that.  Was this at Watsessing Park?

Thanks for the tip on rentometer.com, looks like another good tool to try and find your center.  Do you know how they source their data?  I have not talked to property management companies and plan to self-manage, although probably not a bad idea to talk to them anyway.

Thanks again! 

Are there any investors on BP who have property in the Watsessing Ave area of Bloomfield? I would love to connect and hear your thoughts on the area and especially market rents......

Hello BP community!  I am a new investor planning to owner occupy my first multi unit property.  I've digested a lot of knowledge and practiced running numbers over the past few months to the point where I feel well equipped (enough) to take the plunge.  One thing I'm struggling with however is my ability to really understand the local markets in some of the areas I've been targeting.

Among a couple areas, I think Watsessing Ave in Bloomfield has great transit, appropriately priced properties (cash flow opportunities), and there seems to be some serious development happening (new supermarket and luxury apts just finishing a short walk east of the Watsessing Ave station).

I've driven many of the streets and seen a few properties in the area to get a feel.  Aside from a few streets, I think it has an ok vibe to it (not North Bloomfield/Montclair, but not like rougher areas a little further south).  It's also tougher to tell in the winter months when less people are outside.  Does anyone have a good picture on the tenant class/who is renting?

I think the biggest "?" that could sink the ship is my analysis of market rents.  I do everything fairly conservatively, but a few hundred dollars off can really make or break a lot of the properties I'm seeing.  I've been looking at Trulia and Craigslist to make my determinations and understand there can be a big swing depending on the general quality of the apt.

Any insight/advice is greatly appreciated.  Thanks all!

@Vik Nirwal 

Just to preface again... I am a newbie :) and all I know is from what I've read, listened to, or talked to people about.  There are definitely experts on here who would be better suited to answer your questions, but I am happy to provide my perspective to try and keep the conversation going (for my own practice too).  Also, I may be stuck in "analysis paralysis" right now, and too conservative in my underwriting, which can be a bad thing if it leads to inaction.  That being said...

I didn't crunch the numbers myself but I follow your math/approach.  One thing I don't see accounted for is vacancy.   Vacancy rates are very low in the nicer parts of JC, but I would still plug in an estimate - is this in Journal Sq?  You are also not adding property management into the calculation. If you manage your own property (I'm assuming you would), you can drive a higher return, but most info I've come across recommends that you factor it in as an expense to really judge the deal strictly as an investor.  If for some reason you needed to move (job relocation, etc) and you were no longer local, would you still be able to self-manage?  If not, would adding the 7-10% cost into your calculation drive you in the negative?  This could put you in a vulnerable position where you are negative cash flow and potentially forced to sell.  10% on 5k a month is an extra 500/month.  You are also doing the numbers based on the top end of the rents (2400 and 2600).  If you are confident you can get those rents, great.  But if you're really treating it as a range, I would calculate as the lower number.  This shaves off $400 and puts you at only 200/month cashflow based on your math (without considering the vacancy and property management).

A couple other thoughts.. Since it's new construction, I assume your incidentals (repairs/maintenance) will be very low the first few years. You would likely not need any capex for quite a few years as well (new roof, replace HVAC, etc). Still, if your plan is to buy and hold for a long time, they will eventually come into the picture. I'm not too sure how/when most people factor in these expenses for new construction, but I would come up with an expectation of how long you plan to hold the property. Obviously, it could change.. but this information has to be there in order to build a complete model, or you should at least understand how your IRR changes depending on the length of time you hold for. If you only plan to hold the property for 5 years, your total repairs/maintenance and capex would likely be very low. Spread this over 5 years and your per month cost would be very low, hopefully less than 200/month, increasing your IRR. On the other side of the equation, your principal paydown will also be very low, potentially yielding less IRR vs holding longer (without considering changes in value). If you plan to hold the property for 15 years, things may need to be replaced and the per month cost will be higher. But you would have more equity when you sell.

Would love someone to proofread and call me out if I've misstated anything here so we can both learn.  I think your margins seem pretty tight on this one.

Hi @Vik Nirwal I am in a similar situation, renting in the heights and looking for my first multi to house hack.  I am certainly not the most experienced one on here (I haven't bought my first property yet) but I think you have to dig into the numbers.  At 800k, you need a rent roll of 8k/month to even meet 1% rent:price.  What are the expected rents of the place you are looking at?  How about the taxes?  Will it cash flow (considering yourself as a renter)?  Rates are low yes.. but from an investment standpoint, it needs to cash flow.  I have a hard time thinking you'll find a "great deal" on new construction in this area.  If you are comfortable making the payments and subsidizing with payments from another renter, it's a matter of quality of life.  But if you were to leave and rent out both units, you wouldn't want to be stuck in the negative.

Thanks @Christie Duffy! Great info and much appreciated

Hi @Christie Duffy I'm currently renting in JC heights and have been looking (MLS) for a few months for my first multi in Hudson/Essex to house hack. Feeling like a small fish a large ocean at this point and the more practice I get underwriting, the more I'm understanding first hand why investors are saying multi family MLS deals in the area are getting far and few between. I'm searching for more creative options and was curious how you went about targeting single families that were zoned for 2 family. If you don't mind sharing, what does that process look like? Or more specifically, what are you asking the building/zoning department for? Are they providing maps with different areas marked as different types (single, multi, commercial) and then you cross reference to find single family listings in zones that are designated at 2 family? Any insight is greatly appreciated!

Thanks @ Jonathan Boyle.  I guess the conversation can shift drastically depending on what their answer to question 1 is.

Hello all. New investor in Jersey City, NJ looking to purchase my first multi-unit property (2-4 units) and house hack. I am getting MLS alerts but the more I research on forums, listening to recent podcasts, etc.. it seems like MLS deals exist in my area but may be pretty challenging to come by... and that sometimes it pays to be creative.

One of the strategies that has been mentioned is to target craigslist 'for rent' ads that seem like Mom and Pop owners that may not be managing the property well or might want to exit for whatever reason.

Outside of the basic "Hi, I saw your listing.  I'm not in the market to rent but I was wondering if you would be interested in selling?"  followed by.. "Do you have any other properties or know anyone who may be looking to sell?"

... What are some strategies that could persuade an owner to consider selling when they might not have been considering it prior?

I guess this same question applies to driving for dollars as well.