All Forum Posts by: Joseph Matarazzo

Hello BP Community,

I have a three family multifamily property in New Jersey. I bought it in 2019, lived in it for two years, refinanced it in 2021, and since then I have moved out and it is fully rented as an investment property.  Let's say it is worth around 650k, and I owe around 400k on a conventional mortgage at 3.1% interest. 

Is it possible to get a HELOC on this property while keeping my current mortgage/interest rate? I reached out to my lender and they made it seem like it would be a new mortgage at a much higher current rate, closing costs, etc in order to get a HELOC. Is there another way to get a HELOC?

Please help me understand what options are possible. Thank you all. 

$/SF can really vary greatly. On the cheaper end you are looking at lets say $125/SF, on average let's say $150/SF, and I know plenty of houses being built for $200-250/SF.   One idea would be to do a takeoff yourself and start to estimate some prices. The best idea would probably be to reach out to a general contractor in your area and ask him to bid based off the plans. 

Thank you for your replies.  I think I just needed to hear it from others to confirm in my head what you are all saying. 

Also to reiterate, I did not buy the property yet, but I am going to make an offer because the potential is definitely there. 

Hello BP Community,

So I have the opportunity to purchase a 4 family where the rents are drastically below the going rate. 

-Each unit is currently rented for $800. 

- BP Rent Estimator says a comparable unit is $1600

- Rental listings in the area are $1800-2300. 

So If I buy this property, I need to raise the rents in order for it to cashflow (break even is around 1300). I have looked for posts like this from the past and the examples are a difference of going from around 450 to 600 in rent.  Not going from 800 to 1600-2200 (double or almost triple current rent).  

How would you all go about raising these rents in this extreme situation? There is such a large difference here that on one hand you almost have to get rid of the tenant and get a new tenant in there. On the other hand, it seems unethical to more than double the rent on someone. 

Hello BP Family,

I hope this is the correct spot in the forums to post this discussion. 

I have the opportunity to purchase a multifamily house in New Jersey. This property is unique because it is a 4+2. It is zoned as a 4 family. It has 4 units on floors 1-3, but it also has two areas in the basement which could make another two units (yes they have two means of egress, windows, tall enough ceilings, etc). 

The previous owner has began flipping this property. It was gutted, new electric, plumbing, insulation, drywall, floors, tile, some trim and doors, etc.  It still needs fixtures, outlets, lights, radiators, kitchen and bathrooms finished, appliances, and a bit of exterior work. All this work is on floors 1-3. As for the basements, one side its easy to see that it was once a unit but is in terrible shape. The other side is gutted to the studs with no improvements, but it does have a staircase to one of the units on the first floor as well. 

So I have run my numbers, and this property cash flows with 4 finished units, not including the basements (good!).  But... it would obviously cash flow a LOT if I could finish the additional two units. I understand going above 4 units means transitioning from residential multifamily to commercial multifamily. 

The Plan: buy the property with a FHA/203k loan. Renovate all 6 units. 4 units will be complete apartments. the basement units will be "finished spaces" without the essentials of making them legal units. Get the C/O and rent out the four units, then decide how to proceed further.

Questions:

- Has anyone ever done this conversion from residential to commercial multifamily? 

- I have a call in to the town's zoning department to ask what would be required, but any tips or things I should look out for? 

- How hard would it be to change the FHA/203k loan to a commercial loan later on?

Id really appreciate any and all advice on this topic. I have been searching but I cannot find many examples of people having done this. 

Yes they will be on the loan with me.  And I can look into Lima One as well. Thanks. 

I have built a $10MM entrance pavilion on a federal courthouse, a $37MM brand new elementary school, and I am working on a $4 Billion dollar new airport.  I have also renovated two 3 bed/1bath/1300 SF apartments myself in my multifamily that I rent out. 

My partner has designed, built, or design/built hundreds of homes and custom homes in the $300,000 - $4,000,000 range. 

The property we want to build on is in New Jersey. 

I found an empty lot of land which I want to build a spec house on. I can pay cash for the land, but need money for the construction costs. I ran the numbers, and even on the conservative side it is a profitable project. 

I reached out to two hard money lenders so far and got rejected from both of them. I am hoping that someone can point me in the right direction of what I can do to obtain a loan for the construction costs. 

The reason that the hard money lenders turned me down is because they believe I have no experience. I have tried to explain to them that I am a civil engineer working in construction management for over 12 years, and that my partner is a licensed architect who owns a residential design-build company and has built homes in the area for over 30 years. The only difference is that this one we are doing ourselves and not for someone else. (crazy logic in my opinion). 

Any advice on what I can do to get a construction loan? 

Hello BP community,

I have the following deal which I could use some advice on. Seller is selling a 5 bed, 2 bath, 1400SF house for $489,000. It is being sold with an empty lot of land next to it, which is listed for $350,000 and they are asking for cash for the land. The two properties must be bought together. 

The house: Running the numbers: I could purchase for the full asking price of $489,000. 20% down. The property would cash flow +$1,400/month on average in a short term rental market (Beach town). The CoC return is 16%. The 50% rule has a cash flow of +$1,900. Obviously this is a no brainer, good deal.

What makes the overall deal risky is that the lot next door is an irregular lot. I am not sure it is the right shape/big enough to build on. If it is able to be build on, I can spec build a house and sell it for profit. (I would be happy to share these numbers as well if anyone wants to see them).  If it is NOT able to be built on, then it is unusable. 

What do you all think? My plan is to call the zoning office when they open tomorrow (today is a holiday) and asking about the empty lot and its dimensions/required setbacks. Hopefully there is good news from this call.  But if the property is unusable, do you think that  sinks the deal? Would you consider buying both properties just to get the cash flow from the one property? It would bring the cash flow down significantly, but it would still be positive a couple hundred dollars. 

Yes, I saw the registration per room. No issues there. I live about two hours away. So I will need to hire a property management company.