All Forum Posts by: Kevin K.

Save your money. You don't need an attorney to setup an LLC in NJ if it's going to be a single member LLC. You can set it up all online in NJ in just an hour or so. I've done it multiple times. Click here for the NJ website explaining steps to create LLC. Also setup an EIN with the IRS here. Single member LLCs are usually treated as disregarded entities (unless you select to be treated as a corporation...normally you don't). Disregarded entity basically means that for tax purposes, the IRS doesn't really recognize your entity. You just recognize all the income/expenses on your personal taxes (i.e. Schedule E or C usually).

If you are setting up a multi-member LLC with investors or other partners, then you should probably consult an attorney who really knows what should go into a good operating agreement for a multi-member LLC. I don't have any recommendations there though.

Good luck.

If you have a realtor who knows you, they may share their NJAR (NJ Assoc of Realtors) standard lease.  Just ask a few brokers at a nearby office...maybe someone will be nice enough to share the latest one.  This is an older one from April 2007:

http://pdrhomes.com/marketing_tools/Residential%20...

Don't forget to also provide the lead disclosure form for homes pre-1978:

http://www2.epa.gov/lead/lessors-disclosure-inform...

You can of course ask an attorney to do a lease also if you want to take the safest route, and it makes you feel more comfortable knowing your contracts are fully vetted.

I haven't gone through the process of trying to raise base rent through improvements.  From speaking to various people, I get the feeling that the rent control office can't keep up with managing so much housing and enforcing the rules.  I suspect that some landlords probably charge more than the base rent and probably get away with it because the tenants have nothing to complain about (i.e. they're happy paying the rent, the landlord takes decent care of the building, etc.).  I've also come across buildings that should be rent controlled but aren't registered with the rent control office.

I've read through many of the rent control ordinances, and find that the rules are sometimes too onerous to really follow and too far reaching in what they ask for. I doubt a single landlord really follows ALL the rules because there are too many of them, and many of which are too obscure.  Most rent control offices probably couldn't even keep up with all the paperwork if landlords really followed all the rules in the ordinances.

One other thing to be careful of is getting caught with an ordinance change. Union City repealed its improvement allowance last year probably so the mayor could buy votes with the bulk of the residents being renters.  It's a shame because UC has so much under maintained housing that needs investment. Great way to kill the incentive to improve.

It probably means that the building has a registered green card from the state. See FAQ below.

http://www.state.nj.us/dca/divisions/codes/offices/bhi_faq.html

I've never done an oil to gas conversion but I have separated heat where the building had a single gas boiler, and I installed gas boilers for each unit.  I suggest contacting several plumbers who can give you quotes and can also advise you and answer questions about your particular situation.  Hopefully the main gas line coming into the building is big enough to provide the gas necessary to power separate boilers (probably should be).

Converting to gas and removing an oil tank will definitely add value when you eventually sell the building.  Whenever I look at buildings with oil heat, I usually ding them on value for it.

I find that the value created from separating heat usually offsets the cost.  For example, if you save $3000/yr, then a multifamily property worth a 7% cap rate should result in an increase in value of $42K for the building (=$3000/7%).  You may not realize that value until you sell the building, but at least in the meantime you have higher cash flow.

I'm not a fan of electric heat and I find tenants are usually smart enough to ask about the cost of electric heat.  A smart tenant should ask how much cheaper the rent should be to pay for electric heat.  If they're not smart enough to consider it when evaluating an apartment to rent, they're probably not the type of tenant I want to rent to.

I'm not familiar with gas mini split systems.  I know mini split systems (LG and Mitsubishi) exist for cooling with heating done via a heat pump type system.  Those are electric though and require separate circuits, etc.   Your building elec. service may need to be upgraded.  Obviously, if it's gas based then not an issue for heat but I'm not familiar with them.

I'm wondering if anyone has any first hand experience raising BASE rents (not surcharges) by making capital improvements and applying for base rent increases according to the Jersey City rent control laws.  I would like to hear how the experience was dealing with the city, the application process, etc.  The ordinance explains the process and looks like a pain.  If anyone has any experience, please share.  Thanks.

I forgot to mention that the inspector also checked to make sure the front door into each apartment self-closed.

I tried searching through the forums to see if there are any discussions about the NJ state green card inspection process.  I didn't really see any so figured I would start this thread with my initial experience, and ask a few questions.

I recently had an inspection done on my rented 3-family in Union City, NJ.  The inspector was actually pretty nice and helpful since this was my first.  She checked that I had the appropriate smoke and carbon monoxide detectors located in the right place.  She not only checked that I had them, but also checked that they were installed in the correct location relative to the ceiling or nearest adjacent wall (you can google this to find out optimal locations).  A few of mine were on the wall too close to the ceiling so I had to lower them.  She was nice and asked if I would take care of it today, which I said I would.  Otherwise, she would have to come back for another inspection, which would waste my time.

She noticed some chipping paint on the wall and noted to me that she could require me to have it tested for lead paint since the home is old (prior to 1978).  I personally think that is a ridiculous thing, but I guess it's the law.  However, she was nice and basically suggested that in the future, I touch up the whole house prior to any inspections.

I didn't have a fire escape since the height of my building doesn't require one, but she would have inspected that also.  I didn't get a chance to ask her what they look for so I'm wondering if anyone else knows.

Please share your experience.  Anything else they look for?

Thanks.

Throwing in some keywords for those of us that monitor the forums via alerts: Hudson County, Essex County, Bergen County, Morris County, Middlesex County, Somerset County, Passaic County, Jersey City, Weehawken, West New York, North Bergen, Bayonne, Hoboken, Guttenberg, Newark.

@Justin C.

I can give you some insight on most of Hudson County, NJ (Hoboken, Jersey City, Union City, North Bergen, Weehawken, West New York, Guttenberg...I don't know Bayonne, Secaucus or Kearny that well).  You may want to open up Google Maps to find the neighborhoods I mention here, and use it to map out your commute.

You will rarely/never find MF at less then $150K/unit in Hoboken, downtown JC or the waterfront (mostly high rise) so forget that...cash on cash returns there are crap at the moment anyway...pricing is based on a condo sales market since prices are now well over $600/sqft for newly renovated condos.  Journal Square area is doable but has become pretty popular because of all the glitzy headlines recently about Kushner's new high rise rental coming to the area.  JC Heights area is also doable.  I would generally avoid Greenville and West Bergen in JC, although some areas along the 22nd St Bayonne light rail are reasonable I've heard.  Bergen/Lafayette area closer to light rail is somewhat blighted but changing.  Could find good value there potentially.

Union City is mostly hispanic but has relatively inexpensive multi-unit buildings where cash on cash returns are still attractive, and it's relatively safe.  For a midtown commute, live somewhere near a bus to Port Authority.  If I had to pick a place, I would live in the Union City area close to Weehawken along Park Ave, but many other areas of UC are good commute to Port Authority.  I have tenants who commute to midtown from my rentals in UC.

Weehawken is pretty expensive and mostly above your target price per unit, and also relatively lower cash on cash returns.  West New York has good value still.  North Bergen is probably a bit more difficult commute except for the parts that are close to the Hudson River.  Guttenberg is such a small area so I rarely see deals there.

Another thing to keep in mind about the cities in Hudson County, all the cities have their own rent control laws so you have to know each (most are on the city websites).  The good thing is that most rent control laws have exemptions for owner occupied units up to a certain size (3 or 4-family usually) so you should be ok.  But if you move out, I think it falls into rent control so you should always ask to confirm if rents are registered and where the registered base rent currently is.  Rent control in these areas usually means that increases are capped to CPI (usually) or just a few percentage points, and you can usually get temporary or permanent increases in base rent by improving units (most are temporary but I think JC is permanent, some places like UC recently repealed their improvement laws so it can change, but I've heard it's coming back).

Good luck.

@Jeiby V.  Sounds interesting.  What part of JC is this?  A few things to keep in mind is that your expenses aren't just limited to a mortgage.  Don't forget property tax, sewer/water, insurance, maintenance, utilities (heat and hot water are the big ones if not separated), etc.  Another thing to keep in mind...the city has been cracking down on illegal basement apartments.  As part of a resale, the city may do a CO inspection (can't remember if JC does it or not).  Standard contracts usually say seller is responsible for CO and if the city does do a physical inspection on re-sale, sees that it's a legal 2-family with an illegal 3rd basement apartment, then city may force seller to remove the 3rd unit.

Shoot me a message on the grants you're talking about...are they for owner occupy or investors?

Cheers.

-Kevin