All Forum Posts by: Kevin Manafi

Hi @Zachary Parrish, condos can be a solid, less daunting option for newer investors to get started and get their feet wet without being overwhelming. However, you definitely want to make sure to do your proper due diligence.

Here are things to check for if considering investing in a condo:

-Gather as much information about the association as you can. Inquire as to the status of the finances of the association, where they stand both currently and historically in terms of fees collection (this can show you whether they have adequate financial reserves in case of large future expenditures)

-Whether the association allows the units to be rented out either traditionally or as an AirBnb if that is your plan

-Make sure the current owner(s) are current on their HOA dues, otherwise you would be liable for the bill after closing

-Some buyers ask for the minutes (notes) from all board meetings from the past 6-18 months to see what kind of topics are being discussed. Usually this can be a good way to be alerted to anything pressing you might not have been aware of. However, the HOA may or may not be willing to provide you with this

While some people opt not to get inspections on condos/townhomes that are in good shape because of the nature of the HOA taking care of CapEx, getting an inspection is always a good idea so you can learn more about your property and to potentially discover things that may not meet the eye. Even the best of us miss things sometimes. Also, the inspection for a condo will be much cheaper and shorter than a single-family or multi, so it's worth the peace of mind.

Best of luck!

Hi @Manthan Patel, congrats on taking the right steps towards getting your first property. Condos can definitely be a less scary way for a newer investor to get started and grow from there.

As Joe mentioned above, you will definitely want to add in the HOA fees and any other special assessments into your cash flow analysis. Further, it's always a good idea to do due diligence into the association itself to make sure it has adequate reserves in case of any large future expenditures. I would also recommend making sure the current owner is in good standing with the association and that all dues are current, otherwise that could become your liability post-closing.

All in all, if everything checks out and the numbers work for you, condo/townhomes can be a less daunting way to break into RE investing, especially in a high-priced market like NJ.

Hi @Chris Mandle,

Congrats on closing the refi. Hopefully you got some nice equity out or a better rate.

Closing costs generally average around 2-3% of the sales price as a general rule of thumb, but they can vary based on any number of factors. As a Seller, your closing costs will be made up mostly of realtor commissions, attorney fees, transfer tax, some recording fees, title release and/or mortgage payoff fees, and potentially some other miscellaneous items that could be unique to your deal specifically (Seller concessions/credits).

Hi @Mathew Williams, welcome to BP and congrats on taking the first steps in your investment career!

Hard to comment specifically without knowing the exact areas you are looking in, but don't be discouraged. Finding deals isn't always easy, and especially not easy in New Jersey with the property values/taxes and the hot seller's market nationwide. Nonetheless, with enough persistence and dedication, anyone can find deals anywhere.

I will say that looking for a 12% cap rate is a flawed approach for several reasons:

1) Cap Rates are really just an indication of what different properties are trading at relative to their income. It is not the end-all be-all of metrics

2) 12% cap will be nearly impossible to achieve even in a normal marketplace, let alone right now and for a house hack.

As an investor and investor-agent, I can tell you that waiting to time the market is never an advisable move. The smart play is to always be tuned in to the inventory, always be analyzing deals, know what you are looking for, so then you are ready to strike whenevr the right opportunity presents itself.

As a house hacker, I would be looking at metrics like your Cash-on-Cash return instead and monthly cash flow or mortgage paydown over putting all the emphasis on a particular cap rate.

Hi @Julian Popel,

Congrats on taking the first steps in your investing journey. I personally like Clifton quite a bit and there is solid rental demand and pricing in the right areas. For Northern NJ where very high property taxes are prevalent, $9-$10k actually isn't horrible.

As to your question about whether to buy the single-family or save some money and buy a townhouse, that would all come down to you, what you are trying to accomplish, how much you want to spend both upfront and monthly, etc.. If your calculations are correct and the numbers work, that's what matters.

I'm an investor and investor-agent in Northern NJ. I'd be happy to connect and learn more about your goals.

Hi @Gina Mann --- your head is in the right place thinking of potential pitfalls like this as a landlord!

I would recommend A) Consulting a qualified attorney to perhaps draft some sort of Addendum to the lease specificially as it pertains to the pool usage and liability and B) Consulting your home insurance company to see if there is any additional liability coverage in case of an incident with the tenant(s) and the pool.

@Aditya Samarth Rental demand and pricing are very strong in NJ. Jersey City has been hot for years due to the proximity to NYC and multi-family housing supply/demand there, so competition is and has been fierce. However, there are still neighborhoods and pockets that are lagging behind where deals can be potentially be found, but with a likely trade-off in neighborhood quality.

It's hard to recommend specific areas without knowing your investment goals, budget, ideas/plans, but as @Max Vishnev said, there are deals to be had in every market. It just takes more persistence to find them in Northern NJ. 

I'm an investor and investor-agent in Northern NJ--I'd be happy to connect and learn more about you and your investment objectives.

@Leroy Aaron You would get the Proof of Funds letter from wherever your funds are being held...if it's in a bank account, a PDF statement of that account generally works perfectly. You can also try contacting the bank directly for a more official "letter." 

@Randall Duperval Congrats on starting the search for your first home!

It is absolutely possible for you to purchase a property with less than 25% down--with an FHA loan, you can put as little as 3.5% down. There are also other low down payment loan products and programs available. The catch is that these all require you to owner-occupy the property as your primary residence, generally at least for the first year. If you're planning to house hack though, there's no issue.

Congratulations, @Maileen Calhoun! Hoping everything goes smoothly for you.