All Forum Posts by: Kevin P.

I like your response! Funny.

Wow, I could not disagree more. Also, I speak from experience. I have invested in Ohio, and New Jersey has been much much better for me. Also, out of state investing has always been known to be more risky and with more headaches. It’s always better to be closer to your investments. There are some good places to invest in Ohio, but there are many places with depressed economies that will never get better in any case. Good luck.

Dude! Adam. I bid on that house but you won because it was all cash. I actually bid $121,000. Congratulations on the job you did. We were going to add a 3rd bedroom there in that kitchen area. It did teach me that cash is king because it happened two times in a row where a cash bidder eeked out a win. Nice job. If you are ever interested in checking out a property let me know. I am a licensed realtor. It looks like you listed it in 2019 but I'll bet you're glad you didn't sell it then. :-)

Quote from @Javier Duenas:

HI Kevin, I'm not 100% positive on the meaning of hard money lending, but if it's private lending rather than a bank, then I think that would make it even harder to obtain. It's hard for anyone to want to invest on a newbie who's never done fix and flips. I don't know of anyone who has the money and would want to risk it. I've been also told of a construction loan ( I think it's called 203K) or something like that. I don't know how it works and how I would pay that back. After fixing and selling the property and paying back the loan, plus the down payment from the HELOC, I'm not sure if the numbers will work to make a profit. It's very confusing. I feel like I'm stuck and don't know how to proceed. Again, thanks for your responses and advice. Please feel free to continue throwing advice and ideas. I truly appreciate it. Thanks!

 A hard money lender is pretty much the same thing as a private money lender. They would charge you a little bit more because of the lack of experience. Yeah you always have to run the numbers and if they don't make sense move on to the next one. Most of the time repairs that I've done are less than $$20,000 per house but I've done almost all the work with my wife. I leave the tricky stuff for the professionals but painting and flooring and drywall are not that difficult. Good luck whatever you decide to do.

Quote from @Javier Duenas:

Thanks Kevin and Zach for your responses.  I didn't know you can hold the fix and flip for a year to help with the taxes. I still have a lot to learn but definitely want to start investing in 2024.  It just hard in NJ right now to find any deals on fix and flip. As a newbie, I rather do it in state where I have control of the job and able to keep an eye on the process.  Thanks again, I appreciate it. 

I agree with you on investing locally. That's what works best for me. I just wanted to mention that you will need to find a hard money lender since you are using the HELOC money for down payment. A traditional bank would not be interested in lending for that reason. 

Hi there. Congratulations on taking the first step and getting the HELOC. If you are getting eight to eight and a half percent on that HELOC you were getting a good deal. My HELOC is around 9 and 1/2% now. You are just like everyone else who doesn't have cash for a large down payment. The numbers are just not going to work out on a buy and hold investment. That's the type of investor I am but I am forced by the interest rates to start doing flips. Flips can work out at the moment. I don't know what the deal is that you were advised against but if you have the right deal flips are about the only thing right now for a person in that situation. So I am doing flips now and when do you find the right deal you can fix it flip it pay off your HELOC and put some cash in the bank. I don't think you're missing anything but I'll let others chime in and see what they think. Good luck and stick with it. Oh, and about the capital gains, you could try to hold it for a year and maybe get some short-term rental happening or a 1-year lease with the understanding that they would move out after that? That way you would not have to pay short-term capital gains. That would make a huge difference and you might not have to pay any taxes on that.

Quote from @Michele Cosenza:

In New Jersey is it legal for a landlord to ask you for first months rent ,a month and a half security and last months rent

In New Jersey you can only ask for the first month plus 1.5 months for security. Sometimes I have prospective tenants offer me 6 months of rent just to enhance their application. Do not ever accept this. It might be a trick or it might be innocent but it opens you up to lots of legal trouble.

Hi I have two section 8 tenants starting near the end of 2020. I had contemplated section 8 about a year earlier and I wish that I did because it would have protected me through COVID which was a difficult time for us as landlords. The process getting them set up is not too difficult and they are very consistent with paying the rent. The tenants that we have gotten have been on time payers and good tenants. All in all I think I will continue with an even mix of section 8 tenants and those without. The rental contracts are annual so you will have an opportunity to raise the rent as long as it's not too much. Something like 5% should be fine if the market has gone up. However since the market has been really crazy for the last 3 years, you would not likely be able to raise the rent to market rate. For example, in the past two years a three-bedroom house that we rented for $2,400 is now renting for $3,200 in that area. I wouldn't want to raise it that much anyway because I don't believe it is reasonable to do that.

Hi Hector, 

I'm sorry if you mentioned it but I didn't catch it. Are you working with an agent that specialized in or has enough experience in working with investors interested in distressed properties. I started out with such a person here in New Jersey and it has made a big difference to me and in my success. I am a buy and hold investor though I'm switching to flipping because of interest rates. It sounds to me like you are getting close to your first deal. For me, I did go a little outside my parameters of what I thought was a perfect deal in order to get my start and I was glad I did that because the analysis paralysis was killing me. So my contribution to this discussion is to make sure your agent can walk into a distressed property and point out some of the flaws on day one. Agents will give a disclaimer before they say anything because they are not fully qualified to give advice on building structural integrity but a skilled agent can weed out the worst and save you time and frustration. Good luck, Hector. You are heading in the right direction my friend!

Quote from @Natalie Schanne:

@Kelly Williams - I don't know what your family situation is like, but if you are capable of buying a larger house like 5-6 bedrooms (it won't be listed on MLS like this, but look for spare rooms that could be made private like a dining room) and 2-3 bathrooms, you can rent out the spare rooms in New Jersey for $1000-1300/month depending on amenities. That's how you cashflow it. I would NOT expect tremendous "just because" appreciation over the next 2-3 years unless you're buying and rehabbing a dump and creating forced appreciation. The past few years with extraordinary appreciation "just because" should be a thing of the past. The market is definitely softened in terms of prices went up and interest rates went up (so affordability fell) and now a house gets 1-3 offers over 3 weeks instead of 5-10 in 1 week.

 Hi Natalie,

Is it legal to rent out rooms long term with a lease in New Jersey. I'm asking because I have always rented SFRs as one unit because I want to do things legally, getting the C/O and having the house inspected and paying any local landlord registration costs. When I was considering one purchase which was a mother/daughter style I was cautioned that the spare unit could not be rented legally except to a family member. It's my understanding that the Department of Community Affairs regulates all "rooming houses". What is your take on this? I do own a 5 bedroom house which could be expanded to 6 bedrooms if needed and I'm currently getting $3,200 for it but of course it would be desirable to get 5,000-6,000 if I could. The city might have something to say about capacity as well.