All Forum Posts by: Lance McCaskill

I see a lot of misinformation over Union City's rent control law in this thread. Union City has updated their Rent Control ordinance over the last several years, but has not updated their E-Code. Visit the rent control office and they can provide you with a copy of the ordinance. Make sure you hire an attorney who has experience with rent control in Union City. 

@Ishmael Johnson The eviction moratorium has expired as of end of August and normal laws apply. However, a new eviction prevention bill was also signed into law that makes it more difficult to evict someone for nonpayment of rent.

@Rashad Ellis Congrats on the closing! I could be wrong, but I think 3 unit has to be owner-occupied in order to evict (see Grounds for Eviction). Just curious, how much cash did you offer? If you don't have any leverage to evict, smart tenants will know their rights (they also have their own tenant lawyers advising them) and turn down a small amount of cash (say $10,000) because they will end up spending more than that once they start paying market rents. I know it is tough, but it is not uncommon for tenants in this area to expect around $50,000 - especially if you don't have any grounds to evict. But once you buy one tenant out and you move in, then you have the leverage of eviction and can get the other 2 out (evicting if needed). Even a good eviction attorney won't be able to get you out of that until you've established the legal grounds yourself. But as for an attorney recommendation: Adolfo Lopez in West New York, NJ is a landlord himself in NJ and will do an in-person consultation with you for just $50. Not sure if he works outside of Hudson County though. 

Hey @David G Aburto, I am not an attorney, so in no way is anything I share on here any type of legal advice. If you are thinking of investing in Union City, more than anything else, read through the code and/or talk to an attorney.

However, from my understanding of Union City code, if you can no longer claim the owner occupancy exception, then standard rent stabilization (of only being able to increase rent each year by 3%) would apply. Which, 3% is basically just enough to keep up with inflation (which historically is around 2%). If you are looking for cash flow, then success or turning a profit on a property in Union City would depend on your ability to get the property to market rents. Once the property is at market rent, then 3% increase actually is not that bad. If you are able to rent a 2 bed unit out somewhere between $1600-$1800/mo, then 3% is somewhere around $50/yr that you could increase it. However, if you find some really great tenants that take good care of the property, you might not want to increase it the full 3%. A great tenant that pays market rent, doesn't destroy the place, and doesn't bother you all the time, might be more profitable and more desire-able in the long term (if you don't have to spend as much on repairs, vacancy, and advertising, etc) than trying to get your rents to the top of market.

@Alan Liu you left us hanging!! Did you have any luck with your offer?

Hey @Greg Clark congrats on getting the property under contract! Your math makes sense if your rehab estimate and projected rents are accurate. If you plan on holding this property long enough, and you are able to rent it out, then the $6k will pay itself off and make sense. Also, the money you put into rehab + vacancy (I am assuming that, by vacancy costs, you essentially mean that you are paying PITI + Utilities yourself instead of a tenant) you can eventually get back once you are able to refinance or sell the property. Another thing to think about is whether or not you want to inherit that tenant vs selecting your own. Depending on where you are located, you may have a difficult time vacating the property (given the eviction freezes) if the tenant does not want to leave. If you screen this tenant and they turn out to be a great tenant, then maybe it's worth it for you to keep him/her. And then if you want to keep the tenant, then like @Anthony Wick said, maybe try raising the rent a little.

Hey @Abdoul Guisset, Union City does seem to scare away a lot of investors due to Rent Stabilization. But to second what @Justin McElroy already said, Union City does have an exception to rent control when the owner occupies the property. However, please do not accept anything I write here as any kind of legal advice. You can read through Union City's rent stabilization control code yourself and look through the exceptions here: https://ecode360.com/15396991

Keep in mind that in addition to this code, there is a rent increase freeze in place in Union City (in addition to the state's requirements) until 2 months after the state of emergency is over. You can read more details here: http://www.ucnj.com/web_content/pdf/ordinances/Moratorium-Rent-Increases-Ordinance-2020-11.pdf 

Since you are looking to finance this deal (i.e. you're not a remote cash buyer) and you're willing to move in... in my opinion, there are several deals for you in Union City right now. You can use your strategy as a competitive advantage to beat out wary cash buyers and still make money due to the exception to rent stabilization for owner occupants. You might even be able to get a better deal by purchasing a property with existing tenants paying below market rent if you are willing to go through the process of vacating the unit (removing the tenants). I am using this approach and just put a property under contract in UC using FHA, offering slightly more than asking, that has over 30% instant equity baked into the deal.

Hi!

I am a new real estate investor looking to purchase my first deal. I have spent a lot of time reading, watching webinars, listening to podcasts, educating myself and learning how to evaluate deals. I currently pay rent in West New York and am looking to make my purchase in Hudson County (North Bergen, West New York, Union City, Jersey City, Bayonne), Southern Bergen County (Cliffside Park, Fairview), and potentially Essex County (for the right deal). My investment strategy is to "house hack" a cash flowing, owner occupied 2-4 unit multi family home, that also needs some rehab, using one of the FHA loan options. My budget is $600k, though I am looking to spend less than $180k/unit (depending on age and/or condition property). I work in Midtown so I am trying to keep my commute close to 1 hour. If you have any experience purchasing a deal like this yourself in the last few years, I would love to connect and pick your brain/learn from you and learn about your experience (can you send me a dm)? Also, do any of you know someone that has experience converting/adding units (such as converting the basement into a 3rd or 4th unit) in these areas? Or maybe did you analyze converting/adding a unit and decide not to?