All Forum Posts by: Larry S.

Hi @Daljit S.. I had a home under contract in Hudson county two years ago, and in the inspection an oil tank was found.  The home inspector's report in big, bold, red lettering said "DO NOT BUY THIS HOME WITH THE OIL TANK."  Under no circumstance would I have purchased the home without the buyer having it removed, and having the soil tested to make sure there wasn't a leak.  The purchase ended up taking six months from offer acceptance to closing, mostly due to the complications of the tank. 

Everyone has their own risk tolerance.  For my first house hack, I was not willing to take on a home with a known oil tank that could have lead to unknown issues down the line.  The way I looked at it was: either the seller would fix the problem and I'd end up with the property, or I would have learned a lot and saved myself a huge future headache.  The seller in my transaction was willing to remove it.  I would have walked if they didn't remove it.

This looks like a great event.  Look forward to meeting everyone there. 

@Kay March 2 of the 3 were being purchased with conventional owner occupied loans. The third was an investment property 

I have been under contract to purchase three properties in my life.  All three purchase appraisals came back at my exact purchase price. One of the purchase prices was $492,500.  What a coincidence that the appraisal came back at exactly that amount, rather than $490k, $495k, or $500k.  

As @Jonathan Greene said, it's hard in NJ to get a tenant out.  In Union City it's even harder.  UC has some of the most tenant friendly laws around. Back in April UC passed an ordinance preventing eviction of tenants for any reason (https://www.ucnj.com/web_conte...) which I believe landlords sued to have overturned.  The rent control in UC is about as strict as you'll find too, so a potential buyer could have a lot of trouble raising rents, which I imagine is something you've seen yourself.  

If I were you, I'd try to contact the Union City Housing Initiative. They would probably have good information for you.

@Web A.

Back in April, Gov Murphy signed Exec Order 128 which allows tenants to direct their landlord to use their security deposits to offset rent or back rent.  I do no know if a landlord has the ability to decide to withhold the security deposit for rent without the tenant's consent / direction.  I have not had a situation where this Exec Order would be relevant.  Below are links to the actual Exec Order and a brief summary of it:

https://www.nj.gov/governor/ne...

https://nj.gov/infobank/eo/056...

@Andrew McElroy Property taxes are another expense, just like insurance or vacancy. Yes the taxes are high in NJ, especially closer to NYC.  But so are rents.  The higher rents should more than make up for the higher property taxes.  Even if the property doesn't cash flow while you live in it, you can drastically reduce your living expense and then cash flow once you move out.

Hi @Andrew McElroy. I also live in north Jersey and was at the same decision point as you.  Though at first I didn't really consider buying around here due to the high price point.  I had a house under contract in Kansas City that fell through at the last minute and it's the best thing that could of happened.  You are going to have to live somewhere, so why not reduce or completely eliminate your housing expense while house hacking?

When buying an out of state property, you most likely will need to put down 25% since it's an investment property.  If you take that down payment, it can become a 5% down payment for a house hack here.  I was going to buy a house for $115,000, which meant I'd put $28,750 down.  Using $28,750 as a 5% down payment, you can buy a home worth $575,000.  Then each month, the loan paydown will be greater, you will get more in rent, so you probably will be able to cash flow a greater amount every month.  Plus you get to learn a bunch while being a landlord and managing the property. 

Feel free to reach out if you have any questions.

Hi @Robert McCormick, I'm doing exactly that. You listed basically every north Jersey county except Hudson, any reason in particular, or just an oversight? I have a duplex in Hudson County. Why did I decide on Hudson? Well I was already living in Hoboken, wanted to stay nearby and love the proximity to NYC. I financed it with a 5% down conventional loan. Unfortunately the loan I used is no longer available, but there's no reason you couldn't use a 5% (or 3.5%) down FHA loan.

In the pre-COVID world, in person meetups were a great way to meet people.  There was a meetup that I attended regularly and met people through it.  Some were like me, looking for their first investment. Others were much farther along in their investing careers.  I learned a ton from the host of the meetup and he was able to recommend many resources (agent, handyman, etc) to me.  

As you mentioned, the cost of living in north Jersey is high.  So I wouldn't worry too much about many of the rules of thumb that you read here on BP.  Though depending on your goals, you shouldn't have trouble finding a property that works for you.  With the high property taxes, you'll have trouble finding a property that meets the 1% rule.  You might not find a property that cash flows while you live in it.  But you can definitely find a property that allows you to rent out the other unit(s) and reduce your living expenses while living there and also gain loan paydown and appreciation. 

Hi @David Spangenthal, I would challenge your statement "my first deal will need to be out of state".  I live in Hudson County, but the same idea applies to all of northern NJ / the NYC suburbs.  

Let's say you find a house the MFR out of stat that you are looking for and it's $120,000. Since it's an investment property, you'll need to put down at least 25%, and I'm not sure if that will be higher since it's a MFR. 25% of $120,000 is $30,000. If you were to buy a MFR here in north Jersey, as an owner occupant, you could put down 5% or even 3.5%. That $30,000 as a 5% down payment would buy a $600,000 house.

There are benefits to this more expensive house in NJ. Any appreciation is on a property worth 5x as much.  For each mortgage payment, the principal paydown is much larger as well. It's hard to quantify exactly with interest rates on the two loans (and you generally get a lower interest rate as an owner occupant), but it could be $700 per month right from the get go.  

I was in a similar situation as you. Two years ago I thought I had to go out of state and had a transaction on a SFR fall through at the last second. I'm so glad it did, because I now have a duplex in Hudson County and I benefit from everything mentioned above.