All Forum Posts by: Matthew McCormick

Aha yes, for your first property it sounds like a repair hassle unless you have the right construction contacts. I’d get a GC or architect to give you an indication about repairs. Seems common with older houses especially those 100 year old houses in the north Jersey area. I doubt a seller would repair that. If anything and if they’re looking to sell immediately, they’d give you a credit you can use towards repairing it on your own. 

However, yes it is entirely legal for them to sell it in that condition. Either if it’s an as-is sale, or especially now if you’ve completed your inspection. In a sense, if you’ve done the inspection, had it come up in a report, were aware of the issue (as showcased here) and then bought the house regardless, no fault would likely come on the seller’s if an issue should (god-forbid) happen sometime in the future. Hope that helps! 

What material is that roof replacement? For 9 squares, that seems very high but I could be wrong as I haven’t a lot of experience with roof replacements. Could also be our higher cost area. Are there intricate pitches and shapes of the roof? Or is it pretty standard? Definitely go for those other quotes, the more the better. 

I wouldn’t worry too much about the back steps. You can always hire a carpenter to fix those quickly. 

As for the seller's market, originally I was going to say don't bother as they probably have other offers. This market has been crazy. However, then I thought about it more and what's the worst they could say? No? Then it's all up to you. So you have to ask yourself, are those issues deal breakers or would you be comfortable continuing forward, knowing you will have to tackle them after closing? If it's an investment and you're planning your ROI, I guess think about the bigger picture. If it's too much to tackle alone or if you don't believe it's right to take on all of those hassles without some conditions, then I'd walk away. Other properties will appear at some point.

This is precisely why I am trying to being out of state investing. Our local area is extremely expensive for the property you get, and the laws are completely burdensome to the owners of their own properties. 

This is a tough case, because as you said the NJ eviction moratorium is extended. However, if she is month-to-month, I would at least get her to sign an official lease originating from yourself (not the previous owner). It could still be month-to-month but make sure there is a clause that states if she is unwilling to renew, she could be charged 2x rent (or whatever the NJ limit is) if she remains on the property unapproved. 

There are a few issues however, first I believe there may be some NJ landlord law about tenants who have been on the property for many years, and how you need to give them extra notice/follow extra standards about renewals. I'm not 100% sure, and I don't know if 6 years meets that standard. I would definitely speak with an attorney. The other issue is, in NJ lease expiration is not grounds for termination. The local politicians we continue to elect have made the state extremely non-landlord friendly. Therefore, you can't terminate or refuse to renew someone's lease strictly because their lease is up. There needs to be grounds (violations, non-payments *not applicable right now*). Keep a record of all of your interactions and any/all violations. If she really is a problem tenant (your instincts are likely correct) it probably won't take long to build up a file for her. 

The fact she refused cash for keys is troubling, should you make a higher offer? Would it matter? You may be able to raise her rent, but depending on the area (likely in this scenario in Essex County) there will be limits to how high of an increase.

Hi BP Community:

I am trying to gather inspiration, ideas, and advice regarding out-of-state investment properties, and what you would do if you were in our situation.

Currently I along with my father, manage a few units in NJ (nothing big, we’re talking 5 or less). We just sold a multifamily here in Newark, NJ, and have a nice profit to transfer towards our next purchase. We feel comfortable with using around $100,000 towards expanding our portfolio or at least trying a new method. Our market is extremely expensive even with the funds the house provided. Additionally, the location/state/laws are not at all landlord friendly (but I’m sure most of you know that!).

So, if you had a good starter amount to spend on an out-of-state investment property:

• Where would you look?
• What details would be most important to you? 
• How would you get in touch with local lenders? We are considering hard money lenders if it’s the right fit, although we’ve never gone that route before.

If the conventional rule is 25% down for investment/non-owner-occupied multi families, then we'd probably cap our search at $450,000 ($112,500 down) but preferably less. 

I should also mention, the way our scenario works is my father purchases the properties solely in his name and I handle the day-to-day operation. Everything from tenant repair requests, contractor dealings, realtor involvement, attorneys, tax preparation for the accountant, screening tenants, preparing leases - I handle. We’ve been doing this since 2018 and it’s been a phenomenal albeit stressful experience! I definitely love it, and believe I have a strong foundation to manage properties with the right contacts (which is why I think Out-of-state is the way to go)!

I really appreciate any thoughts/ stories/ tips at all. We’re brainstorming at the moment. The house was sold last week!

Thanks all,

Matt

This is great! Would love to join the next one. Where can I sign up for info? 

This is extremely helpful. I really appreciate all of the effort that went into this post! Thanks so much! 

@Moe Hirsch Yes, it's very relieving to see the area being so popular lately. To put things into perspective, our property on Lawrence had 5 offers all above asking when we purchased last year. We weren't anywhere near the highest, just had better terms I guess. I can't imagine what the competition is like today in light of this insane summer market. 

The 2 bedroom is on the smaller side... roughly 700sf. However, it has a pretty decent size kitchen which really helps make up for the smaller "living room" area. the 2 bedrooms are decent sizes, and everything is completely updated (new floors, paint, SS Appliances, Quarts countertop, cabinets, etc). The only thing that wasn't complete but on our list eventually, is lighting fixtures. For now, it's the basic ceiling dome lights but eventually I would add some more character... not necessarily for the ROI on rental amounts, but more so because I think it will help with the style. Again, this is $1,750 this market (COVID and all).

3 bedroom is 2 floors (one bedroom on the main level w/ kitchen and living room and 1 bath).

Also, if they're not on a lease, are they considered Month-to-Month? If so, it might be possible to give them their 30-day no-renew notice and that wouldn't be considered an eviction because their "contract" has ended! I would consult an attorney either way though. Newark likely has some even further restrictions than general NJ laws. It might also depend how long of a resident they have been.