All Forum Posts by: Mike Bonadies

@George Rodrigues - Thanks for the shout out!!

@Jake Drappi - Shoot me a DM. I am coming back to BP after a very long break. I own/manager 150 units in the area (primarily Millville). I know the area well and I can give you a few pointers on what to look out for. I love the area though. As long as you put a few dollars in the building it can be very profitable.

I wish you the best luck @Rachel Reese with your investing career. House Hacking is a very smart start. I did that to get started and a very fast effect on growing my business. To your deal...

I am a landlord and co-own a property management company that specializes in South Jersey. I manage a bunch in and around the Pitman area. Here are some things I see.

-Your 3 bed rent is slightly too high. A 3/1 in Pitman is closer to 1400 if its a duplex. I think you are picking up some college rentals in your comps which go around $450 to $550 a bedroom.

-Your garage rental sounds low. You can get $75 bucks a bay depending on size and if power are present.

-You need to verify if utilities are actually split. Pitman has a lot of MFHs that don't have split utilities. If its not split that utilities number should be closer to $300 a month.

-Got to love Pitman prop taxes, super high

-$300 is a month for cap ex/maintenance is fine, but as @Stephen Kappre make sure you verify the condition of all the mechanicals of the house

-you'll spend about $300 a year on COs/registration with the township. You should bake that number in there.

Overall

$284k is high for a duplex in Pitman. You can pick up duplexes in other areas of South Jersey for $240k to $120k (depending on town). Spending $1400 a month to house hack is almost the same as having a SFH house so I think there are better deals out there if you are trying to mitigate your mortgage/rent payment. Keep looking and you will find a deal. If you aren't tied to Pitman, try looking in Franklinville, Westville, or Woodbury. Some great house-hacking opportunities in those areas.

Best Luck!

@Bradley Rieger best luck on finding your first investment!

In South Jersey you won't see a big change in small multifamlies especially in the three lowest counties. Many of these markets had very depressed prices to start. For instance, Gloucester City and Millville are two areas where SFHs have higher ARVs than MFHs. Places like Collingswood and Haddon Heights will probably see MFHs drop as those towns were overpriced before COVID19 craziness started.

What you'll need to be careful of is inheriting bad tenants. Lock outs aren't and won't be occurring for a number of months so it is vital that if you buy a property with inherited tenants that they are good and well veted.

Another barrier is the change in the lending landscape. FHA guidelines (as well as most loan products) are changing daily. Make sure you stay close to your lender to know exactly how much cash you need to close. I am seeing reserve minimums increase as well as escrows increase.

 

Thanks @Odie Ayaga for the shout out! @J Womack my partner @Drew Side and I are GCs that do full rehabs in South Jersey - specifically rentals. Feel free to give me a DM if you would like to talk. I do encourage you to have a property under contract before asking for quotes regardless of who you pick. Demand is steep for contractors and trades most won't go out to a property unless you have it under contract or you are a repeat customer.

@Zachary Olley shoot me a DM and we can connect. To your question it really depends on your comfort level both are possible!

@Zachary Olley determining ARVs of MFHs in South Jersey's less populated spaces can be very difficult. @Stephen Kappre made a great point of getting a local expert agent who can help you out. That said understand MFHs in the Southern NJ can be hard to pin. There are a number of factors that drive that:

1. Limited amount of sales that occurred and were recorded - This is a big problem in the southern most counties. Many MFHs are seller financed and the sales never get recorded naturally depressing the market. This is seen in places like Salem, Millville, and surrounding towns.

2. Everything is a unicorn - Most MFHs in South Jersey are pre-1950 and none of them were built the same. It makes getting apprisal difficult because sqft, bed/ba count, and features change wildly from one to another. Take for instance Millville where I can have six MFHs right next to each other and zero of them will look alike. 3000 sqft duplexes get appraised to be just as much as 2700 sqft triplexs

3. Income Approach Doesn't Help - This is because rental comps are showing less and less on the MLS. What's the most effective tool for filling units in Deep South Jersey...a yard sign. Old school landlording is very much alive down in South Jersey. This means there are very limited amount of units that rented out on the MLS driving the rental comps down and puts pressure on the income approach for small multi unit buildings.

Best luck with your search!

@Nnamdi Mowete welcome to the Deep South Jersey Market! @Stephen Kappre is very knowledgeable about the area and he is a great resources.

I manage rentals and have rehabbed houses in Salem County (Salem City, Alloway, Penns Grove, and Pennsville). Salem County can be one of the toughest areas to landlord in the state, especially Salem City and Carney's Point. Penns Grove is step above both but the toughest part is finding a quality tenant. Salem County has a depressed economy and the average income is low. Furthermore the properties are older and have a considerable amount of deferred maintenance. If you buy one in the area I would be comfortable with pre-1950 construction.

Best Luck! 

@Mark Rabkin congrats on buying your first rental property! There are a lot of mis-conceptions around Section 8 - one is that all section 8 tenants are a pain. That is simply not true. Some of my section 8 tenants are some of the best because they do not want to lose their voucher which is very hard to come by, especially in NJ. The second misconception is that Section 8 is a unified program. It's not. There are three types of Section 8. Let me breakdown my experience with each.

Federal -  The fastest moving of the three. These tenants normally get a blanket voucher amount which they can use on any rental as long and the bedroom count lines up. There is some paperwork involved but the federal offices are pretty tech savvy and processing it can be fairly painless. I would allow a 30 day window from purchase to actually verifying with Section 8 that you are the new landlord and that payments should be sent to you.

State - This is the slowest and least well ran group. NJ Section 8 can be a bureaucratic trainwreck at sometimes. They require a ton of paperwork and their offices still require "wet signatures" to function so it makes it a challenge to get everything done in a timely manner. Their processing timeframe is long too. It can take up to 4 to 5 months for state section 8 to recognize new owners. Some offices are notorious for not sending payments on time either.

Municipal - I don't have a ton experience with these guys and only a few townships have them in South Jersey. So far they have been fast and lenient. Payments do seem to come in on time as well. While the paperwork is similar to federal and state I've noticed I've need less than both which makes it pleasant to work with them.

Best Luck!

Hey @Anthony Sinigaglio you are operating in South Jersey and that's where I invest! You do not need to have a licensed contractor do the work. Furthermore a HIC licences is very easy to get in NJ and requires no tests or portfolio of work whatsoever for that reason it means almost nothing in NJ. Its better to ask other investors who they use and go off of references. Best Luck!

Thanks @Stephen Kappre for the mention and welcome @Victoria Essex to the world of RE in South Jersey! I think @James Masotti hit it right on the head. SJ re community is pretty tight and its a relatively small area so we all know each other. Attending SJREIG and SJREIA are both great starting grounds. You can get to know everyone and learn from them. Taking that even further you may be able to find a member who needs someone to run errands or take care of miscellaneous to-dos for their RE business and you can be that person. In exchange they might be able to give you a slice of the deal, which is a win-win for you. You'll be able to make some money and learn more while getting to actually execute deals.

As for South Jersey itself, its an excellent area to do RE investing. I'm a landlord specifically and there are a ton of good buy & hold deals in the lower 5 counties. The cost of entry isn't too high either. You can pick up SFHs in places like Gloucester City or Sicklerville with LOCs. If you can get a decent paying job to build up some finances you can get in pretty quickly.

Best Luck!