All Forum Posts by: Mike Bonadies

@James Masotti, @Lauren C. - Looks like I'll have to receive the disapproving face with @Odie Ayaga as I can't make it either =(

@Jeff Moore - Second what Odie said, its a great meet up with quality RE professionals and investors.

@James Masotti - You made me actually laugh out loud. My backyard has a flip that's been on the market for for 3 months and took 9 months of work before. I hope they didn't run a 90 scenario for their numbers.

Also jokes aside. Totally agree. Flips certainly take more the 90 days but there are some BRRRRs that can be done under the 60 day mark.

@Jason Matthews - I agree a lot with what @James Masotti said. One other assumption to check is your holding costs. Your calculator shows $1k a month which is low unless you are assuming a 100% cash buyer. If you want to appeal to a larger audience then you should take into account the cost of hard money in the holding costs and bake that into your offer. In your example a hard money loan my be around 125k-ish @ 10% depending on the experience and relationship of the buyer with the lender. You also have to account for taxes and utilities as well. So in your example the holding costs would be around:

HML Interest: ~$1041 a month
Taxes: ~$416 a month (assuming 5k a year in taxes knowing the area)
Utilities: ~$100 a month (a bit high but rather be safe than sorry)

This would mean the total holding costs for 90 days would be: $4,671. A small adjustment but one that can add up if the flip taxes longer.

-Mike

@Winnie Cheng -  I would echo the thoughts of @Stephen Kappre. Rowan Uni has manifest destiny going on right now and the college is exploding in both student base and employees which makes the surrounding towns and excellent place to invest. That said, there is more potential for fix & flips then buy and holds due to the high taxes of Pitman. Pitman's proximity to Rowan makes it a common searching place for starter homes. Many friends of mine have personally bought there for their first home. All of them being flips.

Here are some things to watch out for or things I've seen in most distressed Pitman houses:
-Knob & Tube is rampant due to the ages of the house, be sure to verify the electrical service and type.

-Flooding basements are common in Pitman because most are unfinished. Check for water damage.

-Foundation structure is another to look out for. Most distressed Pitman properties I've walked have had deterioration of the walls of foundation or of the load baring structures. I've even found a house with the original timber pylon still intact and functional.

None of these issues are show stoppers just make sure to verify it during your walks and bake it into your offer. If you are looking for cashflow Glassboro & Clayton can serve you better.

-Mike

@Michael Peralta - If you have the ability to work from home or be flexible in your location across New Jersey, South Jersey has many locations where you can house hack with your budget. Glassboro, Westville, Pennsauken, Woodbury, and Gloucester City all have many MFHs under 250k that aren't in a super rough condition.

@Odie Ayaga& @James Masotti - better believe I'll be there!

@Account Closed Employment is a major issue in Salem County. As others stated before, for NJ standards its incredibly rural. One of the major employers, Oyster Creek Nuclear Plant, started to shutdown in May of this year and as it closes down it takes with it many jobs for people in the area.

Hi @David Smith! First off, it you are new to being a landlord in NJ I highly suggest spending an hour with a lawyer and walking through what you can and cannot do. I'd find a RE Lawyer specifically and just explain you are a new to being a landlord in NJ and you want a general walk-through. It may cost $200+ dollars but its worth every cent. I did it myself and it saved a couple times already.

Now to my understanding, NJ is a "eviction for cause" state. In other words, you cannot just terminate a tenant just because their lease is up. NJ law stipulates there are 18 reasons (I'm not 100% sure on the exact number) why you can terminate/evict a tenant and you must state which reason it is when you terminate them. I believe the verbiage is a bit tricky and I'm not experienced enough myself so when I do have to do this I just pay my lawyer to send the letters. It cost a $50-75 but well worth the headache avoidance if I mess it up myself.

That said, if you don't like the tenant you can offer a rent increase or other unfavorable terms and hope they don't renew. I've never had to do that so you probably want to confirm that with a lawyer.

@Trevor Deeter - Accrual Rate is slang for saving for future financial hardships like repairs, vacancy, and capital expenditure. Technically these are contingent liabilities - they are not guaranteed to happen but you save for them so that when they do happen you are covered financially.

Example: Let's say your unit rents for 11 month of the year and rents for 1100 a month. If you save $100 a month for vacancy for eleven months your savings for vacancy will cover you during the time your unit is empty. The vacancy is factored into the income of your property.

@James Masotti @Trevor Deeter - Love the respectful disagreement neighbor! There is most definitely areas you can do a successful BRRR in South Jersey for both Multi and SFH but I do understand the turnoff of some of the tenant pools. I will say most good deals are not found on the MLS in South Jersey. Maybe I can convince you there is possibility, even in our own backyard. Here are a couple examples that I've worked with.

Example 1 - South End of Sewell - BRRR Duplex (2/1 & 2/1)
Acquisition and Rehab was $200k
ARV: $240k
In the deal for $20k
Rent Roll : $2800 a month(1400 a unit)
Mortgage: $1400 a month (200k @ 7 %)
Taxes: $516 a month
Insurance: $100 a month
Licences/Sewer/Gas: $20 a month
Vac/Capex/Repair: $316 a month (that's a lot but lets be safe)
Cash Flow: $448 + you have 40k in equity and a fat safety net each month due to an accrual rate of $316 a month

Example 2 - Lindenwold SFH - BRRR 4/2
Acquisition and Rehab was $110k
ARV: $140k
In the deal for $5k
Rent Roll : $1700 a month
Mortgage: $700 a month (105k @ 7 %)
Taxes: $441 a month
Insurance: $90 a month
Licences/Sewer: $15 a month
Vac/Capex/Repair: $200 a month (that's a lot but lets be safe)
Cash Flow: $254 + you have 35k in equity and a fat safety net each month due to an accrual rate of $200 a month

The Sewell usually has ideal tenants and very little headaches. In Lindenwold will have lower quality tenants but I look at anything south of the WHP which has higher quality tenant pool vs the norm of Lindenwold. And Lastly, you are in these deals for a few dollars but with my business model I'm okay being 5-15k a deal as long as I create equity and solid cash flow with a fat safety net.