All Forum Posts by: Mike Bonadies

@D Higgs I think @Patricia Steiner hit a lot of the core aspects. If you have a PM or are vetting one make sure to understand the expectation on property walks. Understand how often they will occur, how they will be documented, and how the information from those walks will make it to you. Similar to Florida, twice annually is the norm in NJ. 

Also make sure to check with your tenant-landlord laws. Some states may have restrictions on how frequently or how much notice in advance you need to provide when walking a property.

Hi @Viana Bailey ! 

First off, congrats on getting the property. Slight hiccup with the occupied status but you'll get through it.

@Charlie Hampton hit it on the head. Get a lawyer. NJ has some very specific Landlord-Tenant laws that are very unique compared to other states. I'm a landlord in Gloucester, Camden, and Cumberland counties which isn't very far from you. It sounds like the people living there have been there for more than three months which gives them squatters rights. You can try cash-for-keys but that can also set you back and be used against you in court. 

If your rental is in Gloucester, Camden, or Salem counties DM me and I can refer you to an eviction lawyer.

@Simcha Davidman I think@Alina Trigub had a great suggestion. Finding other small building owners and "pooling" your units together to get a dedicated PM is a great way to get a discounted rate as well as dedicated staff. It allows you to get the focus your units need at a better cost.

I see you live in NJ and I also live in NJ. @Frank Procopio suggestion is a really good one but there are some legal snafus you can face if your property is in NJ. To manage a property (as in collect the rent and enforce a lease) in the state of NJ you either have to have an ownership interest in the property or the PM company has to operate under a brokers license. If you have a grounds keeper who lives on the property you may run into legal issues down the road. If you just need a repair person to fix things than having a groundskeeper should work but the owners would still need to enforce the lease and collect rent.

Best Luck! 

@Brendan Edwards Philly & South Jersey typically get lumped in with one another. If you plan on buying or have rentals on the Jersey side of the Benjamin Franklin I highly suggest you get a PM company specifically for NJ as their laws and practices are very different from PA. If you need someone in South Jersey shoot me a DM and I'll get you connected.

@Lance Hitz I Think @Ian Walsh, @Isaac S., and @Mike Fontaine hit some very good points. 

There are ton of little elements you need to account for that your standard buy & hold investor normally doesn't take in account here are a few. Here are somethings to consider if you decide to transition to your own business.

1. Insurance - You need a bunch of it as a Property Manager. You'll need E&O, general liability, building (if you have an office), and workers comp (if you have employees).

2. Banking - You'll need a bank that has a large enough escrow account to hold all tenant deposits without co-mingling funds (each state is a bit different so look into your specific regional laws). Furthermore you going to want to be able to move those escrow accounts without too much headache and paperwork. Additionally as a property management company you are going to blow away the transaction limits of many banks. Make sure to find one that knows your business and will work with you. Lastly, check into your real estate commissions rules on bank accounts for property management. Some states dictate that the escrow account must be the one that is tied to the RE brokers license.

3. Contacts - You'll want two types of lawyers on retainer. One to handle the contracts between you and the owners of the property. The second to handle the landlord-tenant contracts (leases, addendum, etc...). Working in multiple counties? You may need a landlord-tenant lawyer for each county (talk to a lawyer to see if that is necessary the laws should be the same but you want someone who knows the norms of how the law is practice in each county). 

Best luck! Getting started this early and learning will help you crush it later!

Hi @Matthew Meade, 

I think Antonio captured a solid point about Condos that you need to weary on. Outside of HOA fees make sure to read HOA by-laws. Some condo associations restrict the amount of time a condo can be rented, who it can be rented too, and what kind of modifications you can make - they may outright ban AirBnB.

Additionally, consider how you are purchasing the condo, traditional financing can get a bit strict around Condos. Many banks want to see what % of condos are rental condos and they don't want one person to own more than 25% of the building (that number changes) so make sure you understand what your financing requirements will be.

Lastly, as for condos themselves, South Jersey beaches have some viable places. Margate and Ventor small condos are viable (8 or less buildings where the associations aren't monsters). I can't speak for North Jersey. I do know a RE agent who knows the Condo market very, very well in AC/Brigantine, Margate, and Ventor. Feel free to DM me and I can put you two in touch.

-Mike

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Westville.

Purchase price: $215,000
Cash invested: $31,250

The Deal: Three separate duplexes all of which were physical neighbors to each other. We picked up this property in a portfolio deal that included another mix use Quadplex. It was an estate sale and the current owners inherited the property and did no want to be landlords.

What made you interested in investing in this type of deal?

What Made It Interesting: These duplexes and two value adds and additional government benefit that made it an even juicier deal. The first value add was that rent rolls were not market rate and we had an opportunity to drive them up over time. The second was that properties had opportunities for cosmetic updates allowing us to BRRRR them. Lastly, these properties were in an economic redevelopment zone so by improving them we were awarded tax abatement for 5 years.

How did you finance this deal?

The Financials: We used hard money to purchase the entire portfolio including this property. 10% came out of pocket for the entire portfolio and the hard money lender covered the rest. We are refi-ing the properties as portfolio too which gives us some unique rate benefits. The ARV for these three is approximately $460k so by the time we finish refi-ing the properties we will be almost zero dollars out of pocket.

@Rob Cucugliello - This is a very state specific question as its dependent on state specific landlord-tenant laws. My properties are all in New Jersey (South Jersey to be specific) so I can speak to that state. First off, I do want to state that I'm not a lawyer and that you should consult your specific situation with your lawyer for the definitive answer. The answer is two folded in NJ. To my understanding the law states here that you either have to have an ownership interest in the property or you have to have a RE brokers license to collect and enforce a lease.

Collecting rent and enforcing a least for Properties in an LLC:
1. The collecting entity must either have ownership interest in the property (Example - Any member of the LLC or someone who works for the LLC who either owns your LLC or has partial ownership of the house)

or 

2. Have a real estate brokers license (Example - if you have a PM company they must have a team member who is a real estate broker)

Collecting rent and enforcing a least for Properties you personally own:

1. You may collect rent

or

2. Have an LLC who has either an ownership interest or has a a member who has a real estate brokers license 

As you can imagine this gets tricky when you personally own your property but try to send everything through your LLC. Unless your LLC has ownership interest in your property or has a member with a brokers license its legally vulnerable. If you try to claim that you own the property as the owner of the LLC who also personally owns the property the court can pierce the veil.

All of this being said, the only time I've heard people running into this issue is with professional tenants who intentionally try to work the system. Otherwise I haven' heard of blowback.

-MB  

Hey Joe - 

We've spoken before on Woodbury but I figured I'd provide this information for anyone else who may be curious and to help spark the conversation.

Woodbury is very similar to Gloucester City in the sense of demographics, rent roll, house conditions, and tough local government.

Its a blue collar town with moderate crime. The buildings, especially the multi-families, are old so do extra due diligence when estimating repairs. That said its the seat of Gloucester County so it will always be an economic hub in some shape or form.

ARVs on duplexs float anywhere around 120 to 160ish after they are rehabbed.

-MB

@Steve Mcdonald There are a couple elements you might want to check into in greater depth

1. HOA by-laws and restrictions on tenants - Some HOAs put restrictions on renting out a condo in the building. Some restrictions are strict, mandating certain credit scores, specific types of business, etc... and some are laxed. Make sure you read them. I've gone under contract for what I thought was a good deal on a condo to realize their restrictions were crazy.

2. Seasonal Renting - Its common in the shore area to have a 10 to 14 week rental window and for leases to be either monthly or weekly. That said when that time period is over you place will either be vacant or you will have to find a winter tenant. With retail is will be very hard to find a winter tenant. Make sure you check that the $1500 a month isn't a seasonal rate versus a year round rate.

Overall Ocean City is probably the most popular of the South Jersey Beaches but that also leads to price inflation. You will certainly have demand but consider your investment over the long haul. I personally like places like Atlantic City, Wildwood, and Margate more. They aren't thriving as much as OC now but they all making the right moves to grow the city (and prices are much lower).

@Keven Vanegas is a property manager in the area and might be able to help you more with specifics.