All Forum Posts by: Ian Loew

Considering selling a 2 family house in Northern New Jersey. One unit is 2 bedroom, 1 bath and second is 4 bedrooms, 2 full baths. There aren't other 2 family homes in the town with these specs. They only similar comps are single family homes with 3 full baths, 6 bedrooms. How do I assess what the base listing price should be?

My wife and I are in the process of purchasing our 3rd 2 family property. We currently live in our 1st which has been a huge success (house hack). We are nearing a year on our 2nd. Made several costly mistakes but was a tremendous learning experience. Now we are out of attorney review on our 3rd. We have decided to go with traditional financing, 25% down @ 4.65% on a 30 year fixed. Our intention is to BRRR: buy, renovate, rent and possibly refinance.

Unlike our two other properties this house is situated in a less than desirable area. However our real estate mentor who has over 30+ years of experience in our marketplace thinks it is a sure bet. My guess in 10 years it will gentrify, he is more optimistic.

Technically there are 2 units and 3 floors but a few oddities:

• 1st & 3rd floor are on the same electrical panel
• 3rd floor was rented as a boarder apartment (full bath but no kitchen / currently no tenants)

Cons include:

• major electrical work (federal pacific boxes need to be replace / upgrade from 60 to 200 amp service)
• water heaters are at the end of their life expectancy (2002 / 2004 respectively)
• Unit 1 floors need to be refinished
• Unit 1 kitchen needs all new items

Pros:

• 2 blocks away from NYC mid-town direct (40 min into NYC by train)
• 1st floor is currently rented to a great section 8 tenant ($1,269 month total rent)

Specs

• purchase price: $232,000 / $174,000 loan
• closing costs: approximately $12,000
• 7 total beds
• 3 full baths
• total 2,136 sq ft
• built in 1917
• last sold in 2003 for $87,000

Monthly Expenses:

• insurance: $125
• landscaping: $100
• property management: ? (currently will be me)
• sewer: $40
• taxes: $729 ($8,750 yearly: crazy high taxes but common for Essex County)
• water: $70

We are thinking that the 2nd & 3rd floor / Unit 2 could rent for conservatively $1,750 a month (4 bedrooms / 2 full baths). Since it is in a downtrodden area of town we might try to rent to another section 8 family.

We've obtained a home equity line of credit against our current home (2%+ prime) and budgeted up to $25,000 for necessary upgrades like the electrical, kitchen appliances.

Without paying for a management company but figuring in 10% of annual income for captal expenditures ($293 monthly) our monthly cashflow is approximately $350.

I would like to aim for $200 per unit thus my hesitation. 

My wife and I both feel that we are currently in a real estate bubble that will burst within the next 1-2 years. However prices didn't fall that drastically after the last crash in northern NJ. 

Does it make sense to hold onto our $60,000 in cash (current down payment) and wait for a better opportunity?

We've put some much effort into this deal thus far it is difficult to see objectively at this point.

Any feedback would be greatly appreciated, thanks BP community!

- Ian

Thanks Adam!

Looking for attorney recommendations in the Northern NJ area, 20 mile radius of Montclair, to help with asset protection (setting up LLCs and / trust). Thanks Ian

Thank you for the warning!

Hi Robert,

Yes please. That would be great. Please email me directly at [email protected]

Hi Michelle,

What is your background?

Also what is Jack Stephen's contact info?

Feel free to email me directly

[email protected]

Thanks!

My wife and I are currently buy and hold investors in Northern New Jersey but we are exploring the possibility of moving back to my wife's home city of Portland, OR within a year to 2 year timeframe.

We are interested in spending a day viewing multi-family / apartments complexes. Our budget range is $500k - $1 million. 

Our goals are to understand the marketplace and rents based on districts. From our limited experience we believe that Northwest Portland seems like a strong area of growth but are willing to explore. We want to stay in Portland proper.

Looking for experienced agents who have dealt with investors in the past and with a strong understanding of tenant laws, rent prices, rehab costs and growth markets.

We will be in the area from July 17 - July 24. 

Thank You BP,

Ian

Thanks Dave!

I am in the process of selling my condo in Montclair, NJ, which I have owned for 14 years. Since 2012 I've been renting it. To avoid capital gains need to sell it by May 21, which is days away. (Taxpayer Relief Act of 1997created IRC Section 121) Thus the likelihood of making the cut is slim. My condo will most likely sell for $190k. May I purchase a property more than double in price ($400k) using a 1031? The property would be either a residential rental or used for our businesses (my wife and I are both small business owners).