All Forum Posts by: Murtuza Bengali

Hi,

We are in the process of doing a rehab for a 3-family in Weehawken and need an architect for some permit work. The work is fairly low - medium lift and needs 2-3 days work tops. 

Any recommendations would help tremendously.

Thanks

Murtuza

Hello BP community,

Looking for your guidance and advice. 

We are about to close on a 3-family in Weehawken, NJ in a couple of weeks. The 2nd and 3rd floor needs rehab work including, 

- Full Painting Flooring (Vinyl/Linoleum)

- Replace Kitchen cabinets

- Renovate the Bathrooms (replace tiles)

- Drop a wall and make a corridor

- Electrical throughout 

My question is, do I need to apply for a permit for all of this work? I spoke with the Building Department and they said that because this is a 3-family that any work will need a permit. 

If yes, can I only use a general contractor that has a license? We’ve spoken with a couple who said they should be able to “borrow” a license and do the work. The estimates are wildly different across the three contractors we’ve spoken to so saving money is also obviously a concern. But also want to make sure that we aren’t flouting rules and at the same time not straight jacketing ourselves under undue process and paperwork. So really want to do things only if it is absolutely necessary. 

Any general advice that you might have would be helpful as well. It is a significant amount of work that we will be taking on so looking for all the inputs. 

Thanks in advance. 
MB

Very helpful discussion - appreciate everyone's inputs.

We are just starting out looking at buying a 3/4 unit property in and around NYC using an FHA 5% down. But it looks like given the current market with high interests and high property values there is close to no way that the self sufficiency test would clear.

There's barely properties where you find are breaking even in this area and having 75% of rental income to cover PITI means the property has to already be deep in the money cash flowing already! Good luck finding those during this time - and if they do exist, why would anyone be selling it except for really personal reasons.

Might need to reconsider, shift strategies and just go in for a duplex of some sort

Hi BP Community,

We are a 30+ yr old couple with a one year old baby, renting in NYC for the past ten years. We recently purchased our first SFR property in Greensboro, NC. Now that we have set off on this journey and rents in NYC skyrocketing, we are contemplating whether to continue expanding on out-of-state SFR investments or explore the path of FHA approved house hacking in NYC/NJ metro area.

Our question is twofold:

1) Assuming we qualify for an FHA loan, are there decent multi-family deals sub $1MM available in the greater NYC area (we both work in midtown)? Are there certain pockets for multi-family housing better than the others?

2) How many units worth of multi-family (2, 3 or 4) is economically viable to limit the net outgoing to less than $3.5K a month. Considering the EMI on a $1MM multi-family @5% for 30Yr fixed is $5,400+property tax+insurance.

We are just looking for guidance from people who are debating on the same topic or folks who have already executed house hack and have a positive or negative point of view on this topic. I'm sure it is tricky going from being tenants to landlords! Looking forward to hearing from everyone

Thanks

Murtuza

Wow blown away with the responses so far already. Thank you @Ryan Karel and @Humberto Valle.

Yes we are trying to enter each deal with an open mind and even though we had set out trying to find properties below 100K that needed some TLC of $10k-$15K to start off, we've begun to realize that we might need increase our overall budget.

The houses that come on the market under $100K need a lot more than just TLC and being out of state first time investors we realized that we might end up biting off more than we can chew. So now we're looking at houses around $125K but then that means that the budget we've set aside for investing this year might also need to be adjusted upwards accordingly.

Also when I say CoCR i'm typically referring to just the first year return. Is that a good mark or one should project the cash flows and appreciation out to an average of five years and see the total return instead? 

Which one to investors look at more and try to beat the 10% mark?

We are newbie investors and have been scouring the Triad area for the past three months like hawks. We've been running numbers on every deal that pops up on any of the MLS's as well as talking to our agent for off market ones.

I guess my question to the BP community is in today's hot market is everyone still trying to target 10% CoCR at the very least? We're not seeing a ton of properties breaching even 7% at times. Rents are barely able to scrape the 1% rule due to intense competition on houses. We've put six offers so far and each has ended up going the other way even though we have on an average bid 5% over listing price.

It's crazy - should one just sit tight for sometime or still go for deals yielding 5%-7% CoCR?

Thanks for all the advice in advance

Murtuza

 Exactly right @Michael Gessner - that was what we were being told as well that estimates are hard to provide for an infestation at this scale. Being out of state - this was not a risk worth taking. We would've ended up being under construction for 2 to 3 months and with the current supply chain issues and inflation would've probably regretted getting into this in the first place.

Thank you for the advice!

 Thanks for the kind advice @Eric Chiang. We did decide to pull out. Because the damage is so extensive, the estimate on this repair could've ranged from $10K to $40K depending on how much of the wood would need to be replaced. Since we are first time investors we thought pulling out would be the best decision at this point and look for other deals.

We did send a strongly worded letter to the seller and our agent worked quite hard to get 50% of the due diligence money back. So all in all lesson learnt - part and parcel of getting into REI!

Quote from @Oren Kachel:

Quote from @Murtuza Bengali:

Hello dear BP members,

We are rookie investors who have been studying the markets, talking to agents, property managers and fellow investors diligently since the past few months. After going through multiple deals and failing to acquire any properties we finally secured a conditional approval on our bid for a 1950 SFR in Winston-Salem, NC two weeks ago.

Our due diligence period ends on February 28th. We new when we bid that the house needs about $8K to $9K worth of refurbishment. However, the inspector recommended a termite inspection which has revealed infestation from the under the crawl space all the way up to the attic. By the looks of it only random wood members in the foundation have any evidence of treatment but the rest of it, including window frames, interior foundation walls and attic show no sign of treatment. This possibly points to years worth of neglect from the owner and no annual termite checks. (I'm attaching the copy of the report for your reference below)

My question to BP members is this. Would you recommend proceeding with this deal or back out? In your experiences are termite infestations of this nature (from the foundation up to the attic) solvable. If yes how much approximately can one account for such a repair. Any words of advice on how to proceed will be greatly appreciated, especially since NC has a due diligence component on top of earnest money which we now stand to lose if we back out.

Thanks in advance for your guidance!

Murtuza

 hey Murtuza, do u recommend this inspector? im looking for one in the area

Hey Oren - tbh I haven/t worked with them before. I was recommended to use them through my agent who is an investor in multiple properties in that area himself and this company has done all his inspections. 

He recommended them highly and the charge was $75

Quote from @Russell Brazil:

Quote from @Murtuza Bengali:

Hello dear BP members,

We are rookie investors who have been studying the markets, talking to agents, property managers and fellow investors diligently since the past few months. After going through multiple deals and failing to acquire any properties we finally secured a conditional approval on our bid for a 1950 SFR in Winston-Salem, NC two weeks ago.

Our due diligence period ends on February 28th. We new when we bid that the house needs about $8K to $9K worth of refurbishment. However, the inspector recommended a termite inspection which has revealed infestation from the under the crawl space all the way up to the attic. By the looks of it only random wood members in the foundation have any evidence of treatment but the rest of it, including window frames, interior foundation walls and attic show no sign of treatment. This possibly points to years worth of neglect from the owner and no annual termite checks. (I'm attaching the copy of the report for your reference below)

My question to BP members is this. Would you recommend proceeding with this deal or back out? In your experiences are termite infestations of this nature (from the foundation up to the attic) solvable. If yes how much approximately can one account for such a repair. Any words of advice on how to proceed will be greatly appreciated, especially since NC has a due diligence component on top of earnest money which we now stand to lose if we back out.

Thanks in advance for your guidance!

Murtuza

 Every house with a yard in the Mid-Atlantic has termite damage. The question always is how much. Words on paper dont reveal anything. Only visuals can help here.

 Hi @Russell Brazil fair enough - here are some images for everyone's reference. Any thoughts?