All Forum Posts by: Amit Patel

Also - do you think its possible that you are falling in love with the property or the town or the possibility of appreciation. The numbers don't lie. Assuming it was in a different town and a different house, would you accept the numbers ? 

I've had properties in areas I loved and I bought them outside my criteria and have regretted each one because the return was good but wasn't great and I would've made so much more by being patient and using that money for a less-sexy property with better numbers... just my humble opinion of course based on the little info you put here..

In my humble opinion: This is evolution. The strong will survive. You have to go past Anger, and Denial and when you get to Acceptance, then you can think calmly. There are multiple mini-revolutions in industries that have happened and will continue resulting in behemoths that can do this. It is all about data but also about having something so simple and easy to use (and free) which causes network effects. The more people use it then more valuable it becomes and the more others (even competitors) can't live without out and zillow did build it self on MLS data (mostly) so it's a shame. The problem is that realtors are not a united front so they will never strike against zillow because they need zillow as well to showcase their properties to a large group of potential buyers.

My rentals manager has used everything and we loved zillow for free. We still love it  now because at $10/week its a small cost and the site has great integrated features.  I think it may be too late to stop zillow unless you unite and come up with better solutions and revolutionize what you guys do now or revolutionize how you do it. It is still archaic if you think about it in terms of technology.

@Ray Lai

I'd love to take you up on your offer for some advice on the direct mail and will PM you - It's much appreciated.

@Joshua Hollandsworth

With all due respect, if you read all the posts, I think you have all the info you need to take action to figure out if this will work or not. I don't think anyone can answer about an appeals with a lawyer when what you need to do zoning wise isn't clear. You have to do the legwork based on the posts here and figure the rest out out.  You will learn a lot doing this so go do it and report back.

Thank you all for the Kind words.  I do this part-time and spend an hour a week (sometimes two) looking for these types of deals and have been lucky to find great deals. It does takes 6-8 months to find an amazing deal and seems to be getting harder but totally worth it. I am hoping to learn how to get better deals through direct mail and hoping to get more deals that way.

@Shiloh Lundahl

There is no rule on how long you have to hold. If you can prove you were doing it as an investment, you are fine. We purposely did changes that went beyond cosmetic that a quick fix/flip person wouldn't do. We have also held all our other properties (Our philosophy is buy/hold) so I was very comfortable with our track record of acquisitions. 

The 1031 folks I worked with were amazing and on top of their game so paperwork wise we had no issues and we paid about $1200 or 1,500 or so total I think in total fees. However, the 1031 was tough to execute fully due to timing! Luckily, we had a 4-unit+1Comm property for 475K (vacant fixer upper)  that we had already scoped out but then we needed more to get to the 720K or so that we netted from 750K gross so we added a 3-family family on top of that for 310K.  Due to complications the 4+1 Property took 5 months almost to close (was owned by bickering partners). The 310K house was a quicker closing.

The 4-units was rehabbed and rented while we are turning commercial into 2 more units (awaiting approval). If this one 4+1 comm. works out like we planned, it will likely end up being our best investment as we should get all our money invested back and the property will provide a free 35k cash stream for life. Can provide more details on how the numbers worked out if any is interested.

@Joshua 

A "permit" allows you to build, renovate, etc. However, zoning typically needs to approve certain types of changes (I often to do Commercial to Residential conversions). What you really want to do is speak to a local Zoning attorney. Most of them will talk to you about your situation for no cost and you pay only if you hire them. That being said, please note that there may not be any attorneys that are very familiar with the Boarding house ordinances as I'm assuming there are not many around (at least if you are similar to NJ).

In this case, it looks like Zoning can deny you in the end if they want. Bottom line is in these cases, you are at their Mercy and they can deny you for whatever reasons they may have ( Boarding rooms typically are NOT desired by any neighbors as they are basically a low-end short-term hotel). 

Call the person in charge of Zoning and you can likely go and have a sit-down with them.  These people typically don't bite and are happy to help in most towns. Whatever you do, DO NOT commit money to this unless you have done your due diligence. No one in this forum is going to be answer conclusively either so your best bet is to speak with  a local zoning lawyer and also to the zoning officer in town in detail. 

I have found out the hard way that anything related to zoning approval will require a lot of time and patience and there is no sure thing as far as approval. Don't give up though - it's just one more thing you can learn to master and add to your toolbox.

@David Wientraub - This was in the Heights, closer to N. Bergen

I wanted to post this Success story from a property we bought and then sold last year. I bought it as I was getting a discount of 50K from retail and figured at worst, we could flip it quickly without a realtor and make about 45K after closing costs (realty transfer fees from state and attorney fees mostly).

How we found it. Our super also managed this and the owner lived out of state and his dad maintained it but was tiring of it. He did not raise rents as needed. Total was $3600 a month ($900 a month as they weren't in great condition and small) but knew we could easily get $4,000 a month with maybe 12k in basic/needed updates (cosmetic). Took almost 7 months to negotiate a sale.  We got the 4-family for 450K, including closing costs (Jersey City, which was and is a hot market).  

After reviewing the property location and talking to neighbors, we did more analysis on rents. We found that even though each apartment was tiny (500 sq. feet), single people were looking for clean/renovated apartments and were willing to pay $1400 a month if it was on a quiet block (this was a quiet block and there was a school nearby but size wasn't proper for most families). Based on our thinking ,we were thinking due to the size,etc. we would only get $1,200 with more renovations but more research with people on the block showed we could get significantly more.

We decided on a 95K budget (but overshot it to 110K)  and did the following

1. Updated all kitchens with new cabinets/granite

2. Updated all bathrooms  

3. Upgraded floors ( went with a clean luxury vinyl for $2.25 /sq. foot)

4. Sand/Fix all walls , Replaced all doors, New Radiator covers

5. Update all common areas (they looked old and worn)

6. Stainless steel appliances

7. Misc. Leaks, fixed bad piping, some electrical issues, etc. (people at $1,400 won't put up with some of these longer term and we were possibly considering holding this long-term if we didn't get our price).

All in cost was 450+110=560K. At this price and with taxes management, etc. we were at a true 9 cap, which is excellent for Jersey City and if we refinanced, this would've been significantly higher.

 Reno was 2 months but 1 month was waiting on permits so took 3 months. We showed units when they were a week from being done and had all 4 rented 2 weeks after we were done.  We got an offer for 750K and immediately took it because at this price, the cap rate was 6.5 at this rate and we had other properties we could get 8-9 caps on after renovation. Also, since the place was small, we just didn't think we could do much better long-term in terms of appreciation. 

Finalized sale about six months after purchase, Our gross profit was 190K in 6 months. Due to taxes, we did a 1031.

Thanks to all for the info. I will reach out to the banks mentioned.