All Forum Posts by: Richard Parseghian

Hi Everyone,

I have a property in Raritan NJ that needs some soffit and roof repairs in certain sections.

I called a few roofing contractors in the area with good reviews, but they won’t even come out to quote anything under a full replacement.

Does anyone have someone they could recommend?

@Jonathan Soto Thanks for the advise. I put my unit on Facebook Marketplace this Tuesday and have already had over 30 inquiries in the past 2 days.

I really appreciate the insight, I had no idea the Facebook Marketplace was such a power full tool for marketing properties.

@Jonathan Soto Thanks for the feedback. I'm hoping it's the fact that it's mid winter and most tenants probably aren't looking to re-locate at this time. (This terrible snowstorm definitely isn't doing me any favors either)

I'm posting on almost all major channels (Zillow, Trulia, Realtor.com, Craigslist, Hot Pads, etc.) through Zillow, Craigslist, and Rentredi.

It's a large unit in a good school district so most applicants have been a little older and it's a matter of they have missed payments, high credit utilization, etc.

If I'm still having trouble getting this unit rented by the end of this month do you think it would be better to lower the rental price by $100 or lower the qualifying standards of the credit score from 650 to 600? 

Given NJ is an extremely tenant friendly state, I'm leaning towards lowering the rent price to try and attract a higher quality tenants.

Hi Everyone,

I currently have a 3 bedroom unit on a side by side duplex for rent in Raritan, NJ in Somerset County (B class neighborhood). One of my required criteria for applicants are that their credit scores are at least 650.

I'm noticing the majority of inquiries I'm getting are from people who have credit scores between 600-640. This tells me that either my pre-screening criteria is doing a great job narrowing my pool to quality tenants or that my requirement is to high. (Note I have only had the unit listed for just under 2 weeks and the fact that it's the dead of winter isn't helping)

I was hoping other investors may be able to provide some insight into the typical credit score you would require on a multifamily property in a B class neighborhood of NJ. 

Thanks for your help.

@Kelsey Mortimore I was in a similar situation this summer. I was looking to buy my first multi family house hack and debating if I should wait for a possible crash or pull the trigger. 

At the end of the day I decided to move forward on my first deal for the following reasons:

1. I plan to buy and hold over a 30 year period. Even if a 5-20% correction happens over the next few months, the numbers still make sense in the long run for modest cash flow and hit my ROI target.

2. It's hard to take advantage of a down market without experience, team members, and processes in place. By getting some of the growing pains out of the way now, I'll be better equipped to take advantage of any pull back that may happen in the next 6-18months.

3. I'm in a position where I can afford to do a second house hack after a one year period if prices do drop.  Thanks to owner occupant financing allowing me to get in on properties with a low down payment.

If you're also in a position to be able to buy a second deal within a 12-18 month time frame I would suggest moving forward and buying property that makes sense to get the experience.

Hi Everyone,

I'm currently in negotiations on a triplex in Monmouth County, NJ that has an operational underground oil tank. 

I have a contingency in place for the soil test to ensure there is no contamination, but as it's fully operational does it make sense to immediately remove the tank and install an alternative heating source? 

My gut says yes to avoid playing Russian roulette with this, but if anyone does have on operational underground tank on a property I would be interesting in hearing what your rational was for keeping it.

If I do remove the oil tank I have a few questions I was hoping the community could help me address:

1. What would I do with the existing oil in the tank. (Can I resell this?)

2. What is the best heating system to replace the oil based furnace. (Based on what I see it looks like gas is the way to go since it can use the existing radiators)

3. Are tank removal companies heavily insured? I want to make sure if I hire someone to remove this tank and they botch the job that I'm not stuck paying for remediation. If had good experiences with a specific NJ company please let me know the company name.

4. Are sellers typically open to removal of an operational tank prior to closing if I front the costs?

Hi @Brandon Sok, I appreciate the feedback.

I should have been more clear in my initial post about my rehab plan. I'll make 10K of repairs out of pocket & 30K will be wrapped into the loan.

I gave a few quick calls to other lenders and it seems like across the boards rates are just spiking due to the liquidity crunch.

In regards to the trusting the numbers. I completely agree with you. If a situation were to arise where an additional 10k of repairs were needed I could cover it, but that would only diminish the projected ROI and cash flow even further. (At least during the first few years)

I think you hit the nail on the head as I'm eager to get my first deal underway. 

Were there more clarity in the market and I didn't get hit with an extra 4K/year in interest due to rate changes my worst case would still make it worth moving forward on. 

Obviously there's the possibility to refinance and rent the lot down the road, but given the level of leverage it's probably better to play it safe.

Hi Everyone,

I currently have my first property under attorney review. (My offer was made prior to the major Corona Outbreak in the US)

It's a triplex in Dunellen, NJ (B- Neighborhood) I would be house hacking and there's is a massive fully paved lot in rear of the home that has a heated garage with a gated entrance (Between 1-2 car garage) which tenants don't have access to and is not rented since the owner kept it for his son who is a mechanic.

The house needs a good amount of repairs such as stucco siding repairs, lot re pavement, new furnaces, and cosmetic updates. (I'm estimating about 40K of repairs total)

I would be using an FHA loan with 3.5% down at a 4.65% rate (Apparently there is a huge spike due to liquidity issues, I was originally quoted at 3.35% so this is really blowing up my numbers). Given the uncertainty I'm also hesitant to be so heavily leveraged (Though I would have 10K cash reserves and 20K in a Personnel LOC).

The concern I have is with the recession and COVID-19 if I would be able to rent the back lot as initially planned. Furthermore due to the new rate increase that eats away my originally planned property management fee I factored to my original scenario when making the offer. 

In either scenario I would not positively cash flow when factoring in property management fees though I'm being conservative on my ability to increase unit rent roll through renovations. I would also be able to refinance in a year or two before moving out, but obviously that comes at a large cost and I wouldn't want to do that till I build up 20% equity to eliminate PMI.

What's everyone's thoughts. Are my concerns valid and I should walk, or is it analysis paralysis with all the uncertainty and I should move forward? (Note that I do live at home with my parents and currently have a 70% savings rate so it's not like this is offsetting major rental expenses)

Best Case Analysis:(With $500/month lot rental and Without Property Management)

Worst Case Analysis: (Without $500/month lot rental or Property Management)

I would definitely say quickbooks is the right call. I have spent a few years working with the program doing small business consulting and teaching quickbooks classes. In addition to it being great for tax time it has allot of useful features that you can use to track your P&L and B/S for each individual property. If you have only a handful of properties making a bank account for each one and tracking all transactions for each property as separate projects in quickbooks is a simple way to handle bookkeeping, track expenses on a property by property basis, and to easily produce financials should you ever look to 1031 your properties.

Having $20,000 is a good position to be in and better than most people who are beginning to plan for their financial future. With that being said you have a few options in front of you and your age, income, and personal life play a big role into which path is right for you. You could:

1. Pay down bad debts such as credit cards or car payments with high interest rates pay them off so you can start saving more cash flow on a monthly basis (If they exist). No point in investing money to get a 5-8% return when your outstanding debt is costing you 12-20% a year.

2. Park the money in a Roth IRA account which will allow you to build up tax free income until your ready to make a purchase on an investment property. Once you do you can leverage your IRA to make the down payment. (However be aware that your earnings will also be locked up in your IRA portfolio making it tax free but you will not be able to access the cash flow for personal use).

3. Put the money in a regular brokerage account and park it an S&P 500 ETF which tracks the US economy as a whole and has historically returned 6-8% annually and continue to park additional saving there until you would like to diversify further and add a rental property to your portfolio.

4. Depending on your market you may be able to get started investing in multifamily homes through house-hacking with the use of an FHA loan. This will allow you to only put down 4% though given the fact you will need to have money in reserves and for closing costs I wouldn't use more than $8,000 on a down payment allowing you to purchase up to a $200,000 multi family home.

Hope this helps, best of luck on your financial journey.