All Forum Posts by: Ro Maga

Hello BP! I'm having a hard time getting hazard insurance for a newer property (a duplex) that unfortunately sits 3 feet away from a derelict, abandoned house. The city has finally foreclosed on the abandoned property and we hear it'll be auctioned this year, so there is hope that fire-hazard next door will be gone in the near future (the location is great). In the mean time, we need insurance so we can close on the duplex. The property is in North Newark. There's got to be somebody who is insuring the many properties siting next to all the boarded up homes throughout Essex County. Any suggestions? 

Could anybody recommend insurance companies and/or brokers that handle cases like this?

Keep on studying your market. The more you know, the better you'll be able to adjust your criteria. To get within walking distance of the path and or light rail in those neighborhoods, in this market, you'll need to increase your budget... Or change your criteria. Unless, you were thinking of small, older condos... Maybe.

Hi @Sean Crean!  I don't know the kind of demand there might be for condos in East Brunswick, but unless it was appreciating a ton each year and/or there was serious demand for condo rentals, I'd sell it and use any equity you may have to strengthen your buying position. As you will soon discover, the competition for small multifamilies in Jersey is beyond tough. In our experience, and that of a couple of friends, we are seeing lots of cash buyers sweeping up the good deals as soon as they land on the market, and a bunch of small investors and regular buyers overbidding each other for whatever is left (that may still be considered a deal). 

If you decide to keep the condo, just remember you can only have one FHA loan at a time. So you may need to refinance (to a conventional loan) in order to use the 3.5% down FHA loan everyone talks about with house hacking.

Happy MFH hunting!

@Greg Torian, sorry to hear that.  You may want to skip on the mortgage brokers and try working with a lender directly (i.e, I'd take @Joseph Scorese invitation to reach out). We were running into the same issue you did, and finding a mortgage bank opened a whole series of possibilities. Your loan officer will be your ally in this. Obviously your intentions to move into the property have to be true and honest, and you may have to provide proof that your current home is going to be rented like a singed leased on your current property and maybe even a deposit into a rental security account. But with the right lender, and if your are indeed going to OO, you should be able to get an FHA loan.

Starting to build a good relationship with a local lender will pay off. Listen to the podcast with Arthur Garcia (is one of the first 10 podcast). He offers a good bit on this. 

The other alternative - at least as it was presented to us - is an investment loan, which requires 25% down in addition to the 6 months PITI for all properties (and yes, you are supposed to have this anyways, but in NJ that adds up quickly because of taxes).

Good luck!

I'm really out of my league here, but from what I remember from reading horror stories of squatters-turned-professional tenants, it really makes a huge difference how you first approach the issue and what you call him. (i.e., is he a tenant with rights you need to evict or a criminal trespasser that can be removed by police?)

Did he ever signed a contract with the tenant on the lease?  Did the lease allow for subleasing?  Did the landlord ever receive rent from him?  But if there isn't any paperwork connecting him to the contract, can you treat this guy as a guest of the old tenant who overstayed and now is actually trespassing? Obviously you will need to consult your local laws and probably retain an attorney since this guy has clearly stated his unwillingness to move out without much drama.   

I may not hurt to reach out to folks who have dealt with nightmare tenants for advice as to how to approach this.  It took @Charlie Hampton more than a year to get rid of a guy who was squatting in a old shed in a property partly because he initiated "eviction" procedures, which gave the squatter access to a whole series of rights he savvily exploited. 

https://www.biggerpockets.com/forums/52/topics/110018-update-on-my-squatter?page=1

Good luck!

This is a question that is asked in some form or other at least twice a month in BP, typically by a new New York-based investor excited by the "low" prices in some of Essex County's more historically neglected and difficult areas (Newark, East Orange, Orange and Irvington). Why not do a quick search before asking? (It just baffles me that folks don't.) At the very least you'd get to see the vast array of versions on this very question ranging from the overtly naive, lazy and borderline offensive to the very sharp. The forum is rich with previously offered insight. Some of it very very recent, a lot of it very detailed and insightful. Anyhow, what I really think would help you is to visit. A couple of hours on the ground is a good investment of your time anywhere, but specially in struggling communities. If you have experience working in poor, inner city communities, you'll know what too look for. Take a drive by those neighborhoods you're considering, get out of of the car and talk to a few people. If you don't have the experience yet, at least you'll have a better sense of the area and the kind of financial and personal investment it'd take.

You should set your price at whatever you want since they've asked for it. It doesn't mean they'll pay it, but remember a few things. 1) you can base your price on supply and demand, and lucky for you they've got but one supplier -- they cannot simply go into the market place and just buy a building. Plus, since you were not planning on selling at all, I don't see why your price would be market price. Aim high. 2) As savvy negotiators, they've put you in the weaker negotiating position to name your price first. There's lots written on this. Google it. 3) if you have long-term tenants you'd have to relocate, include these expenses in your price. 4) if you have already arrived at your "right" price and that's the minimum you'd want to get, start with a higher price. Again read about negotiating. 5) If I were in your position, I'd want to read about eminent domain processes. Good luck.

1. Make sure the HOA has healthy reserves, and the some of those funds are ear marked for CapEx. 2. Look into any deferred maintenance or any upcoming repairs the might trigger assessments. New roof anyone? 3. Look at the history of Maintenance fee increases. Are you up for a hike? Do they increase in a predictable manner? 4. Check to see how long the HOA has been with the same management. The more stable the better. 5. Talk to HOA leadership and ask if there are any potential law suits lurking in the future. That could get in the way of refinancing or selling later on. 6. Be sure the HOA/bylaws allow you to rent the unit from day one. 7. Be sure to check for noise transmission between shared walls! I spent two years of my life hearing my upstairs neighbor snore every night. If I had been renting, I'd have moved at the first chance. Instead I invested in soundproofing. If you have to soundproof at some point, factor some $10-12k (not including floors). 8. Depending on the size of the HOA, you may be hearing lots from them if your tenant is short of stellar. Remember that condo owners are invested in the building in way tenants don't care about. As you know development in JC is very uneven. I'm not sure what you meant by the "outskirts of JC" but location matters a lot. If I had a choice between a condo and a modest house in the outskirts of JC, I'd go for the house anytime.

Are you already on a budget? You'd be surprised what a tremendous difference it makes. Check out The Total Money Makeover by Dave Ramsey from your local library. Read it, and have your partner/spouse do the same. I'm not a fan of everything Ramsey says, but that book alone drastically turned around our finances. I know that when most folks ask for creative, magic bullets to undue the damage of past poor financial decisions they are not looking to hear that the solution includes living on "rice and beans" while you create a little bit of margin for yourself, but that's what it takes.

Here is the NJ Housing Code (2013) which supplements NJ's building code. The document is pretty straight forward. http://www.state.nj.us/dca/divisions/codes/codreg/pdf_regs/njac_5_28.pdf