All Forum Posts by: Sherry Norman

My experience as LL in Morris County has been as described by Tim Booz.  I have found this to be the most common screening process in networking w/other LL's.

My company bought a house that included 4 subdividable lots, with the intention of subdividing off the back 2 lots, which had street frontage on another street running behind the existing dwelling.  The existing dwelling would have violated the side setback lot line if we had tried to create a 4th lot on the side of the existing house.  So in the end we decided not to make a 4th lot (i.e. third vacant lot).

Anyway, the subdivision process is fraught, and you never know how long it will take.  So we decided to rent out the existing house until we got our final approvals from the town.  Problem was, we couldn't sign a lease with a fixed term b/c we wanted the freedom to sell the house with only the front 2 lots as soon as the approvals were granted.

We found we were getting market resistance to renting out the house b/c people wanted to sign a yearly lease.  So I set the rent about $300 below market value, which generated lots of calls.

One woman led her family through a tour of the house, said they really needed a place and were very interested.  I pointed out that the rental would include the use of the side lot and the 2 back lots going all the way to the street behind.  When we discussed the term of the lease I told her that it was for an indefinite period, hence the low rent.  But I also pointed out that by law in NJ we would have to give her at least 60 days notice, and that we would give her the courtesy of as much advance notice as possible beyond that.  And that we anticipated it would be at least a year before we were ready to sell.

This next thing was my BIG mistake. You see, I thought I was speaking to a rational human being. So I next told her that when we were ready to sell we would be willing to give the right of first refusal to buy the house to whoever became the tenant, and that we would even offer some discount from FMV b/c we wouldn't be paying a RE commission. Since most of the applicants were not really mortgage-worthy material, I even mentioned that we knew of a gov't. backed mortgage program writing mortgages in that area, and that we could help them and work with them to get the mortgage. But of course we would be selling them the house and 2 front lots, w/o the back lots.

Potential applicant (hasn't even filled out an application form yet) asks in an almost outraged tone:  "You mean I wouldn't be getting the back 2 lots?"

Me: "Not with the house purchase, if you decided to go ahead with that.  But you would have full use of those lots during the rental period.  And the house does come with a double lot if you decide to purchase."

Applicant:  "But I WANT the back lots!"

Me: "Yeah, we did too.  That's the reason we bought the place.  It's a business and it's designed to make a profit and that's where we're making ours. "

Applicant leaves in a real huff, saying she's not interested then.  Apparently, she was so insulted that she no longer needed a rental.

How does a person walk in to tour a rental, with no apparent notion that she could ultimately buy that house or any house for that matter, and 10 minutes later leave b/c she just found out that although she might get the chance to buy that house w/i a short period of time, it would not include property all the way through to the street behind it that she also didn't even know about until 10 minutes previously? 

 From her attitude, you would have thought someone just tried to chisel her out of a rightful inheritance or something.  I sometimes wonder what kind of logic system prevails on the planets that people like that come from.

Sorry I'm a little shaky on the technology, but in re Steve Babiak's post that I reposted above.  

Steve, at least I assume they told you their intentions.  A few years ago, I rented to two "brothers" (when I commented that they did not look anything alike, one being like a full head shorter than the other, they said that they were actually cousins, but that the Chinese word for "cousin" is the same one as the word for "brother".)  The pretext was that the two of them were moving in w/their g'friends.  Financials looked good & I rented to them.

The next time I had reason to enter the house, which had 4-5 bdrms. already, they had 2 sets of bunk beds moved into the LR, and various other beds and bunks throughout the rest of the house, and had moved in their entire restaurant staff.  (I lost count as everyone scrambled around when I entered, but a lot of people!)

Of course nobody living there had any interest in mowing the lawn or raking leaves in the fall, which were supposed to be tenant responsibilities.  Let alone cleaning the house.  If it didn't involve making more money, it didn't get done.

I will say one thing thing though-every rent check was always paid in full and on time, and never bounced.

Sorry, I meant to ask what the cost per SF to build turned out to be?

Bryan.

Looks like something straight out of the pages of Dwell magazine.  Stunning!

So what did the per SF to build turn out to be?

Legally speaking, you can use either in NJ.  In ordinary residential transactions, the custom in southern NJ is to use title companies, while in northern NJ most people use attorneys.

An attorney will charge more than a title company does.  However, he/she will also perform more services.  One of those will always be ordering a title search in order to make sure that clear title is delivered to you.  However, a title company will not review your contract to purchase and point out ways in which it might harm you the way an atty would.  An atty is your advocate in the transaction, while the title company just acts to close the transaction in a sort of neutral way.

Jaleen,

Do you have access to the member MLS listings in your area ? (Sometimes an agent or appraiser who is friendly will give you access through his/her password if you don't have a RE license, but it is possible to get good deals even if you aren't able to get access to the MLS yourself.)

In my area of NJ, I've been finding great deals on properties to flip or to wholesale out, on mostly, but not exclusively short sales.  This is what I do:

1. Since I have access to member MLS listings, I check off the short sales only search filter on the active listings in the towns I want. If you don't have the MLS access, you'll have to get an agent that you think will be good to work with to do it for you.

2.  Automatically eliminate any short sale properties that denote that the seller has accepted an offer which has been submitted to the bank for consideration.  They are a waste of time.

3.  Look for those short sale properties which have only been listed for a short time with a workable price (indicates agent knows what is realistic and has or is willing to educate seller and bank.  Now, this doesn't mean bank or even seller will accept that or a lower price, but it's worth your time to probe more.)  OR short sale properties which have been on the market a really long time.  In either case, look for short sale properties needing work and preferably, that are smelly.  The smell will often scare potential owner/occupants away from giving the place a good look.  And if the house doesn't need work, you'll have nothing to "hold over the bank's head" in negotiations.

4. In a case where you have direct MLS access, go through the listing agent to look at the property. Question the listing agent as to what's wrong with the house, why they think it hasn't sold, whether or not any other offers were rejected by the bank, how flexible the bank is, etc. If you don't have that MLS access, do all this through your chosen agent. Then decide if the property is worth pursuing. If the lender is inflexible, it's not. At least not right now, but keep an eye on it or have your agent do it. I have found with lenders that it's fun to try and hit the soft spot, when they finally give in. It can be due to too much total time elapsed, too much time spent w/ a previous offer where the lender wouldn't meet the buyer's price, and negotiations collapsed and the house went BOM, whatever. The houses never improve with time, and meantime the sellers aren't making repairs or doing maintenance.

5.  If you decide to pursue a property, be prepared to submit proof of funds in most cases, especially if the house needs lots of work.  If the seller accepts your offer and it gets submitted to the lender for consideration, be patient.  When the lender finally responds to you, it could be a yes, no or counteroffer.  Think ahead of time about how high you'd be willing to go if they counter you.  (Maybe it's such a long time the market has changed!)  I once offered $182k, and the lender came back w/ a much higher counter.  Thinking we were too far apart to make the deal work for me, I outright rejected the lender's counter w/o counter-countering.  About a wk or two later, the agent came back to me and said the bank had now decided to accept my original offer of $182k. Yay! Go figure.

In the past year I've done about 10 short sales here in NJ this way. Right now a reno on that house the bank sold me for $182k with an ARV of $350k-$375k (needed new septic @$32,000, yes that's NOT $3200, septic work in northern NJ can be ghastly expensive, but that's why I got such a great deal, after all). Plus more $ in the way of update, repairs, etc, Still a nice profit. Also a cape for $114k after lender credits, which will have an ARV of $250+k after about $30k in work. Just completed an older colonial bought for $95k which I sold for full ask of $249,900 after about $45k in repairs and reno.

I could give you lots more pointers (hard-earned) and bore you with more of my reno stories, but I just want to say that I don't think I could have done all this with foreclosures and REOs, at least not where I live.  So maybe you can give short sales a try where you live and see how they work out for you.  I will say this--after a while you just start getting a real feeling for them, and how they'll work, and when a property has ripened to the time it's time to drive the stake into the heart of the bank.  They don't all work out, but I find that more than enough of them do, to the extent that I'm going to have to start wholesaling some of mine out to other investors here.

Best of luck to you, whichever path you choose.

Hammad,

Is it possible your old lease had a "self-renewing" clause which provides for the lease to renew for another year  ( or whatever the previous lease period was) under the same terms and conditions if neither party notifies the other to the contrary?

As a NJ landlord, I used to always have this clause in my leases.  If I wanted a rent increase, I would have had to get a new signature, but otherwise it automatically just kept renewing every year.

Hi everyone,

I'm located in northern NJ, and for about the past year or two, I'm finding lots of good, workable deals.  This hasn't always been the case hereabouts.

I also follow the blog of a Dallas Tx area flipper who used to get lots of deals  (although I have to say that her deals seemed to have margins so low that I, and the other flippers that form my local competition, would find them too risky to consider viable.  Maybe we northeasterners are just more conservative, I don't know.)

Anyway, this blogger has very recently posted a blog saying that she hasn't flipped for a while b/c deals have become harder and harder to find in her neck of the woods, and competition from other flippers has gotten more heated.

All this has gotten me wondering:

1.  How is the inventory of flip-worthy properties doing where you live?  Are you finding lots of good potential deals?

2.  Has the atmosphere in your area become noticeably more competitive recently?

3. What do you consider an acceptable margin of profit vis a vis the risk?