Thursday, April 17th, 2014

Plenty of bargains on northern NJ multi family homes for sale

multi family homeRecently, I have been a huge advocate of first time homebuyers having an open mind to multi-family homes in northern NJ.  For the sake of argument, I am going to use Clifton, NJ as my example since my most recent inquiries were for Passaic County.

Let’s assume renters, or you are paying $1,250 for half of a 2 family home.  Their apartment is likely 2 bedrooms with a full bathroom and a total of 5-6 rooms.  This is about the average.

In Clifton, there are plenty of wonderful 2 family homes for sale for under $300,000.  Let’s look at financing numbers.  Please call us for a financial breakdown on any 2 family home in the area.

Call us today for a free consultation on how you can own your own multi-family home, which is overall a great investment opportunity.

Conventional Financing a $300,000 multi-family home
$300,000 x 20% Down Payment:       $60,000 Down Payment

Mortgage Principal: $285,000

30 Year Fixed @ 5% rate : $1,288 Per month  (Interest is tax deductable)

Hazard Insurance:                           $100 Per month  (Tax Deductable)

Taxes:                                                  $625

Total Monthly Payment:        $2,013

So now we have concluded that your mortgage payment plus other required charges will run you about $2,013 per month.  Assuming you rent the unit you are not living in for $1,200 per month, this leaves you with remaining balance of $813, far less than what you are probably currently paying in rent on a similar unit.

Your risk is that your tenant moves out and leaves you with the entire balance to pay, which is why it is important to have a professional execute your lease so terms are “air-tight”.  If your tenant were to move out, you still have their 1.5 month security deposit which can compensate for the vacancy while you look for a replacement tenant.

Now you are paying LESS than what you were paying for rent!  It is important to use the rule of thumb and keep about 3 months of reserves handy.  On this home, 1.5 months of reserves would total about $3,000.  The only reason for this is in case of an emergency and for instance the water heater breaks.  Knowing that you  have a little bit of a reserve account will make you feel more comfortable anyway.

Whether you are looking for a 2 family home in Bloomfield, Clifton, Montclair, or any other part of Essex County, there are great deals out there.