To browse all available condos for sale in Hoboken, CLICK HERE>

As the winter progresses, we don’t see a whole lot of change in the typical patterns.  December will remain moderate, but foot traffic will be comprised of more serious buyers.  If you are a seller, remember, that during the summer, people will go on Sunday drives just to take advantage of the snacks while touring homes in nice weather.  Those that do this in the colder months are historically much more serious types.  Some advice to sellers would be to treat every lead you have on your home seriously because you never know!

In Hoboken, the average price of a condo sold in November of $509,701 was higher than the annual average of $489,558.  The number of sales in November of 28, failed to meet the annual average of 51.  Keep in mind, volume fallout in winter is totally normal.  We look at rate of absorption which continues to improve steadily.

On December 1, there were 232 condos in Hoboken listed on the MLS.  In January, 2011, there were 386 condos on the market, a 40% reduction in inventory.  Some will say “Lucky Month”.  I think not…The inventory has fallen month over month quite a bit.  Here is the chart for inventory:

Regarding the macro market of Hoboken, investors are targeting condos with Capitalization Rates of 5-6% in Hoboken.  In 2011, the average rental rate in Hoboken improved 11.6%, one of the biggest metro jumps in the country.  There is a shortage of 3 bedroom condos and single family homes in Hoboken as only 5.5% of all inventory fits that criteria.  In a luxury building (asked not to be named), the sales manager said 46% of all sales this year went to investors.

Here is a look at November stats from this month and year over year change.

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It is our belief that we will not see a significant difference in home values until 2013, however on a micro/sub-market perspective, Hoboken is likely one that is going to defy the odds of that theory.  My theory was based on a national perspective.  The most recent jobs report, coupled by homebuyer confidence is going to be one of the reason why urban areas will recover first.

Investing in multi-family is always lucrative in the current economic conditions.  Shortage of rental stock means increasing rental rates.  Current MF buildings are being offered and sold at about 5-6% Cap Rates in Hoboken which means there is confidence that Cap Rates should improve nicely in the next couple of years.  Cap Rates at 5-6% today are better than what other investment vehicles can provide.  As long as you are aware of tangible risk, investors should have a field day with potential upside.

If you are looking at buying or selling real estate in Hoboken, call Scott Allan at 877-688-7582, or e-mail at Scott@NewJerseyRealEstateGuys.com.  Scott is the founder of New Jersey Real Estate Guys and located at Weichert in Hoboken, right near the PATH station.  Come see me and my team and find out why we are Hudson County’s most innovative agents.

Mortgage Brokers would:

• Falsify income of the buyer to assist in overall Debt To Income levels, making it appear a buyer is qualified when in fact they are not.
• Photo-shopping W2 IRS forms.
• Interfering with appraisal practice
• Among many other things.

After billions of dollars of real estate was purchased by false prequalifications, the government removed most Stated Income programs and require borrowers to prove income.  Every one of those bullet points above is a federal crime, therefore can be classified as legitimate fraud.

On the other hand, writers are creating false impressions of the real estate investment market with something called “FLOPPING”.  Note the similarity to “FLIPPING”.

These writers claim that “Flopping” is defined as “The intentional misrepresentation of housing value for purposes of illegal flipping.”

I am a real estate investor.  I make a lot of deals happen by achieving very low sale prices on listed short sales.  And I don’t feel bad doing it.  It goes beyond lowballing the bank.  I look for “value add” opportunities.  I ask myself how I can buy a property, make some home improvements and sell to homeowners looking for an upgraded property.  Many homeowners want a modern or upgraded home that they can afford.  So I offer them both of that.  Why does this work?  Because Rehab home loans are extinct and homeowners simply don’t have the money to put 20% down PLUS make all of these home improvements which will be costly.

So my investment risk is simple.  I buy at X, I fix up for Y, and I sell for Z.  Unfortunately, I cannot control Z, or what I can sell it for.  I am a speculator at that point.  I will let the market determine my fate.  We are fundamental real estate investors AND agents.  As a real estate agent, we do not get involved with our own sellers.  But other sellers represented by other agents are free game.

Let’s say a home is listed at $400,000 and is disclosed as a short sale.  I make an offer for $320,000.  Laughable?  Insulting?  Maybe.  But it takes me literally 5 minutes to draw up a cash offer.  Upon submitting my offer, the listing agent and/or attorney and/or seller submits all of this to the bank.  Heck, sometimes I am told that they will not present the offer.  I say to myself, “OK, I will just move onto the next”.

A BANK DOES NOT DECIDE ON A SALES PRICE BASED ON TERMS OF THE CONTRACT AND WHAT THEY FEEL THE VALUE SHOULD BE.  A bank orders a BPO (Broker Price Opinion – Performed by a licensed real estate broker, not an appraiser) or an official appraisal.  BPO’s are cheaper than appraisals, but are considered reliable.  Once the bank negotiator reads the BPO or appraisal, THEY (the bank), makes the decision to either counter-offer, reject, or accept.

Let’s assume they accept my $320,000.  It is not out of left field for a bank to fire sale the home at a 20% discount from current BPO or appraisal.  I’ve seen worse.  But the approved short sale price IS ON THE BANK, NOT THE REAL ESTATE INVESTOR.

Where are we breaking the law?  Appraisers are hired by third party service companies.  The investors and the bank has no knowledge as to who is performing this.  And if you want to really break balls, don’t forget the HVCC (home valuation code of conduct) rule.  If you are interested in knowing what that is, just google it.

So let’s assume I get my house for $320,000.  GREAT FOR ME!  Bad for the bank?  Bad for seller?  The bank approves or doesn’t and it is ultimately up to the seller or homeowner to AGREE OR DISAGREE to all of the terms set forth by the bank regarding any deficiencies, promissory notes, or anything that could be brought on.  I don’t get my price until both the bank and seller agree.  Illegal?  Yeah right.

I should be thanked by neighbors these homes in some circumstances.  I am buying a tired property and enhancing the interior and exterior and overall, although by a nominal amount at worse, I am improving the integrity of the neighborhood.  When the home resells and regardless of whether I win or lose, this house will serve as a true comparable sale and sold TurnKey to a homeowner who got a nice, updated home.

Then these articles insist we investors are illegally flipping…or should I say flopping.  How so?  I list my own properties…  99.9999% of the time, the buyer for my home comes from an outside brokerage, serviced by a real estate agent who is suggesting a good or bad buy for these prospective buyers.  If the buyers like my home, they STILL have to get financing and the sale is STILL subject to an appraisal.  If it doesn’t appraise for what I agree the purchase price to be, I either lower the price, or the deal is dead.

I can go on and on about the lucrative practice of flipping real estate, and if you want to call me out as being into “Flopping”, well then I am happy to be a Flopper.  There is a ton of money to be made if you are a cash buyer or serious investor.  This is old school fundamentals of real estate investing.

If you would like to read the articles that hate me and all of the other floppers out there, here are some links.

Florida Flopping

Tri-State area Flopping

If you are interested in Flopping, or flipping real estate for profit, give us a call for a consultation and we will provide our straight forward precise method for buying short sales with the intention to fix and flip.  You can reach Scott @ 877-688-7582 or you can e-mail us here.

Take care and happy house hunting,

Sincerely,

Scott “King Flopper” Allan

Finding the right apartment complex or multi-family dwelling can be tedious but tremendously rewarding.  As inflation nears, so do increases in rental rates.  Combined with the historically high number of rental demand in today’s market and the dwinding supply of living units, the upside for NJ multifamily is great.  These factors are resulting in the perfect storm for real estate investors.  NJ Real Estate Guys can provide non-public offerings as well as act as your representative to assist in the entire acquisition of any multifamily assets and assist in the Due Diligence process.

What makes a good multifamily or apartment complex investment.  Well, the first thing most investors want to know is “What is my ROI?” or “What is my Capitalization Rate?”  Your Capitalization Rate (Cap Rate) is the correlation between Net Operating Income (NOI) and Market Value.  Or it can be described as your first year yield.  Either way you look at it, the Cap Rate is  calculated by taking your NOI and dividing it by your purchase price.  Or if you are looking at a specific property, you can calculate it by dividing the NOI by the asking price.  In short, the NOI is derived from taking your total Gross Income of the subject property and subtracting all of your operating expenses, ie.. Taxes, Insurance, payroll, water/sewer, maintenance, management, and about a million other things.  A good commercial broker can look at an operating expense statement and determine if it is realistic or not.  We provide a hands on analysis and evaluation as a free service to our clients.

It is widely expected that New Jersey rental rates on residential units are going to increase in what could be a substantial amount.  We are already seeing this in most of Hudson County, where rental rates have increased anywhere from 3-10% since just last year.

Where do you look for multifamily investments?  That depends on what your strategy is, but one determining factor in making a decision is location.   Commercial multifamily is broken down into three classes.  A, B, and C.  Value-Add B and C properties were particularly hit hardest by the credit crisis.  Properties with high vacancies, poor management, and deferred maintenance and repairs are considered Value-Add assets.  While value-add complexes could make the deal a home run, only cash investors are typically interested in these as financing is near impossible and you will likely be sinking a lot of money into the property during its first year of operation in order to improve occupancy and stabilize the property to make it run smoothly, ultimately improving its revenue stream.  Here is our opinion on the Class designations of multifamily.

• Class A properties are well located and are new or newer construction.  These will have good infrastructure and good management.  Class A commands the highest rents from high quality tenants.
• Class B is a little older, but still of decent quality.  Often times, investors of Class B assets will buy as a Value-Add play and target these in speculation of returning them to Class A through some renovation such as exterior, facade, and common area improvements.    
• Class C is your older construction located in less desirable areas that are often in need of some rehab, have older technology, etc… As you read the description of Class C, you may think of it as a deterrent.  I have found some of my best deals in Class C multifamily.  Good management is key.

The good thing about investing in multifamily is that if one of your units go vacant, you still have all of the other units providing income.  If you are a single family home investor, if your tenant moves out, so does all of your income until you replace that tenant.

In New Jersey, the upside is what is attractive moreso than the current Cap Rates at what multifamily is currently trading at.  In many areas of Northern NJ, this is currently where complexes are trading:

• Superior Area:  5-6% Cap Rate
• In the middle:   6-7% Cap Rate
• Inferior Area: 8-10% Cap Rate

Why such a difference in Cap Rates?  Most investors prefer higher yields in higher risk areas, and will accept lower yields in less risky areas.  In all areas, the upside is very good considering where the economy is today and where it is expected to be in 3 years.  From 2008 to 2009, the average apartment complex saw Cap Rates improve by about 150 bps, or 1.5%, so a complex that was bought performing at a 6% Cap Rate improved to 7.5% in one year.  With the correction in the market near a conclusion, we expect those levels to come back in the very near future.

Recent complexes we have looked at have been located in Bloomfield, Montclair, Morristown, Jersey City, Hoboken, Clifton, Nutley, Passaic, East Rutherford, Newark, and Elizabeth.  We are seeing a huge increase in inquiries from investors both local, out of town, and internationally.

If you are in the market for multifamily or an apartment complex or would simply like to discuss different options, New Jersey Real Estate Guys has “second to none” experience and a seasoned team of veteran professionals who are invested in this type of asset class personally.  We can provide unmatched market knowledge provided with current data, as well as personal experiences to help you in understanding this investment strategy.  Please call Scott Allan at 877-688-7582 or e-mail here.

Updated on 4/21/2011: (Watch our video below for some Q1 2011 Apartment news)

Our current inventory includes a Class C multifamily residential fractured complex in Ft. Lauderdale, Florida.  This complex consists of 255 total units where 241 are available for the bulk purchase.  The complex is currently achieving good effective rents and is 82% Occupied.  Current Net Operating Income appears to be $1,060,000, however a change in NOI is possible during our audits during Due Diligence. We have a good amount of Due Diligence on this from the lender but will need additional info during Due Diligence.

Suggested Strategy: Non-Binding Letter of Intent for $10.3 mm.  45 Days Due Diligence to begin once bank supplies all appropriate Due Diligence material.  This complex is not publicly marketed, however our First Right of Refusal ends on 5/1/2011.  Call Scott at 877-688-7582 or e-mail here

See why Real Estate Investors are acquiring Residential MultiFamily:  Wall Street Journal Link
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SOLD

The current apartment complex we are working on is located in Jacksonville, Florida.  It is a distressed asset and the bank is looking to get off their books.  As all of our complexes, this is currently unlisted and not public.  We have received all of the Due Diligence material on it including Receivership reports, P & L Statements for the last quarter, Survey, Tax Bills, and Rent Rolls.  This is for a cash buyer only at this time.  UPDATE:  This complex is sold.  Please contact us for our current inventory.

I am very familiar with this area of Jacksonville.  The complex is located only 2 miles to the downtown water district and in a great location.  This property represents a tremendous opportunity to reposition a unique, distressed asset, with rare and spectacular waterfront views.  This gated garden-style apartment community consists of one and two bedroom apartment units on 19 two and three-story buildings, with over 40% of the units offering river views.  The property was built in the 1970′s and units average 882 square feet comprising a total of 181,900 square feet.  Below are some highlights.  Please CONTACT US if you are interested in additional information on this complex.

• 205 Total Apartments
• Asking approximately $19,000 per door or $4,000,000 total.  Market Value comparisons show a per unit value of $30,000 to $35,000.
• Amenities include Clubhouse, Swimming Pool, Fitness Center, Laundry facility, and a Fishing Pier.
• Value Add Rehab opportunity that can be purchased well below replacement cost.  Approximately $350,000 to $500,000 in improvements needed on a high estimate.
• Gated Entrance
• Area Occupancy Rate of over 93%
• Located 2 miles from downtown Jacksonville and located off Arlington Expressway, a very popular area of town.  67,000 cars pass daily.
• Total of about 11.5 Acres
• Most recent Comparable Sale sold for $31,000 per door.
• Roofs replaced in 2004.
• Currently 70% Occupied.

Please call 877.688.7582 or e-mail us with any inquiries or questions.  Ask for Scott Allan

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As many of our clients know, we are very active in the Florida real estate market.  Our Florida firm is based in Ft. Myers and we have been utilizing our asset management, Receivership, and Special Servicer contacts to find inventory for real estate investors.  None of our properties are publicly listed and acting quickly is important.  Year to Date we have sold over $15 million in distressed multi-family assets in Florida.  After spending a significant amount of due diligence time on an apartment complex, we are ready to make it available to the right investor.  We cannot go into to much detail right now as this is not a publicly listed asset.  We are arranging for a private sale on this as we feel we have negotiated the price to where this will sell quickly.  We have this negotiated at $3 million from the lender.  This is a “Value Add” complex with a ton of positive upside.

• Located in Orlando, FL
• C-Class complex consisting of 340 Apartments – Studio, 1, 2, and 3 bedroom units.
• 16% Occupied – Due to 3 years neglect by current owner.
• Current owner is executing a Deed in Lieu of foreclosure which will be complete in 45-60 days.  This complex is being sold as the “asset”, not the note.
• Current note in the amount of over $17 million.
• Capital Improvements needed in the amount of +/- $2.5 million.
• Area occupancy rate of 94%
• 15 Days Due Diligence will be allowed.  Non-negotiable
• After Capital Improvements, cost per unit will be about $16,000, approximately 40% under market value.
• We have a 2 year pro forma for this asset.  If rented to 70% occupancy, complex will have a 9.5% Capitalization Rate at $11 million, making this ideal for re-sale once stabilized.
• Current Net Operating Income covers most current expenses based on most current Receiver Report.
• Investor will need approximately $4 million for purchase and Phase 1 Improvements.  Beyond that, rental income will take care of Capital Expenditures.

If you are interested in any additional information, please contact Scott Allan @ (877) 688-7582 or e-mail here.

November 4, 2010 Multi-Family Income Investment Opportunity of the Week:

Our deal of the week lands in Morristown, NJ.  This is a 5-Family home with a walking distance location to “The Green” and the downtown sector.  The rent roll is solid and income is very good for investor oriented buyers.  Here are some numbers on the building.  If you are interested in all of the information, please contact us.

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Typically, I like to look at deals that get around an 8% Capitalization Rate.  The Capitalization Rate or Cap Rate is a ratio used to estimate the value of income producing properties.  Put simply, the cap rate is the net operating income divided by the sales price or value of a property expressed as a percentage.  Investors, lenders and appraisers use the cap rate to estimate the purchase price for different types of  income producing properties.

Investors like myself, also look at “upside potential”.  While this home has a Cap Rate of 7.23%, it is enough for me to consider this deal WITHOUT upside potential.  However due to its location, rent roll, rent escalations, etc. I believe that this deal has both factors of Cap Rate and Upside working in our favor. 

If you would like any additional information on this property, please call Scott @ 877.688.7582. 

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Three (3) Family Home priced at $280,000  (SOLD)

Welcome back to our Multi-Family Home of the Week Post.  As most of you know, I am an advocate of multi-family home investing.  I think in New Jersey, it is easily the quickest way to make a solid return on your invested dollars.  Today’s Multi-Family home of the week is in East Orange.  Here are the details:

Located off of Central Ave in East Orange.  Built in 1940 and completely gut-renovated in 2008.  All Units have a washer/dryer, Central A/C, Vinyl Siding, Privacy fence in back, and security system.  Owner pays water.  Tenants pay Electric, Gas, Heat.  Building has a total of 16 rooms, 10 bedrooms, and 3 Full Bathrooms.  Underground utilities.

1. First Floor unit has a total of 5 rooms which includes 3 bedrooms and 1 bathroom.  This unit is rented for $1,300 per month.
2. Second Floor unit has a total of 6 rooms which includes 4 bedrooms and 1 bathroom.  This unit is rented for $1,550 per month.
3. Third floor unit has a total of 5 rooms which includes 3 bedrooms and 1 bathroom.  This unit is rented for $1,300 per month. 

 Let’s now look at how the numbers work as an investment property.  The pro forma will be based off of today’s (1/8/10) investment mortgage program using a 75% Loan To Value and 5.75% rate

Purchase                              $280,000

Down Payment:                     $70,000

Mortgage Principal:               $210,000

Monthly Gross Rent:            $4,150

Monthly Expenses

• Debt Service:                              $1,247
• Taxes                                         $626
• Insurance                                   $150
• Property Mgmt (if applicable)        $332 @ 8%

Total Expenses:           $2,355

Surplus Cash:               $1,795 or $2,127 if managed by owner

Net Operating Income :  $21,540

*Mortgage could be paid off in 12 years on a 30 year term.

If you are interested in setting up a showing appointment, request additional details, or would like more information on how to purchase this home, please contact us and we will assist you in the entire transaction. 

As the working week comes to an end, and while you are pondering your thoughts on how much rum and egg nog you could possibly drink this weekend, I want to leave you with some real estate thoughts that stuck out to us during one of our visits.  If you are looking for your primary home or an investment, this Kearny Two Family Home for sale should be right up your alley..

It is a 2 family home located in the Arlington section of  Kearny, NJ.  For the price and current market inventory it is one of the largest in its group and also one of the nicest in terms of the overall condition. (The thumbnail picture is the actual home). 

The home is located within walking distance to bus stops and is less than 100 meters from Roosevelt School.  There are wood floors, gas forced heat, and Central A/C.  There are 2 separate gas and electric meters and as a bonus, the roof was replaced in the last 2 years. 

The building has a total of 12 rooms, 5 Bedrooms, and 2 Full Bathrooms.  The basement is partially finished and is HUGE, which can be used for storage, however is finished enough to use as a recreational room.  Taxes on this home are approximately $9,500.

Currenly, the first floor is occupied by a physician as a Medical Office.  It is not known at this moment if the tenant plans on staying put, but if not, no worries.  Our property managers can assist in finding a new tenant, which we would recommend as medical, law, office, or retail.  You also have the choice of simply renting it to a normal tenant who plans to live there.  Either way, you have excellent options since that first floor is zoned Commercial (C-3).  The first floor commands a rental of $1,200 to $1,400 per month minimum.  The second floor commands nearly the same, closer to $1,200. 

The price of this home is just under $340,000.  For the location, it speaks for itself.  It is only 4 miles to the Meadowlands where the world famous XANADU is opening its doors in mid 2010, and you are also less than 7 miles from the Lincoln Tunnel!  Inside of 10 miles, you have anything else you could ever imagine…Entertainment, fine dining, nightlife, etc…

Here is how the numbers would work if you purchased on a 30 Year Fixed Mortgage at 5.5% rate.  Rates are significantly lower for owner occupied home loans.

$1,500     Monthly Debt Service (Mortgage)

$791         Taxes Escrowed Monthly

$2,291     Total Debt / Escrows

Taking into considerating that you rent out the first floor at $1,300, your leftover monthly payment would be $991 per month if you are an owner occupant (This is actually cheaper than renting).  An investor would get a positive cash flow of about $300 per month.  Although the capitalization rate is slightly low for an investor (to some), this home has the perfect location and condition to nearly assure you a much higher future value and be in a league of its own in regards to available inventory for sale now or in the future. 

If you are interested in viewing additional pictures or would like any other information on this home or other Kearny NJ homes for sale, please do not hesitate to contact us.  We are your real estate experts for all of Hudson County multi family homes, single family homes, and condos for sale.  CONTACT US NOW

At least in the state of Florida, buying a distressed condo building that is FRACTURED has huge potential for a Value Add investment.  In short, a Fractured Condo Building for example is a 50 unit building where currently 10 are owned by individual owners that may or may not be current on their mortgage and condo association dues.

I LOVE THESE DEALS.  When you have an opportunity to purchase a Fractured Condo Building, put some wheels in motion with an experienced person in the niche and look to purchase the note or the asset.  You won’t believe how clueless lenders are on Condo Laws.  This is your leverage to get a building at pennies on the dollar.  First off, banks normally won’t do a condition update.  They also don’t know the condo statutes regarding delinquent Condo Association dues.  Here’s a secret.  If you purchase a fractured building, there is a way where you can get the bank to pay you for all the back log of delinquent Assocation dues, your first part in stabilizing the asset.

Second, know everything about Developer Successor Liability.  Typically, we can get the bank to release all pertinent information on the property that they know of so we can perform some due diligence, including walking the property.  Walking the property is essential to do with a professional inspector.  It’s worth the $350 to have them handy.  This isn’t a FULL inspection, but certified inspectors can typically locate a BIG problem.  The little problems can wait until our due diligence starts in the contract for purchase.  Something to look for that could be BIG problems:  Sinkholes (just had a deal fall through because of it), Dry-Rot on wood frame construction, such as hardy board siding.  Look for roof issues, most noticeably any “waviness” in the shingles and structure.  Look at parking.  Are there enough spaces without making it look very crammed?

Fractured Condo Buildings are a HUGE headached with HUGE potential.  Knowing Condo Statutes is a MUST and being direct with banks is also very important.  We can help in both categories.  Price ranges for our projects typically run from $3 million to $20 million, depending on size and location.  But the long term benefits of taking a fractured building and stabilizing it is worth the headaches.  Value Add opportunities are my favorite and something I would recommend looking into.

Lastly, there is no financing available for fractured condo buildings UNTIL they are stabilized.  New legislation is likely being put in place to allow favorable financing for fractured buildings, however they aren’t available as of this minute.  Cash buyers are best for purchasing this type of asset or note, however once you stabilize the asset with occupancy, condo association stability, etc..  Once you have a stable asset, lenders will allow you to refinance and during the time of stabilization, you added a lot of value to the real estate, thus a 70% Loan to Value could conceivably get you all of your invested cash back out of the deal.  Playing with house money is always most fun!

If you are interested in hearing more about Fractured Condo buildings in Florida for sale or any other investment opportunities in real estate, Contact Us today for a free consultation.

New Jersey Real Estate Guys also owns a very popular real estate firm in Ft. Myers, FL.  Aside from general real estate, we pride ourselves on diversification in our customers portfolios by becoming diverse property owners.  In a lot of areas today, buying real estate is favorable given the market conditions regarding pricepoints and rental rates.  Today offers unprecedented pricepoints and the time where most millionaires are made. 

In my opinion, leading the nation in appeal for second home buyers or investors is Southwest Florida.  Naples and Ft. Myers seem to be absolutely on an aggressive rebound.  The median home values are up nearly 20% since February 2009.  At its peak the median home price in Lee County (Ft. Myers / Cape Coral) was ~$345,000.  In February 2009, the market hit its bottom at settling on a median of $84,000.  Today, we are at $101,000.  Additionally, unemployment has dropped 1.4% over the last 2 months respectively.  Homes below the conforming loan limits of $417,000 are selling very quick and you can now buy a respectable house in a great area for less than $250,000.  In the past when investors and second home buyers thought they were priced out of Paradise, today offers historically low prices.  Compounded by low mortgage rates, homes are flying off the shelves.  I invite you to come down and see us.  I always fly in and out of Ft. Myers Int’l Airport.  Come down and see for yourself!

Another great area for opportunity is the Smoky Mountains region of Tennessee.  Purchasing a resort cabin and applying it to their rental program could be very lucrative to your portfolio.  The “Save Our Mountains Act” has applied a construction moratorium in the Smokies in order to preserve the environment and protect views of current development.  Recently, we assisted in restructuring the debt of a large resort.  Our intentions was to bring developer land price payoff down to favorably combine with the cost of construction of an unbelievable cabin.  If you are interested in looking into Tennessee, CLICK HERE to see the article and executive summary to one of the most favorable investment opportunities we have seen in a while.  Because of its severe lack of cabins, and Wahoo Zipline which attracts 100,000 visitors annually, the developer is putting his money where his mouth is and offering a developer guarantee of 15% ROI for each of the first 3 years based off the purchase price.  Our FL brokerage, who is also a licensed brokerage in Tennessee is acting as the exclusive sales and marketing firm for this resort.  We are reimbursing travel expenses with all deals closed.

As for New Jersey income property, Section 8 compliant multi-family homes are becoming very popular especially with the Housing Authority alleviating their waiting list by handing out an additional $10 million in rental vouchers.  Section 8 in Newark is most popular, followed by pockets of Passaic County.  CLICK HERE to see our article on Section 8.  Morris County has been a hot pocket for multi-family home investing.  Although most are not favorable for Section 8, higher rental rates are being realized as supply is lower than most areas of the county, and much less than Essex County.

If you are interested in discussing different real estate investment possibilities, call Scott at 877-688-7582 or Contact Us by e-mail.  Ask us about investing using your current or a future IRA account.  The benefits are unbelievable.

As many are aware, we love to explore out of the box for income real estate opportunity.  During a trip to Sterling Springs Resort in the Gaitlinburg area of Tennessee at the beginning of the year, I noticed a glaring problem with availability.  The resort is 5 star and one of the most beautiful settings I have seen.  My question was why there were only 33 cabins available on a property that had nearly 350 acres.  I met the developer one afternoon and got to talking.  The problem was simple.  He did not have access to construction financing since the markets collapsed.

As I questioned him about the structure of the resort, he mentioned that each lot had a payoff of $75,000 to the bank.  I began to look at the idea of bringing real estate investors to the table to build out this resort, but I was mostly interested in land + construction, and my initial goal was to achieve a 20% discount all-in from a current market value standpoint.  Once all was said and done, our immediate equity position was a surprising 44% based on our price of $149,000 and a recent appraised value by a local lender of $225,000.

Fast forward to May of this year.  The developer worked with the bank with the note on the land and we were able to restructure the debt down to a payoff of $35,000.  We also designed a cost/energy efficient cabin that would give the resort a new look.  Our new cabins would be spherical in shape and offer unobstructed views of the Smoky Mountains.  All cabins would come turn-key with furnishings as a typical hotel unit would come.  To see entire executive summary and offering memorandum, CLICK HERE.  Each investor will have full rights to use their own cabin at any time.

Some caveats we have worked into the deal:

• Offered turnkey for $149,000.  Current appraisal as of July 17, 2010 of $225,000.  Will provide upon request.
• Includes Developer Guarantee in contract of $24,000 in NET Income per year for the first 3 years which equates to a 15.10% Capitalization Rate.
• 100% Passive.  Managed by on-site management company.
• Sales are not publicly marketed until 2011.  Price increases by phases at 12-15% per phase.  Each phase consisting of 10 cabins.

Some amenities currently on site:

• Athletic Field (currently set-up for soccer)
• Full sized pool with cabanas, sun deck, volleyball
• WAHOO ZIPLINE :  Biggest attraction.  Attracts 100,000 visitors annually.  Largest zipline tour in the country.
• 4,000 Square Foot entertaining clubhouse overlooking the Smokies.
• Snack Bar
• This resort is 8 miles to Gaitlinburg and 6 miles to Pigeon Forge.  Pigeon Forge is the home to Dollywood, one of the largest theme parks in the country.

Amenities to be completed after first 10 private sales:

• 6,000 square foot spa complete with full spa services, fitness center, etc.

If you have an appetite for a tremendous out of state opportunity contact us for more details.

With an occupancy rate of nearly 100% over the last 12 years, these 4-Family Homes present a perfect opportunity for any homeowner or investor.  Due to the current owner being an owner occupant, he has taken tremendous care to preserve the utmost value for these homes located in the beautiful historic district of Morristown, NJ.

55 Wetmore Avenue $579,000

A four-family house consisting of four 1BR/1BA apartments. These units are very easy to rent. The building has had a near 0% vacancy rate over the past 12 years. Located in the Historic District of Morristown on the dead-end section of a quiet residential street. Within walking distance of the Morristown Green, the train station, the Community Theater and the best shops and restaurants in town. Quick access to major highways. Each apartment has a private front and back entrance, back patio and separate utilities. The current average rent is $1096/month with the tenant paying both gas and electric.

$52,620 Rental Income
$12,504 Property Taxes
$1,776 Hazard Insurance
$1,362 Utilities (water & sewer)
$36,978 Net Operating Income
All Units separately metered (tenants pay)
New vinyl windows 1993
New 300 amp electric service 1999
New back porch and staircase 2000
All units renovated 1993-1996

50 Western Avenue  $899,000

A four-family house consisting of two 2BR/1BA apartments downstairs and two 4BR/2BA apartments upstairs. Located in the center of town, just one block from the Morristown Green. Within walking distance of the train station, the Community Theater and the best shops and restaurants in town. The backyard borders a wooded National Park and the yard is meticulously landscaped. Each apartment has a private front and back entrance, back patio or deck and separate utilities. Tenants pay gas and electric.

5700 Total Square Feet.
Built 1911
$99,600 Rental Income (assume $2,000/month for owner occupied unit)
$18,861 Property Taxes
$2,473 Hazard Insurance
$4,242 Utilities (water & sewer)
$74,024 Net Operating Income
All Units Separately metered gas/electric (tenant pays)
New Vinyl Windows 1998 and 2002
New 300 amp electric service 1999
ALL UNITS and exterior completely renovated from 2001 – 2004

Our Income Property of the day is in Heights section of Jersey City only approximately 1 mile west as the crow flies from say 13th & Hudson in Hoboken.  It’s a 6 unit residential building with brick all the way around.  The apartments have tile and wood floors.  Public transportation is just a few steps from this building and the rental history has been near perfect over the last 5 years and currently has an Annual Gross Income of $64,000.  On my way out today, I drove by the building and it looked in great exterior condition and after calling the sellers’ agent, found out the interior had extra large rooms, nice bathrooms, and in impeccable condition.  (He said you gotta see it to believe it so until I do, I’ll take his word for it)

So to not bore you, I will get to the details, and if you would like to see this property, please contact us for an immediate showing.  I do not think this one will last long in my opinion given the recent reduction in asking price to under $520,000.  The investment potential with this building looks good and may need a bit more due diligence, but comfortable in knowing that a deal can be had here.

Price:                                $520,000

Taxes:                              $7,772

Insurance:                     $3,700

Miscellaneous:            $5,000 (covers vacancy factor + minor repairs if necessary)

If you are a cash buyer, great!  If you are a financing buyer, the best Loan To Value (LTV) you will likely get on an investment building loan would b 65%, meaning you will need about 35% as a down payment plus your closing costs.  For the sake of this article, let’s assume your loan rate and terms are as follows:  5 Year Fixed Amortized over 30 Years with a interest rate of 5.75%.

 Taking the numbers above into consideration, here is what the banks and investor minds want to know:  Your annual income is $64,000 off rental income.  Your operating expenses which include our taxes, insurance, and miscellaneous comes to $16,472.  If you subtract your Operating Expenses from your annual income you get a Net Operating Income (NOI)of $47,528.  The $47,528 would be what you will take home in income before taxes per year.   If you divide your NOI by your purchase price of $520,000, you get a Capitalization Rate of nearly 9.2% a comfortable number for investors of multi-family investment buildings. 

If you are financing 65% of the $520,000 or $338,000 (principal amount after down payment), you will have a monthly debt service of about $2,220.  Your monthly income on the property of $5,333 will give you a monthly surplus income of $3,113 or annual income of $37,356.  After paying your operating expenses of $16,472, you are left with an annual Cash Flow of $20,884, almost a 20% annual return on your investment dollar for dollar. 

Now that I have you a little excited, get in touch with us and set up a showing.  This building would look good in your portfolio.  A great opportunity for Jersey City real estate