I’m a newbie in Northern NJ. After reading several general RE books, I’ve decided to start with Rehabbing. After I’ve done several, I anticipate buying some rentals, and ultimately getting into commercial properties. My goal is to purchase my first rehab within a year, and to do 2-3 rehabs that first year.
I am currently beginning to focus on Rehabs by just reading, so I can become an expert on just that subject, but I understand that I won’t learn the skill set I need until I start doing, rather than just reading. And “doing” initially involves getting to RE clubs, then looking at properties. Here’s where I need help-- I am curious if anyone here is a member of any of the Northern NJ RE Clubs and if they can relate their experience in terms of help with Rehabs. I’ve found the websites to be either too generic, or not applicable to Rehabs. Is this the case? Which club is better for Rehabs, if any? I understand that the websites are likely not indicative of what exactly goes on, but I don’t want to waste time. I want to go to the one that is most applicable and will get me investing as soon as possible. I need to gain exposure to rehabbers and want to know which of these meetings best suits me to rehab. Any recommendations/comments/suggestions? I’m looking for a little direction. I will not be like the 90% of other newbies who don’t invest and get stuck just learning. Thanks in advance for your help.
Regardless of what specific real estate investing strategy you employ in your business, real estate represents the single best method of creating long-term, sustainable wealth available today. While the stock market can be extremely explosive and subject to radical day to day shifts in value based upon economic news, oil prices, and political instability around the world, real estate is remarkably stable and has consistently trended upwards in value for the last 100 years. While it is true that real estate values have taken a severe kick in the teeth as of late, investors utilizing a buy and hold strategy are still making money while the rest of the market is struggling.
In order for this strategy to work, it’s necessary for you to purchase property as inexpensively as you can and to ensure that the cash flow generated from your property is consistently more than the expenses associated with owning it. In order to guarantee that this happens, you need to perform an accurate cash flow analysis of your property before making the purchase. The following components are critical to your success:
• Income – the single largest income item associated with your property will be rent. It’s imperative that you know your local real estate market and how much similar properties are renting for. If you estimate that your property will rent for $1500 per month and market conditions will only support $1200 per month, you can very quickly get yourself into trouble with negative cash flow.
• Expenses – Novice real estate investors often don’t have a true grasp of expenses or how to accurately estimate them. Because of this lack of knowledge, many investors have been known to blindly accept expense figures offered by real estate agents or the property seller. This is dangerous because the seller has an incentive to minimize expenses in order to make the investment look as attractive as possible in order to get it sold; the real estate agent stands to earn a fat commission check. When you estimate the expenses for your property, use documented, provable expenses whenever possible, but also use the smell test. Don’t forget to factor in an allowance for vacancy because no property can remain rented 100% of the time without fail. You should also be sure to factor in an expense for property management, whether you intend to manage it yourself or hire a professional to do it for you.
• Reserves – Regardless of how new a property is, things are bound to break or need replacing. For instance, water heaters, furnaces, and appliances will invariably break down. When this happens, they need to be replaced. By setting cash aside for these situations, you can be prepared when or if repairs become necessary. If nothing ever breaks, cash will be available for you for any other purpose.
As long as your property will provide you with positive cash flow on a consistent basis, you won’t be rocked by market fluctuations, including rapid depreciation of real estate values. You’ll still have a positive cash flow to rely upon for consistent monthly earnings. In addition, as the number of properties you own increases; your monthly income will improve. If each property you own has a positive cash flow of between $200 and $500 per month, you can see how lucrative owning 15 or even 20 properties can be.
This monthly income is ongoing and life-changing. You can literally reap the rewards of real estate investing by building a generational cycle of wealth creation that will live on long after you exit stage left.
Holding property as a long term rental also offers tremendous tax benefits to you through depreciation – an ingenious tax code creation of Congress that allows you to take a depreciation tax credit while the actual value goes up – while deferring capital gains taxes until you sell.
Invest early and invest often in property that will provide you with ongoing cash flow. As this cash flows into your real estate business you can use excess funds that you don’t need for your day-to-day needs to fund acquisition costs of additional properties that will allow you to better take advantage of other investing strategies that will provide you with potentially huge infusions of cash, further enhancing your bank account and allowing you to live YOUR American Dream.
Hey Student, I’m here in Northern NJ and have just started myself. I’m surprised that you want to start with rehabs when the market is still going down and every day you hold the property is another dollar that might slip away. I’m concentrating on Wholesale and Lease Option properties, try to get in with no risk and as little down as possible and get them sold or rented quick. Let me know what you’re up to, you can contact me on this site. I have only attended one NJREI meeting and found it to be very busy and hard to talk with people, but that was in Feb. and I have been looking for deals ever since. The best way I’ve found on getting some good advice is to look for the bandit signs and ads and call them. Tell them you’re new and if you find any deals, will they help you with putting them together for a cut of the action. Good Luck. DAVE
have we spoken before? i’m from northern nj as well. i’m a member of gsreia but haven’t been to a meeting in the past few months (been busy with other stuff)
i think i may have spoken to Dave (Dave maybe you can confirm). at any rate, since we are all in the local area, perhaps we can meet up and start some local networking.
Hey guys, I would love to meet up and see how you’re doing and what’s working in our area. I’ve had some success with my yellow letters and signs on my car. Hope you’re getting some deals done, I have two on the table that I’ll need buyers for if you have anyone in mind. DAVE
I’ve been talking with Ryanpal on the side and i just wanted to introduce myself to the other Northern NJ’ns in the thread. I’m from the Morris County area.
scott. i received your email and misread it. i didn’t know it was tonight that was the meeting. my guess it, it was a little short notice to gather everyone.
gsreai does not meet this month, i’m still working out the details so that we can maximize the attendees.