Hi there. I live in Brooklyn and I am looking to start out buying small residential properties in the Ironbound section of Newark, N.J.
I found this mixed use building that has a hair salon on the first floor with 3 apartments above it. It also has three garages (detached). The apartments were gutted and renovated approx. 5 years ago. They each have their own water heater and central air unit (I believe), but all the apartments are on the same meter. The business is on its own meters.
The salon is two years into a six year lease. Current rent is $1,750 with $100 annual increase. They also rent one of the garages for $125. There is one 1BR apt rented for $950 plus $125 for one of the garages minus $100 for taking out the garbage and things like that. There are two 2BR apartments. One was rented for $1050 but is vacant now (didn’t pay rent for two months). The other is rented now for $1,150. The last garage is currently being used by the owner.
Taxes are currently around $6,500, but I believe they may go up to around $12,000 after it is reclassified as a 3-family. Insurance was quoted to me at around $5,000. (Sounds high to me, but I am having trouble finding a competing quote on a mixed use building.) The agent tells me that water/sewer bills were $90-120 per month and electricity and gas ran between $280-500 per month. I believe I have someone to manage it for $6,000 a year, not counting getting new tenants.
My questions are as follows:
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Does anybody have any advice or knowledge about the Ironbound? I’ve heard it is different than the rest of Newark. What can I expect from investing there?
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What is my NOI going to look like on this deal? Specifically, how do I know how much to count towards maintenance? Vacancy? Are there other expenses I’m overlooking?
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What is a reasonable price for this property and what is a reasonable offer to make?
Personal note: I have read a lot and made previous half-hearted attempts at investing, but never pulled the trigger on a deal. Any help would be very appreciated.
Thanks,
Raphael