[19] 43R: create rooms: feasibility of 7+rooms

I see Guang created many rooms. I will need to do the same. I discussed with 冯凯, Kyle and GregR.

Bayonne — I saw a few 2FH units

  • $325k 71 West 13th — 7 rooms realistically
    • 2nd floor same layout, but a small room (with window) can be created, with private entrance.
    • ground floor 3 spacious rooms if I convert the living room
  • $500k 712 Ave E — 9-10 rooms realistic, excluding finished basement
    • 2nd floor 5 rooms if I convert the sunny living room
    • ground floor 4 rooms if I convert the living room
    • Both floors feature a narrow space big enough for a bed and wardrobe, but I can’t remember the windows.
    • basement can open another window towards backyard.

— Attic is most valuable

  • cheaper to implement
  • often has windows on four sides 🙂
  • creating window — presumably easier since the wall is thinner?
  • xp: I have lived in attics twice.
  • need to provide fire escape

— HIGH basement is valuable

  • I think if height is right, then fix-up is affordable.
  • I have seen many basements with some windows .. promising
  • backyard walk-in basement is a rare find and valuable. Kyle grew up in such a house. He agreed that there are more windows in such a basement.
  • two exits required, probably front and back.
  • https://www.hunker.com/12614558/how-to-legalize-a-basement-apartment-in-new-jersey has details on legal requirements

— living room (carve-out)?

  • I prefer less elongated rectangular shapes, because the living room is too big and unusable as tenant rooms.
  • I prefer non-existent living rooms
  • 🙂 If there are windows on the side, then carving out a room is easy, according to Feng Kai.
  • Avoid townhouse and condo completely, due to windows.

43R: top 2 factors #loc..

  1. rental demand, probably dependent on location, among other things
    • For reference, top 3 factors in appreciation is location, location and location.
  2. BCP Ratio := bedroomCount to price. For 350k, I hope to get 7 bedrooms including attic and basement.
  • –Top 4 challenges:
  • efficient renovation to improve my room offering and hopefully to create more bedrooms in living room, attic and basement. The best BCP often requires major fix-up
  • — secondary factors, dependent factors .. critical thinking!
  • vacancy? Depends on rental demand and my price
  • tenant delinquency? Well-known issue. Poor low cost locations tend to attract problem tenants.
  • legwork? I think Guang shows a good example.
  • average rental price in Bayonne or JC? easily verifiable.
  • feasibility of having many small rooms? I can buy a house with that many rooms, to reduce the uncertainty
  • asset depreciation? rental income seldom declines in a down market.. U.S.home price cycle #Wallace

43R model requires renovation know-how

I think anyone following the 43R model need to be serious about renovation. The best bargains are usually unwanted houses that needs lots of fix-up. The non-bargains will also be 2nd-hand houses.

Also we may need to carve out bed rooms in living room or attic and improve the basement.

I need to start acquiring knowledge and network.

43R: focus@location,clean,warm !!size

We as landlord want to provide a reasonable level of comfort inside the rooms and a clean bathroom, and don’t need to care about kitchens, stairs, living room, window, door, yard, balcony etc. Those areas are often run down and barely functional:

  • Flushing Ave — the least comfortable living space in my experience, even inside the rooms. The size of the living room didn’t really help relieve the discomfort.
  • Winnie’s place .. 423 Hart
  • 40 Wayne
  • 43 Rockledge
  • 4119 Fort Hamilton

It’s not uncommon to see tenants accepting a mobile partition (not a real wall) in a living room in Newport or JSQ.

If the location is safe, and not too far from transport, then I think most low-end tenants would be willing to pay for a clean, warm room, regardless of size. If we as landlord invest on renovating the interior to provide comfortable space, then we can charge a rental close to the market rate.

tristate renovation cost level

  • Opening window, carving out an office in living room … are all doable according to FengKai.
  • kitchen is expensive, typically 20-30k, according to JackHe.
  • bedrooms are cheaper than bathroom, according to GregR.

Total? 100k is a common figure, but Wallace said 10k is a common figure. Before deciding on a budget, (as Alona’s colleague Bob pointed out) it’s better to list specific items, then prioritize them like

  1. furnish the basement to rent it out if legitimate
  2. carve out an office
  3. modernize the kitchen

Tim Yao said cost is much lower than XR’s experience.

— rental property renovation

It’s probably smart to buy a relatively old rental property, and pay lower tax, then invest 50k-100k to improve it, then rent out.

George Abdelmalak <gabdelmalak1@gmail.com>, a nice agent, is familiar with renovation, and told me renovation cost is at least 50-60k. Background — I told him that I want to buy a reasonably OK rental property and make it more comfortable more appealing for my tenants.

George also said extension to create 1 or 2 extra rooms cost 50k.