BEND, Ore. (CNN/Money) – Patrick Feeney's first real estate investment had more to do with necessity than speculation.
Fresh out of business school in 1999, Feeney, then 23, landed a job as assistant product manager at a pharmaceutical company in New Jersey. He planned to rent in Hoboken, which is a quick train ride across the Hudson River to New York City, but realized that prices were out of his league, at least if he wanted parking.
"I needed a car to drive to the suburbs in New Jersey, but few apartments in Hoboken had parking," he said, adding that places with parking cost at least $200 more a month.
Feeney settled on a rental in nearby Jersey City but kept shopping the Hoboken market until he found an 877-square-foot condo with two bedrooms and parking in a new (as in not even built) condominium.
With a roommate, it would cost him less to buy than to rent. In September 1999, Feeney put down 5 percent for the option to buy at $223,000 and then waited a year for the building to be completed.
To pay for his downpayment and other expenses, Feeney – who dabbled in day-trading in school – sold all $25,000 of his stock holdings and asked his parents to loan him another $20,000. In hindsight, it was a savvy move. Not only did he cash out at the height of the bull market, he locked in cheap housing at the start of the real estate boom.
"I didn't go in initially with a strategy to sell," said Feeney, now 28. "But a few months after living in my first condo I thought 'Wow, this place is really small.'" Less than a year after he moved in, he sold the condo for $330,000.
Prior to selling, Feeney found another new construction project around the block and signed an option to buy a 1,300-square-foot unit for $340,000. "I put the place on the market the day I closed," he said.
In June 2002, Feeney sold his second condo for $395,000 and moved into yet another brand new condo.
This time he paid $410,000, which seemed like a bargain for three bedrooms and, best of all, a private backyard.
No kidding. This past March Feeney put the condo on the market and, after five days and a bidding war that added $25,000 to asking price, accepted an offer for $676,000.
Never too many upgrades
Feeney, who is now a sales representative for the same pharmaceutical company earning between $80,000 and $100,000 depending on his bonus, said he isn't speculating on real estate. " I look to make money on a place the moment I buy it," he said.
What's his secret? To spot relative bargains Feeney has studied up on his local market. Also, given the choice between a place with a great layout or a great location, he chooses the latter.
|Upgrades, such as stainless steel appliances and granite counters, help Feeney fetch top dollar.
High-end features are also important. "The market I appeal to is a couple who works long hours and will pay top dollar for something that is very upgraded, very pretty and very much done," said Feeney.
He says he's learned quite a bit about finish work from his parents, who have built three houses in his lifetime. "My mom is also an interior designer so I bounce things off her," he said.
Feeney believes that good lighting, hardwood floors and crown molding help fetch a higher price. Stainless steel appliances, granite counters, tumbled marble bathrooms and frameless shower doors are some of the other amenities that win over buyers. "I also put closet systems in all of the closets," he said. "They eat that up."
Of course, Feeney has to give some credit to the real estate market in Hoboken, which seems to be shaking its reputation as a post-college rental market. "People are staying here, getting married and having children," he said. In fact, New Yorkers who once turned their noses up at living on the other side of the Hudson are now bragging that Hoboken is a "best kept secret."
His next big project
When Feeney closes on his condo in June, he'll walk away with about $350,000 in cash, but he won't go far. He's putting most of that profit into a two-family house up the block.
|Feeney plans to spend at least $100,000 renovating this two-family Hoboken, NJ house.
"It needs work but it's livable," said Feeney, who's paying $860,000 for the house and plans to spend at least another $100,000 in renovations.
"There's no reason I couldn't get at least $1.2 million for it once the renovations are done," said Feeney of the house, which is a 10-minute walk to the train to New York.
Even better, Feeney already has a tenant – a friend of a friend – interested in renting the upstairs unit of the house.
Though his total costs will be about $4,000 a month, his share of the payment will be less than what he's paying today, and that's assuming he doesn't get a roommate for his portion of the house – which has three bedrooms and two bathrooms.
"My goal is to keep building my [real estate] portfolio," said Feeney, who plans to either sell the house eventually or hold onto it and use some of his equity to buy another multi-family property. What if the value of the house doesn't go up as much as he thinks it will?
"So what," he said. "I still have to live somewhere, and the alternative is renting."