On a Sunday morning this past winter, Jerome Fazzari left his Bergen area home, shovel in hand and headed out. A blizzard had dumped over a foot of snow on Jersey City the day before and now it was clean up time. With the roads yet to be cleared, Fazzari set out on foot, walking to each of the 7 rental properties his company owns or manages to dig out his tenants.
Fazzari is one half of the couple behind GreenPen Investments, a real estate investment and property management company that has found success in the less glitzy areas of Jersey City. Together with his wife Lorna McManus, they buy and renovate homes focusing mainly in the Bergen-Lafayette and Greenville neighborhoods.
It was back in 2009, while living in Dumont New Jersey, when they saw the growing potential of Jersey City. They decided to make the jump, packing up their suburban life and moving into a quaint two family on Jewett Avenue.
In the years since, they’ve built quite an operation. Lorna handles investor relations. She attends endless networking events both in NJ and Manhattan to drum up interest in Jersey City. And so far it has worked out well. She has an ever growing list of potential investors. When a deal comes up that they want to act on, they send it out to the list and see who bites. She says, a lot of it is about timing and that’s the key benefit of their investor list. Sometimes a potential investor may have bought a new car or made a different investment recently and needs to pass on an opportunity. By maintaining a diverse pool, they increase the chances of the project getting funded.
We recently went to tour some of the projects they’re currently working on. The first, conveniently two doors down from their own home, is a 2-family where, upon purchase, they discovered a previous owner removed a load bearing wall. To shore the home up, they installed a new i-beam in the basement and re-leveled the property. The upstairs unit received a refresh that included new bathrooms, new flooring and a paint job. They also restored two marble fireplaces and uncovered two brick ones that had been drywalled over.
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The next property was on Garfield, walking distance from O’Leary’s Publik House and the soon to open Berry Lane Park with a phenomenal view of Manhattan. They purchased this property through a short-sale and were told it would be delivered vacant. However, following closing they discovered the previous owner illegally rented out the lower unit. Never ones to displace anybody, they decided the tenants could stay so long as the occupants passed a screening process and signed a new lease. Which they did.
There’s never a dull moment during a renovation project. At the time of purchase, the sewer was backed up resulting in 2 inches of raw sewage in the basement. Upon inspection, they discovered a “weeble” (the toy) was blocking the waste line. The fix ended up being easier than expected. They simply removed the toy and cleaned up the mess.
The vacant unit upstairs was in pretty good shape. They cleaned it up by sanding and painting the floors, installed new kitchen cabinets, counters and appliances, and new bathrooms.
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Lastly, we toured a huge 3 family home on Warner with one 5-bedroom, one 4-bedroom and one 1-bedroom apartments as well as a full basement. During a final walkthrough before purchasing the property, they discovered all the radiators had been removed. After some tough negotiating, they were able to get the costs of the radiators off of the contract price and with the extra funds installed brand new, high-efficiency heating systems for each unit.
GreenPen are big believers in restoring what is already there versus replacement. The Warner house was full of restorable finds. They brought back to life a vintage kitchen sink in one unit, refinished the wooden cabinetry in another, and polished up a highly sought after cast iron tub in one of the bathrooms. Not only does this maintain the historical charm of these properties, but it’s usually cheaper than replacing with new materials.
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Most notable about the GreenPen operation is their preference to rent to those already in the community. Instead of leasing the units to new, higher-income gentrifiers, they typically look within the community. Most of their units never even reach the advertising phase, alternatively relying on word of mouth to find tenants. They also accept the Section 8 program and those with less than perfect credit histories.
As the Jersey City market has changed over the last few years, so has their strategy. Originally, they employed a buy, renovate and sell strategy that allowed them to quickly transition the properties and provide a nice return to the investors. But more recently, they’re doubling down on a new buy, renovate, lease and hold strategy. They see the long term prospects of the market and think holding on to the properties will pay off significantly in the future.
The numbers seem to be working too. They’re only buying properties where the rent roll covers the costs. So they can hold the properties and still provide a return to the investors. Currently, they have 7 properties in their portfolio and are always searching for more. Some deals have taken over a year to close, so they always keep the pipeline full.
That’s not to say there weren’t snags along the way. One particular snag was 2012. They were unable to buy any properties in 2012 because a certain $500 million Australian real estate fund was buying up everything that came to market. They were outbid on practically every property they looked at. Luckily, the market has changed a bit since then and they’ve been able to get back into it.
With the breakneck development of downtown pricing locals out of the market, it’s great to see a different side of real estate development. Development doesn’t have to be strictly about change and “progress”. Lorna and Jerome of GreenPen prove you can make money and do good in the industry. Which is essentially their motto, “reviving communities and providing housing.” By focusing on renewal and the existing community, they’ve been able to provide safe, updated housing to demographics typically marginalized by development.
Looking toward the future, GreenPen wants to continue on the path they’ve created. They have a lot of properties in the pipeline and with a bit of luck hope to close on a some more in the next few months.