How do investors make money in new jersey real estate market?
They have so high property taxes..especially central new jersey, on average you will end up paying 4000-5000$ in property taxes every year for a property worth 250k$.How can you make positive cash flow when you have to pay such high property taxes?
You make your money when you buy so simply buy for less.
Vaishal Patel Great question. So the way that I have found to make double digit returns in New Jersey market is through multifamily investments within urban markets such as Newark, Jersey City, Passaic etc. It also depends on the rate of return that you wish to make that can drive where within New Jersey you should consider investing.
Originally posted by :
They have so high property taxes..especially central new jersey, on average you will end up paying 4000-5000$ in property taxes every year for a property worth 250k$.How can you make positive cash flow when you have to pay such high property taxes?
I agree with Ankit - multifamily investing is key. Single family investing as rentals doesn't work too well unless you're on the high end (And can charge $3-4k in rent) or extremely low end (where you have low property taxes and section 8). Even then, this is a pro-tenant state so a single family eviction has the potential of costing an Investor BIG.
Many NJ cre investors make money by investing across the state line in PA, either in the Philly or Lehigh Valley markets. RE taxes in PA are considerably lower than Jersey.
Ankit Duggal -Thanks ...but what about people like me who are first time investors and its not feasible for us to invest in a multifamily property cuz of high prices...also from what i have heard newark,jersey city has very high crime rate which is why i am not looking to invest in those areas.Any tips?Appreciate it..!! :)
Vaishal Patel What is your end goal from the investment if you dont mind me asking? If your goal is high current cash flow then you will need to consider urban markets to be able to achieve that in NJ. But if your goal is capital appreciation then you can consider better areas which will wind up costing you more in purchase price. So it is kinda a Catch 22 there.
If you want to invest into cash flow assets but cannot do it on your own then you may want to also consider investing into syndicate or Tenant in Common Investment as they would let you participate in multifamily investments without the risk of putting all your eggs into one basket (so to speak) but these investment structures have their own inherent risks so conduct your research on these investment structures.
@ankit duggal my goal in nj is to buy in lower income areas where I can achieve an optimal level of cash flow. I have been looking into Trenton and Elizabeth . Do you have any suggestions for towns or city's in nj that you believe are best ?
Gerald Gatyas it depends on what is optimal cash flow?
Originally posted by Ankit Duggal:
Gerald Gatyas it depends on what is optimal cash flow?
Optimal meaning which areas will yield the most favorable cash flow? For example , Trenton multis are going for a much lesser sales price and taxes then Elizabeth but the demand for housing in Elizabeth is much greater so this makes Elizabeth more favorable being that there is lesser chance of vacancy and the rates can be much higher . I hope I'm making sense here .
Gerald, you've asked the same question like 5 times in as many threads. Everyone has a different idea of what's an intolerably bad hood, and what's an acceptable return. You've got to get out there, find properties in your target areas, and run the numbers. Figure out the cap rate, or even just thumbnail the P/E ratio. Divide the price by the yearly rent roll. you'll get a feel for what makes sense. Taxes make no difference if the rent is high enough, you have to look at the whole thing.
Personally, I like gentrifying areas for long term. But you won't see the cashflows that people here are seeing in the hinterlands unless you're really going to be a slumlord.
