Does anyone have experience investing in multi family properties in Rahway? Have you been able to achieve the 1% rule on rental income in these multi family properties? Is there a demand for multi family rental properties right now in this area? I am looking at undervalued properties in this area but my main concern is taxes. Any advice would be appreciated for Rahway investment potential or for Union County in general.
You're right to be concerned about property taxes. NJ has the highest property taxes in the nation out of all 50 states. That makes it very difficult to cash flow even with a 1% rent ratio. This is why the 1% rule is not a meaningful metric when you are comparing across markets. A 1% ratio in a high tax state like NJ will produce less cash flow and a lower COC return than in states with a lower rent ratio but lower taxes. Another thing you have going against this deal is that NJ is not a landlord friendly state at all. Have you considered going out of state where you can get much better returns? It doesn't always make sense to invest in your local market if the numbers don't work.