Hi,

My name is Nishil Kohary and I am a new real estate investor. I currently live in NYC but am looking to invest in New Jersey given the high prices of NYC. Does anyone have suggestions on undervalued markets to look at in NJ or nearby states? I am struggling to zero in on a few markets to focus on.

I appreciate the help in advance! 

New Jersey market has caught up with NYC as an overpriced area with minimal investment opportunity unless you head to the far south end of the state. I am about to head out of here for future investments

Welcome to Biggerpockets @Nishil Kothary What type of investing are you looking to do in NJ?  I have found great success in North Jersey and will be continuing it into 2020. 

@Shawn M. thanks for the response and warm welcome! I am looking at buy and hold properties (open to single or multi-family). As @Angelo Mart mentioned, the market seems overpriced and cash flow negative. I would love to know more about your strategy in North Jersey.

Angelo Mart, what locations are you now looking at?

@Nishil Kothary Brrrr strategy has worked well for me. I purchase only MFR. single families are tough, a few close friends of mine are doing it but typically the properties are very distressed and require full guy/renovation. I am currently in Essex and Union county.

@Nishil Kothary the markets you should be looking at should solely be determined based upon what you can execute on.  If you don't know or haven't spoken to a lender (that's usually your first step unless you're going in all cash) then it's hard to say where.  I disagree with Angelo that NJ market has caught up with NYC.  I regularly attend Otteau seminars and we're still going up as NJ had a delayed reaction in the recovery.  There are certain towns for sure that have now gone past 2007 values, but on a state wide basis, or even northern NJ on a whole, we're still going up.

@Darren Sager

I agree with Darren

I live in Central NJ and where we live the price are still below the 2007 mark. They are rising but still have room to strike out a good deal.

Thank you for your inputs. 

What are the main resources you guys use to analyze RE markets (cities/towns)? For example @Abhijit Patel you mentioned RE prices in central jersey being below 2007 levels.  

I currently have just been going through Zillow and putting numbers in on BP calculators only to find most properties cash flowing negative amounts. 

Obviously this is not an efficient way to find deals and zone in on an area. Ideally, I would like to find a few markets that I feel are undervalued and create my criteria/rule of thumbs to be able to spot deals. My major issue is market analysis.

@Shawn M. would also love to hear more about why you choose those two areas and your experience/outlook for that market.

Appreciate all your help guys!

@Nishil Kothary I'm in agreeance with Darren and the others. I would get on a realtors MLS auto email list to get a better idea of numbers and you'll see how quickly things are selling here, and above list price. Zillow and those other websites are slow to update and can be incomplete. From there you can either network at local meetups and look for off market deals or try and snag something off the MLS like I'm currently in the process with.

Theres some older threads from this year that mention this but the takeaway is people are not afraid of overpaying. Just to break even or playing the appreciation game. Stick to the numbers, dont get emotion and be patient. I've spent over a year looking with some time off in between. Good luck!

Originally posted by @Darren Sager :

@Nishil Kothary the markets you should be looking at should solely be determined based upon what you can execute on.  If you don't know or haven't spoken to a lender (that's usually your first step unless you're going in all cash) then it's hard to say where.  I disagree with Angelo that NJ market has caught up with NYC.  I regularly attend Otteau seminars and we're still going up as NJ had a delayed reaction in the recovery.  There are certain towns for sure that have now gone past 2007 values, but on a state wide basis, or even northern NJ on a whole, we're still going up.

I have been a real estate appraiser within NJ for 14 years. As far as flips go, yes you can make money but for Buy and Hold it is very difficult right now. I am seeing homes sell for higher than the peak within some of the worst areas of Newark and Paterson. It can't go any higher!!! And yes obv we are not caught up with NYC in regards to raw numbers but based on year to year appreciation we are in the same bubble (which is what I meant)

Interesting opinions. I agree with @Mark F. about being patient. Are there an NJ RE meetups that you guys know of or attend?

@Nishil Kothary the areas I selected are close to NYC direct transits.  Both Union and Essex county offer amazing access to the cit which creates high demand for rentals.  The key is being close to transit lines.

@Nishil Kothary Check meetup.com. Also go into the events and meet up page on biggerpockets.com. Darren Sagger host a meet up that's pretty big but sometimes it's in NJ and others in NYC.

@Nishil Kothary Look up Nick Tang I've known him for years and his team throws the best meet ups where actual business gets done.  Also check out Glenn Galucci's meetups he's like the Godfather and a wealth of info and funding.

@David Wrenn Thank you! I will be sure to look them up.

Stick to the train lines

@Nishil Kothary  Most of New Jersey is undervalued right now as based on historical price-income ratios. The state price performance since latest 'fair valuations' post 2007 has not been stellar, while incomes have grown stronger. I commented the same on another thread. Hudson County is one exception as fairly valued, but then there are counties at >20% undervalued.

High absolute prices preventing good cap rates (price-rent ratios), are also not present as NJ has pretty strong caps outside of Hudson County, in spite of super high property taxes (e.g. 8% average for multifam in Sussex County, 10-12% in counties like Burlington, Cumberland etc, zero endorsement for those).

Also cap rates in Hudson County can go upto 8.5-9% for a 3-4-family property, in spite of a dismal 4% average cap rate for the county.

I have a unit that isn't on the market that we are looking to sell asap. It's in Willingboro NJ. Please send me a message if you are interested. 

prices are high in jersey as well . a lot of people moving in from nyc . I. wholesale real estate in jersey . I can help you find great dealss