Investing in Newark, NJ

21 Replies

hey guys, I am new to investing in real estate. I live in Hoboken/JC and thought I would scope out Newark as a starting point. I am interested in finding 3 to 4 unit multi family properties that I can hold for cash flow. Am I on the right track with Newark? If so, what areas should I be targeting? Can I consider Ironbound? If not Newark where else in North Jersey should I be looking that isn't too far from Hoboken/JC? Any thoughts or advice would be much appreciated! Thanks!

Ironbound is the most desirable location, but has the least inventory and will yield the lowest ROI in many cases

Thanks Manuel, that makes sense. What are some other parts of Newark that may be a good combination of ROI and decent tenants?

@Igor Kertzman Welcome to the site Igor. There's lots of good info here and you will learn a lot. Unfortunately our market is very expensive. While prices in Newark may seem like a relative bargain its likely for a reason. While there probably are pockets that are ok you would be better off starting somewhere else. Have you looked at all in Union City. It's close buy and a pretty good rental market. Best of luck

@Michael Leffelholz 

Thanks for the suggestion. I will look into Union City. 

Hey @Igor Kertzman I live and invest in Union City and agree generally with the other posters here. The housing stock of Union City and surrounding areas is primarily 2 family homes. You're less likely to find 3-4 unit properties (and in Union City those properties are subject to rent control if not owner occupied, so you may have some additional complications), so I think 2 family properties are an easier way to get started here, in my opinion.

Ironbound is very expensive in Newark (as are some parts of the North Ward, part of which is a historic district), but there certainly are transitional areas around the borders of some of the neighborhoods/wards. I'd encourage you to drive around Newark and get a sense of the area, talk to locals, see who is hanging out on the streets, etc... The city is huge and is very different from neighborhood to neighborhood. I haven't bought there yet (I have an option to purchase some vacant land in the North Ward), but it's definitely an area I am interested in exploring further.

I reside in Newark and am also new to real estate. I speak with limited experience, but what I can say is that I have doing my research to purchase a multi family home and those that have made post such as @John Errico and others are correct. Most of the best bargains are in areas that are least desirable to live and the best areas usually have very little inventory when it comes to housing. Areas, such as the ironbound and the northward center are great, but some of the houses you may find have super high taxes that will eat away at your rental income, ironbound especially. Continue to keep your eyes peeled though because I have seen some nice houses for decent prices. Best of luck.

I invest in newark heavily, but its a full time business. Our management team works very hard, and this is a business not an investment. 

You can get cheap houses but its also hard work. There are numerous challenges with the area that have been mentioned in earlier threads such as copper theft, very low income areas, ect. 

I would not buy in newark unless you are in the north ward or ironbound for a 1 off deal. If you are going to be active and buy alot of property then you can afford to put the systems in play needed to be successful there. 

Newark is a miserable investment if you think you can flip or get good renters. The best bet in Newark is go in to the rough neighborhoods, renovate a cheap home and rent to SECTION 8 tenants. People don't pay in Newark and when you evict them they will Purposely destroy your entire apartment just to make a point. SECTION 8 & TRA all day unless you are in Ironbound where you can get good rent but will pay double. I know this because I been a real estate appraiser in Newark for years

@Angelo Mart Bit of a strong generalization. Newark is pretty stratified between neighborhoods and recommending that someone go to the worst neighborhood and rent it to Section 8 as their first multi family is dangerous. I would agree that flipping in Newark is a bad choice just because the housing stock is so old and most have not had steady upkeep for 50+ years. 

I'd just like to add to what others have said about the North Ward and the Ironbound (Down Neck if your talking to old Italians) is that even in those districts there are multiple neighborhoods. In the Ironbound there is the East Ferry, Riverside, North Ironbound, and South Ironbound. And even in the North Ironbound there are areas with low rise projects and lower income tenant base and areas with a high income white collar tenant base. If you take your time and drive around the area you will see these differences and they will be reflected in prices :)

Originally posted by @Mike Zipf :

@Angelo MartBit of a strong generalization. Newark is pretty stratified between neighborhoods and recommending that someone go to the worst neighborhood and rent it to Section 8 as their first multi family is dangerous. I would agree that flipping in Newark is a bad choice just because the housing stock is so old and most have not had steady upkeep for 50+ years. 

I'd just like to add to what others have said about the North Ward and the Ironbound (Down Neck if your talking to old Italians) is that even in those districts there are multiple neighborhoods. In the Ironbound there is the East Ferry, Riverside, North Ironbound, and South Ironbound. And even in the North Ironbound there are areas with low rise projects and lower income tenant base and areas with a high income white collar tenant base. If you take your time and drive around the area you will see these differences and they will be reflected in prices :)

 First of all I am NOT generalizing, I am speaking the clear facts. I have foreclosed more properties in Newark then you could even imagine. Also, I have worked for a property Reassessement firm in the city and would inspect 30--50 homes per day.  In addition, my entire family was born and raised there. Unfortunately, I have heard horror stories from homeowners that were losing their homes that is heartbreaking. 

North Newark is a great investment if you are on the right block (this is know because I grew up near there) but prices have increased so much that it kills positive cash flow. Down Neck as my "Old Italians" (generalized statement) would say is awesome but once again prices are still too high that they kill cash flow at times. I personally know an investor that has (5) 3-Fam homes all near South 18 and Avon Ave with positive Cash flow working nice. This works great for him because he lives on South 18th and Hawks his properties. I have met other Successful landlord Near notorious South Side but its still a HUGE risk for a rookie to me. I know guys that flip properties but have qualified buyers lined up but that's not for me.

So when you say my strategy is dangerous, do you say it is Physically dangerous or Financially? Section 8 is guaranteed rent with a government agency that screens tenants so it's good security. As far as Physical danger, well that's another risk. 

@Angelo Mart I don't doubt that you are informed about prices in the area. That isn't the point I was trying to make. The OP was asking about buy and hold for cash flow and you said "The best bet in Newark is go in to the rough neighborhoods, renovate a cheap home and rent to SECTION 8 tenants", that's dangerous because you are going to kill your money. Physical security aside, getting a property Section 8 ready from long distance without a team is a risk. You have lived in Newark but OP has not (or hasn't mentioned it).

Originally posted by @Mike Zipf :

@Angelo MartI don't doubt that you are informed about prices in the area. That isn't the point I was trying to make. The OP was asking about buy and hold for cash flow and you said "The best bet in Newark is go in to the rough neighborhoods, renovate a cheap home and rent to SECTION 8 tenants", that's dangerous because you are going to kill your money. Physical security aside, getting a property Section 8 ready from long distance without a team is a risk. You have lived in Newark but OP has not (or hasn't mentioned it).

 How does that kill your money? My friend purchased a 2 Family for $40,000 that needed $40,000 in repairs. During renovation they barricaded windows and doors with Steel guards. He rented both units to Section 8 and gets $2300 total - $1,100 in expenses = $1200 cash flow. The home also appraised at $150,000 when he refinanced out of hard money loan!!

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Originally posted by @Angelo Mart :

Newark is a miserable investment if you think you can flip or get good renters. The best bet in Newark is go in to the rough neighborhoods, renovate a cheap home and rent to SECTION 8 tenants. People don't pay in Newark and when you evict them they will Purposely destroy your entire apartment just to make a point. SECTION 8 & TRA all day unless you are in Ironbound where you can get good rent but will pay double. I know this because I been a real estate appraiser in Newark for years

As a Native Newarker who still invests in the property there AND the people (I have been volunteering with a youth mentoring group there for the last 10 years), I too don't like your generalizations about the people of Newark. There are many good people there who pay their rent on time and who DON'T destroy your properties. Most of the foreclosures have happened there because unsuspecting and uneducated buyers purchased at the top of the market prior to the 07 crash. NOT because tenants stopped paying rent.

Angelo, you're an appraiser so speak on the values there. Not as an investor on "horror stories" that you "heard" about. The foreclosures were only one side of Newark. Most of the properties in Newark did not go into foreclosure.

Medium step buys houses logo 13Ibrahim Hughes, STEP Buys Houses LLC | http://www.StepBuysHouses.org

Ibrahim Hughes I agree with you 100%. However, you cant deny that the foreclosure rates in NEWARK are not ALARMING in comparison to its counterpart cities such as Elizabeth & Jersey City. This is not a generalized statement this is a FACT. I have done a lot of foreclosure work in Newark for CHASE & WELLS FARGO which are the 2 biggest lenders in America. Therefore, I can attest to the foreclosure issues in the city at first hand. We just foreclosed somebody yesterday that purchased a home in 2011 after the market crash. Once evicted they DESTROYED the house. My statements were based on proven evidence and NOT hearsay. If you read my prior statements I said "I personally know an investor that has (5) 3-Fam homes all near South 18 and Avon Ave with positive Cash flow working nice. This works great for him because he lives on South 18th and Hawks his properties. I have met other Successful landlord Near notorious South Side but its still a HUGE risk for a rookie to me" (and like me)

The statements are based on statistical evidence as I was responding to out of the area investors that never stepped foot into Newark and now they want to jump in the investment game blindly not knowing the harsh realities and risks they could potentially face. There are good and bad everywhere in the world which is the reason the TENANT SCREENING is IMPORTANT. Once again I do agree with you that there are many good people who pay their rent on time along with the low property taxes and wide yield spread on After Repairs Values making NEWARK a great investment.

Originally posted by @Igor Kertzman :

hey guys, I am new to investing in real estate. I live in Hoboken/JC and thought I would scope out Newark as a starting point. I am interested in finding 3 to 4 unit multi family properties that I can hold for cash flow. Am I on the right track with Newark? If so, what areas should I be targeting? Can I consider Ironbound? If not Newark where else in North Jersey should I be looking that isn't too far from Hoboken/JC? Any thoughts or advice would be much appreciated! Thanks!

Hi Igor,

First off, I'd like to say welcome to the world of REI. It seems like you are on the right path in terms of ideas. You sound like you know what you want, just unsure of where to start.

I am wondering if you have ever considered investing in turnkey properties?

One of the best options for someone like you is investing in turnkey properties. For example, turnkey providers rehab homes and sells them to investors. They also manage them so you do not have to worry about it. It becomes just like any other investment for you. It is a better way of buying and holding.

In terms of markets, I can tell you right now the Midwest is booming. Many people moved out to the costs and Texas a few years ago and real estate took off. It really took off in prices. Homes are very expensive out there. The Midwest is now starting to see a similar boom, but the real estate is still very affordable!

We have been seeing a large influx of investors in Cleveland. Many people from out of state are buying and holding in the area.

I know you are near by, so many you might want to consider looking into it.

We are in Cleveland and things are really booming!

Message me if you have any questions.

Medium smartland logo rgb blackTom Ott, Smartland | [email protected] | 440‑749‑4043 | http://www.Smartland.com

Originally posted by @Angelo Mart :

Ibrahim Hughes I agree with you 100%. However, you cant deny that the foreclosure rates in NEWARK are not ALARMING in comparison to its counterpart cities such as Elizabeth & Jersey City. This is not a generalized statement this is a FACT. I have done a lot of foreclosure work in Newark for CHASE & WELLS FARGO which are the 2 biggest lenders in America. Therefore, I can attest to the foreclosure issues in the city at first hand. We just foreclosed somebody yesterday that purchased a home in 2011 after the market crash. Once evicted they DESTROYED the house. My statements were based on proven evidence and NOT hearsay. If you read my prior statements I said "I personally know an investor that has (5) 3-Fam homes all near South 18 and Avon Ave with positive Cash flow working nice. This works great for him because he lives on South 18th and Hawks his properties. I have met other Successful landlord Near notorious South Side but its still a HUGE risk for a rookie to me" (and like me)

The statements are based on statistical evidence as I was responding to out of the area investors that never stepped foot into Newark and now they want to jump in the investment game blindly not knowing the harsh realities and risks they could potentially face. There are good and bad everywhere in the world which is the reason the TENANT SCREENING is IMPORTANT. Once again I do agree with you that there are many good people who pay their rent on time along with the low property taxes and wide yield spread on After Repairs Values making NEWARK a great investment.

 yes I definitely agree. Foreclosure rates are alarming. But again I want to note that most of those homes went into foreclosure because of people not being financially savvy and educated enough to purchase correctly. Not because they're so many tenants in Newark who are unwilling to pay their rent and instead tear up the properties when evicted. It definitely happens. And I'm sure it happens at a higher rate then most areas like any inner city would. But it's also important to note that while we may work a lot of foreclosures, our experience in such should not be used to paint a broad stroke about Newarks real estate landscape. The overwhelming majority of the homes in Newark are not in foreclosure and do not have bad tenants. I know that sometimes it's a challenge for us to remember that being that we work in the foreclosure market.

Medium step buys houses logo 13Ibrahim Hughes, STEP Buys Houses LLC | http://www.StepBuysHouses.org

Steve Wilcox , Hi Steve, Im a real estate investor that hasn't invested in a thing. However, I'm also a freelance construction manager with over 18 years in the industry. Additionally, we've been liscenced general contractors for over 10 years based out of North Jersey. As it appears, we occupy the same market. I would like to connect with you and or other experienced investors on BP from our area to learn more about the actual investment aspect of the business and to possibly establish a fruitful relationship at some point in the near future.

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