New Jersey - Taxes!

6 Replies

Greetings everyone, I just moved out to NJ and am hoping to build a portfolio in the New York / Newark suburbs. What do people think of compensating for the high property taxes in NJ? It seems that they generally break down one's implied cap rate goals.

Looking in Bloomfield, a 2 family near major employment / retail in an ok neighborhood for sub $300k can be had with rents in the $3k range plus some potential for fixing the basement as an extra unit. But even then, it seems you can never overcome the hurdle of $11k property taxes. Would welcome thoughts and if anyone has any advice. 

Thanks!

HI Stephen,

I'm a new investor in northern NJ and just recently backed out of a deal because the taxes were 12k /year and I thought I'd be cutting it a bit close if I saw 100% vacancy on a duplex. It's to be considered that in NJ with higher taxes comes higher rents. Essex County is known for its high taxes and if this is your concern you may want to consider looking in Morris county where the taxes tend to be a bit lower. This being said, Essex County does have a lot of great areas with a lot of potential and I surely wouldn't rule it out based on taxes. I wish you the best of luck and know of a great realtor if you're looking to get started. Please feel free to PM me if you'd like more detail.

Best of luck,

Mike

Welcome to BP! Check out Manville and surrounding areas in Somerset County. Nice quiet town with lower taxes. If you have any questions feel free to PM me. 

My opinion Bloomfield is set to explode in the next few years.  Mark my word.   Tons of investment from the big boys putting huge dollars into the area to create a rental destination @Stephen Cheng .  Don't invest in sleepy towns with long commutes into NYC.  If you're looking long term you should rule out places like Somerset County.  Always follow what the big players are doing.  Let them create the market and piggy back on their work.

Thanks everyone. Much appreciated for the thoughts. It's just amazing to hear people talk about 10% cap rates. And then to see properties with major value add requirements not pro forma out unless one is hyper aggressive. 

Does anyone have a GC recommendation? There was one property in Bloomfield with some empty storefronts. If one can convert into a residential and rent it out as a 2b/1b, seems like the cap rate will get close to the 10.  

Hey @Stephen Cheng I think I know the property you're talking about.  It has an oil tank buried in the back (if it's the one close to the Watsessing Station).   You should know that my main go to oil tank puller says that greater than 75% of the tanks leak up in the Bloomfield/Montclair area.  It's something about the soil that eats up the tank.

The tank is under concrete which makes testing the soil more prohibitive.  But I wouldn't buy any property going forward without doing that test.