New Jersey - Taxes!

[Stephen Cheng]

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!

[Michael D.]

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