Hi my name is Josh and I am looking to buy my first investment property. I live right in Hudson county and would like to have a property within an hour drive of where I live. However, I haven’t found any solid opportunities yet. Does anyone have any suggestions on good areas to find a property <400k that will provide a solid cash flow? Thank you!
Hey Stephen R Johnson I am not so worried about a market correction for rentals if the property is cash flowing OK right now. In my mind, the value of the property is sort of irrelevant, and the main concerns are rents and vacancy. Your expenses are going to be basically fixed, and the only way rents are (probably) going to decrease in the greater NYC area is due to a lot of new supply, or some big economic event/natural catastrophe/terrorism etc. that makes living in or around NYC suddenly undesirable. I’m not really worried about that either so much in this area. If anything, you could argue that rents will be even healthier in a recession because home ownership may be less attainable.
I think if you can find solid cash flow properties in, say, East Orange, you shouldn’t be super concerned even if their value decreases in the shorter term due to some macro economic events. You can get both Section 8 tenants and non-government assisted tenants in East Orange. There are pros and cons to both... but, I think, if you are thoughtful about picking tenants and management you should be ok. Best of luck!
@Joshua Goldberg Try Newark. The market there is getting a bit hot and crowded but there are still solid deals to be had and it’s a great market for rentals.
@Joshua Goldberg if you're willing to drive an hour of Hudson county there's basically any type/class of property you could possibly want. Sort of depends on your desire to be within proximity of public transit to, say, NYC and your tolerance for living/investing in areas that may be seen as less desirable. Some general thoughts:
Hudson County is very competitive right now, but there are still some "marginal" areas that offer investment opportunities. Greenville, in Jersey City, has a pretty negative reputation (some areas are quite unsafe), and is not particularly well situated to public transit, but certainly offers buy and hold opportunities currently in your budget. Sporadically, you may also be able find deals in Union City, North Bergen, and West New York, and other ares of JC, but those areas are quite competitive.
Essex County (which includes Newark) is also quite competitive, but, if you're willing to invest in less desirable areas like Newark (not the Ironbound, though, which is going to be too expensive for your budget), East Orange, or Orange, there are lots of opportunities for pretty solid cash flow. The problem in those areas (similar to Greenville) is stabilizing the property: so finding quality tenants that will pay rent on time, in an area that is at least safe enough where you'd feel OK doing renovation work, collecting rent, etc. There are deals you can probably find on the MLS right now in East Orange and Orange below $400k that will yield some pretty good cash flow.
Passaic (in Passaic county) can also yield some deals, though I haven't personally invested in the area.
All of the above areas are pretty block-by-block, though, so if you're not familiar, I'd recommend spending a few weekends driving around and getting sense of the areas. All of those cities have "good" and "bad" areas (and are priced accordingly), so it may be in your best interest to be a little bit picky about exactly where you want to invest.
I'm not as familiar with further west and/or south--if you drive basically an hour west of Hudson county you'll be in essentially farm country, hah. I've invested in Hudson, Bergen, and Essex counties, primarily for buy-and-hold properties, and have done quite well.
@John Errico That’s really great information and kind of you to share your experience. Do you feel a cash flow investment in East Orange or Irvington can weather the storm of a market correction? My concern are taxes relative to the rents, and vacancy loss. And, would I expect prospective tenants bringing State vouchers? Thanks John.
@Joshua Goldberg I live in Passaic and own 3 properties there. I agree with @John Errico regarding Passaic in Passaic County. In fact, I would say it's a up and coming area with major economic development coming in the next 5 to 10 years.
Hey Stephen R Johnson I am not so worried about a market correction for rentals if the property is cash flowing OK right now. In my mind, the value of the property is sort of irrelevant, and the main concerns are rents and vacancy. Your expenses are going to be basically fixed, and the only way rents are (probably) going to decrease in the greater NYC area is due to a lot of new supply, or some big economic event/natural catastrophe/terrorism etc. that makes living in or around NYC suddenly undesirable. I’m not really worried about that either so much in this area. If anything, you could argue that rents will be even healthier in a recession because home ownership may be less attainable.
I think if you can find solid cash flow properties in, say, East Orange, you shouldn’t be super concerned even if their value decreases in the shorter term due to some macro economic events. You can get both Section 8 tenants and non-government assisted tenants in East Orange. There are pros and cons to both... but, I think, if you are thoughtful about picking tenants and management you should be ok. Best of luck!
Hah, thanks @Account Closed! I upgraded to Plus because I wanted to post in the marketplace (though I haven't really taken advantage of that recently). I've thought about upgrading to "Pro," but I don't really take advantage of any of the forms/property analysis/etc., type stuff, so I'm not super show if it's worth it. Maybe for a better forum signature, hah.
There's a great group of northern-NJ based investors on BP, so definitely feel free to PM me if you ever want to grab coffee/a drink/etc. Best of luck!
Hello, this is a great post. I also live in Hudson county and just purchased a home in North Newark ( Fairmount area). It is taking a bit longer to get good tenants, but they are coming slowly. The return is great so I am looking to purchase another 2 multifamily this year but I want to see how the solid the rent will be.
@John Errico and @allan szlafrok I would love to hear if you have some tips to get good renters a bit faster.