My husband and I are trying to purchase our second property in North Jersey. We have a duplex in Clifton, NJ that was purchased back in 2015 without using the BiggerPockets principles. This time around we are trying to follow the suggested percentages but we can't seem to find any properties that bring in at least 8% CoC. Our best options for move-in ready are around 5-6% and even those offers are not taking. We are also trying the BRRR approach where we have CoC around 4%-5% at current rents and plan to update to increase to 6-8% after updates. For the most part, we're focusing on Clifton, Rutherford, Montclair, Bloomfield and West Orange.
I was wondering if there are any seasoned North Jersey investors out there that can provide some insight. Is what we're seeing currently due to the market, or does this area traditionally work differently or different percentages? Just interested on what approaches are out there.
@Angelica Polio Hi Angelica, the home prices compared from 2015 to now have gone up considerably in the areas you’ve mentioned.
Your best bet would be to find a home that needs a little bit more work and has been sitting on the market a little bit longer (over 3 weeks). Otherwise, you’ll be competing with many active buyers.
Or you can find something off market where there is far less competition! Hope this helps!
We lend quite a bit in North Jersey. It compares to the DC market more so than the Philadelphia or South Jersey market. There was a post Covid influx of buying but it seems to have stabilized. It is still hot there and people are over paying. Buy low or be patient would be my advice.
You can't use any of those calculations in New Jersey right now and because of the high taxes, traditional calculators don't work. You have to look for appreciation areas, but right now that is very hard with all areas selling overvalue. You should be looking for value-add properties with just under market rent tenants or vacant ones that need to be finished, those are really the best numbers-wise right now. Of the towns you mentioned, Bloomfield is way too hot and high right now. I like Clifton 07012 if you can find it, downtown West Orange area, and Belleville, but they are all hot now as well.
@Angelica Polio Hey Angelica. What the folks are saying above are true. Your best bet in my opinion is to find something off market or direct from a wholesaler perhaps.
@Neil Pradhanang Thanks for the feedback! We'll keep searching, I like the over 3 week suggestion. Hopefully the market keeps sowing down.
@Jonathan Greene That's what I suspected, things definitely work differently in North Jersey! I had a very limited exposure to real estate before I dived into the North Jersey market, but even I can tell the difference specially with the COVID-influx. I agree, BRRRR is probably our best bet. When taking that approach do you look at the final numbers post-updates in the same way BiggerPocket suggest? For example 70% rule, 8-10% COC, etc, or how is that different in our area? I'm curious about how value was determined traditionally in North Jersey, even though I get that it might be different in the current market. As you said, appreciation is another major factor, odds are that properties appreciate better than in another regions, rent potential are really great in the area as well, what other factors have you seen play a role in property selection? Thanks for your time by the way! Much appreciated.
@Angelica Polio because NJ is the highest tax state in the US, it's hard to use traditional calculations and formulas. You really have to view as many as possible, judge how much it is worth to you and counter that against how many offers they are expecting and then use the calculators to make sure you aren't missing anything. I've been investing 30 years and I rarely use calculators or traditional metrics, especially in NJ. I am looking for appreciating neighborhoods, value-add opportunities that others can't see, and off-market marketing to find deals everyone doesn't know about. Hope that helps.