Investor · Ridgewood, NJ · Member since 2012 · 113 posts · 10 votes
Been researching multi-family properties in Newark NJ and Harrison NJ based on their proximity to mass transit (path train). Anyone have any experience in these areas. Any recommendations whats a good cap rate? NJ is in a state of flux if you ask me with the oustanding foreclosures and Hurricane Sandy so would be interested to hear from current property owners.
Developer · Orange County California · Member since 2017 · 4 posts · 11 votes
9y
A great resource is REIS. Multifamily market data can be viewed as well as other commercial real estate data can be found there. Another great resource is Loopnet. I caution you however to never trust the cap rate in the property listing! However, if you sign up with Loopnet and pay the annual fee, you will find it as a great resource for market data i.e days on market, price sold, property financials, employment statistics, zip code / city statistics, demographics, etc. At then end of the day, as an investor, you have to analyze the deal, run the numbers and look at the other factors that have a direct and indirect impact on the property and neighborhood. As I mentioned I specialize in the commercial properties and also hold my Masters in International Real Estate. I can send you a few quick ratios that can help you analyze the deal and better understand cap rates.
Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
13y
Originally posted by Peter Fokas:
Been researching multi-family properties in Newark NJ and Harrison NJ based on their proximity to mass transit (path train). Anyone have any experience in these areas. Any recommendations whats a good cap rate? NJ is in a state of flux if you ask me with the oustanding foreclosures and Hurricane Sandy so would be interested to hear from current property owners.
Peter, in what areas in Newark are you looking to invest (I don't have much info on the Harrison market)? How many units? I have a lot of experience in the residential multifamily market (2-4 units). Regarding these property types- in good stable areas like (North) Ironbound, Upper Roseville, Ivy Hill etc. inventory is very tight and you'll be lucky to find anything with a 5-6% cap, if you'll find anything at all. Many of these properties appeal to owner occupiers who are willing to pay retail, live in one the units and rent out the remaining units. The south ward will get you better returns but will be more work management wise.
Investor · Cranford, NJ · Member since 2012 · 303 posts · 153 votes
13y
I am also looking at purchasing multi units in NJ. I find that ironbound area is far too expensive to meet my goals for return. I also do not want to be in the south ward, irvington, or east orange where you might need a bullet proof vest to go out to the property.
Another question would be are you going to manage yourself or hire a management company?
If hiring does anyone have any experience working with NJ management companies, how are the fees, and do they change based on the area?
Newark as a city is really coming around and unfortunately in my searches the price of the inventory reflects that
Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
13y
Originally posted by Steve Wilcox:
I am also looking at purchasing multi units in NJ. I find that ironbound area is far too expensive to meet my goals for return. I also do not want to be in the south ward, irvington, or east orange where you might need a bullet proof vest to go out to the property.
Another question would be are you going to manage yourself or hire a management company?
If hiring does anyone have any experience working with NJ management companies, how are the fees, and do they change based on the area?
Newark as a city is really coming around and unfortunately in my searches the price of the inventory reflects that
What are those goals? In my experience you can have cashflow in a slum or a place that just pays it's way in an upcoming location. Not both. If it pays it's expenses through a 15 year mortgage, you make 9.4% on your 25% down. That's not counting appreciation or rents increasing. It's a good investment, but not a living.
I am also looking at purchasing multi units in NJ. I find that ironbound area is far too expensive to meet my goals for return. I also do not want to be in the south ward, irvington, or east orange where you might need a bullet proof vest to go out to the property.
Another question would be are you going to manage yourself or hire a management company?
If hiring does anyone have any experience working with NJ management companies, how are the fees, and do they change based on the area?
Newark as a city is really coming around and unfortunately in my searches the price of the inventory reflects that
Steve,
it looks like we have the same opinion and interest in north nj. Can you please let me know how this turned out for you??
Specialist · Boca Raton, FL · Member since 2011 · 113 posts · 39 votes
13y
Simple Metrics for Northward are as follows:
$60-70,000 a unit renovated
$30-45,000 a unit distressed
I have invested over a million dollars into assets over the last few years into Newark. Newark is urban so blocks really matter even in Northward so the best advice that I can give is study the market and complete a feasibility study that matches your investment thesis.
Investor · Cranford, NJ · Member since 2012 · 303 posts · 153 votes
13y
The market is crazy, prices are running up. I am finding it VERY challenging to source good deals even in some of the tougher areas, and am loosing lots of bids even when I am going slightly above that my maximum offer is.
I have also lost bids when I am the highest and best offer, all cash quick close with no inspection. So i am having a hard time buying.
Developer · Orange County California · Member since 2017 · 4 posts · 11 votes
9y
Hi Peter,
Thanks for your great question. I have over 6 years of experience in multifamily investments both commercial and residential and also own and manage a few of my own in the Essex/Passaic County areas. You are correct when you stated that NJ is in a flux with outstanding foreclosures, especially in the areas of Newark, Trenton, South Jersey and Paterson. As a resident and property manager/owner in Newark, NJ, I highly recommend that you invest in multifamily properties where there is a high demand in rents such as Newark particularly the Upper Clinton Hills section/ Vailsburg/Weequahic/Mount Pleasant areas.
The cap rate is calculated by taking the Net Operating Income / Property Value or Purchase Price. Therefore, the cap rate is directly related to # of units. Typically the cap rate runs around 7%-9% for commercial multifamily properties in B/C areas in Newark 6-15 unit buildings. To me, 11-12% is ideal in these areas and I am willing to show you ways to increase your cap rate and overall cash on cash return.
Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
9y
Freda, how does one find out cap rates in various locales? Is it published or proprietary? I often see them quoted, like here, have seen them in appraisals, but wonder how to access them to value properties. Are they only available in listings for commercial property? My experience with smaller properties is the reported expenses are often fiction. Had I not been experienced my most recent purchase looked like a dog with $12K in heating expense, it's been under $3k after a new NG boiler.
Rental Property Investor · Northern NJ · Member since 2016 · 341 posts · 144 votes
9y
Hi Freda Johnson thanks for reviving this thread,
Ibrahim Hughes it seems to me that you know Newark pretty well (as I've seen in some others treads as well) what is your take on the single digit streets/Dikinson Ave/ next to the I280 ?
Thanks,
Any input will be appreciated,
Developer · Orange County California · Member since 2017 · 4 posts · 11 votes
9y
A great resource is REIS. Multifamily market data can be viewed as well as other commercial real estate data can be found there. Another great resource is Loopnet. I caution you however to never trust the cap rate in the property listing! However, if you sign up with Loopnet and pay the annual fee, you will find it as a great resource for market data i.e days on market, price sold, property financials, employment statistics, zip code / city statistics, demographics, etc. At then end of the day, as an investor, you have to analyze the deal, run the numbers and look at the other factors that have a direct and indirect impact on the property and neighborhood. As I mentioned I specialize in the commercial properties and also hold my Masters in International Real Estate. I can send you a few quick ratios that can help you analyze the deal and better understand cap rates.
Developer · Orange County California · Member since 2017 · 4 posts · 11 votes
9y
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