Almost impossible to find cash flow deals in NJ

Jersey City, New Jersey
General Real Estate Investing
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Almost impossible to find cash flow deals in NJ

Arun Maheshwari
Member since 2024 · 16 posts · 10 votes

Hi,

Are there any specific areas/location in New Jersey where you can get some cash flow generating deal on a single-family/multi-family or townhouse?


Its so hard to find cash flow generating deals given high tax rate in NJ and also higher interest rate environment.

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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
1y

There are always good deals to be found in any market. Generally now it is harder to find them. 

Please don't fall for the nonsense of "just buy, because over the long run real estate always goes up"  I have read a lot of that silliness here on BP lately. 

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  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    1y

    Arun,

    Funny you posted that I just talked to a group today who are new investors in Union and they all had the same complaint! I will tell you the same thing I told them today on our zoom call, do not get frustrated. One reason is there are several states that you can put your money into to triple the cash flow you could make in NJ. Sounds a little scary or stressful at first to some people but once you see how easy it is and cost efficient you never look back.

    Take Indiana or Ohio for example you can still find a single family home for under $100K if needed. One of my investors just closed on a duplex for $185K that is already bringing in $1200 a door. It could use about $40K in renovation but its move in ready and passed an appraisal. He plans on a $40K renovation and in 12 months the home will be worth $285K based on comps and his last (2) REI's.

    On top of a great price point and decent rents you have lower taxes and No additional school or other taxes like NJ. You can find turnkey properties for sale as well last month we closed on a 4 unit for $365K which was currently bringing in $4800 a month. The rents on this one were on the lower side but in 3-5 years that 4 plex will be worth $625K to $650K.

    You also have properties around the University and Colleges that can be used as Student dorms/housing or STR's. This is all based around the home prices still being reasonable but that will change in 3-5 years as the market gets more popular.

    If you ever have any questions about out of state feel free to reach out or check out my profile.  I am always happy to help other BP members with tips loophole or to avoid lost time or money.

    [email protected]727-637-4289
    1Reply
    • Diana DuPre
      Member since 2021 · 3 posts · 1 vote
      1y

      @Jason Wray  Hi Jason, what a great and helpful response! I'm just starting out researching properties to purchase with good cash flow potential straight away. I've been looking in Indiana, Ohio, Michigan, Texas, Alabama, and Illinois. The property tax rate in Illinois is pretty high so I started focusing elsewhere. I just joined BP and am loving all the help, advice, and guidance. 😊

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  • Seth McGatheyBusiness Member
    Real Estate Agent · Milwaukee WI · Member since 2024 · 321 posts · 254 votes
    1y

    I can't speak to NJ because I don't live there, but I know it is pricey. There is a reason Bigger Pockets is making a big deal about the Midwest. We have relatively low prices compared to the rest of the country and relatively high rents compared to our prices. I still wouldn't say it is easy to get cashflow, but it is a regular occurance here. I did it last year with an on market duplex for $300,000. Got $500 cashflow going with one tenant slightly lower than market rents. So it's totally doable. If your local market isn't working for you anymore, consider branching out. And if you are considering Milwaukee, reach out and I can help you put together a team. 

    Best of luck!  

    [email protected]708-297-0996
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  • Charles ClarkBusiness Member
    Real Estate Broker · Milwaukee, WI · Member since 2020 · 306 posts · 209 votes
    1y

    @Arun Maheshwari

    You're absolutely right — finding true cash-flowing deals in New Jersey can be challenging with the high property taxes and current interest rates. That said, there are still pockets of opportunity, especially if you're strategic about location and deal structure.

    Here are a few areas worth exploring:

    ✅ South Jersey – Markets like Camden, Gloucester City, and Pennsauken still offer affordable multifamily options with solid rent-to-price ratios. Just be sure to run the numbers carefully and account for property condition.

    ✅ Trenton & Ewing Township – Often overlooked, but can provide strong cash flow with the right tenant base and management in place. Some investors are finding success with Section 8 rentals here.

    ✅ Newark & East Orange – Prices have gone up, but there are still deals, especially on 2-4 units that need some light rehab. Look for motivated sellers or off-market leads.

    ✅ Paterson & Passaic – Still seeing cap rates that can make sense, particularly on small multis. Property management is key here, though.

    [email protected]414-719-6090
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  • Kerlous TadresBusiness Member
    Realtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
    1y
    Quote from @Arun Maheshwari:

    Hi,

    Are there any specific areas/location in New Jersey where you can get some cash flow generating deal on a single-family/multi-family or townhouse?


    Its so hard to find cash flow generating deals given high tax rate in NJ and also higher interest rate environment.

    Hey Arun, welcome to BP! I would look into out-of-state investing(consider the Midwest). There are some great landlord-friendly states, and as long as you can build a strong team with your Core 4 (with a great realtor, contractor, property manager, and attorney), you can have a solid portfolio 
    [email protected]614-490-1163
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    0Reply
  • Aristotle Kumpis
    Specialist · Long Beach, CA · Member since 2011 · 878 posts · 398 votes
    1y

    Have you considered investing elsewhere? I live in California but don't invest here due to the terrible landlord laws. Tennessee for example has no state income tax and has pretty low property taxes compared to NJ. There are many states that you should consider versus investing in your own backyard. 

    0Reply
  • Melissa JusticeBusiness Member
    Rental Property Investor · Phoenix, AZ · Member since 2024 · 518 posts · 1k+ votes
    1y

    @Arun Maheshwari,

    Hi Arun - I'm originally from NJ and still hold a realtor license there as well.

    So short answer- no, lol. 

    It’s really tough to find cash-flowing single- or multi-family deals in New Jersey right now. Between the high property taxes and today’s interest rates, the numbers just don’t work well for monthly income. Most properties in NJ tend to be better plays for appreciation or long-term equity growth, not consistent cash flow.

    That’s why many investors, including myself, are looking at out-of-state turnkey options, especially in the Midwest and Southeast. Markets like Alabama, Tennessee, Indiana, and parts of Florida or the Carolinas still offer solid rental demand, landlord-friendly laws, and much lower taxes and acquisition costs. You can get into properties with 20–25% down and still see positive monthly cash flow from day one-even after expenses and management.

    If you’re open to exploring those markets, I’m happy to share what I’ve seen work and what to watch out for.

    Best of luck!

    [email protected]313-221-8718
    0Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    1y
    Quote from @Arun Maheshwari:

    Hi,

    Are there any specific areas/location in New Jersey where you can get some cash flow generating deal on a single-family/multi-family or townhouse?


    Its so hard to find cash flow generating deals given high tax rate in NJ and also higher interest rate environment.

    Hi Arun,

    Cash flow can be tough unless you are open minded to major c renovation or creative rental strategy.  I have client getting cash flow deals every month, the ones that do mostly never buy turnkey.  With all that being said the success in NJ comes from finding properties in the right location (landlord friendly town, high rent increase locations).  Cash flow can happen but what is most important is finding deal that will allow yearly rental increases.  For example a deal that breaks even on day 1 will look very attraction with $300 rent increase each year and 5% appreciation.  These types of properties are actually pretty easy to come across.  Cash flow can happen early on in NJ but it can compound big time each year if done right. 
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    1Reply
  • Arun Maheshwari
    OP
    Member since 2024 · 16 posts · 10 votes
    1y

    Thanks. Which areas generally are good for Investing in NJ based on criteria you mentioned?

    0Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    1y

    @Arun Maheshwari that depends on the individuals comfort level, proximity they are looking for, rental strategy and more.  I have clients cash flowing through most of Central and North Jersey

    973-975-3895
    House Hacking New Jersey563 Reviews
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    0Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    1y

    There are always good deals to be found in any market. Generally now it is harder to find them. 

    Please don't fall for the nonsense of "just buy, because over the long run real estate always goes up"  I have read a lot of that silliness here on BP lately. 

    2Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    1y

    Not sure your exact market but I live in a pricey market too (North side Chicago) and the deals don't cashflow with current rents. The way we make it work is do rehabs and then get the rents to max of market this is often 50% higher then the buildings are sold with. Got to get crative! With the class A/B tenants you can easily self manage also even if move out of area with a handyman. I own a working class area building also and it cashflows high on paper but has so much more expensive turnover, etc. that it really doesn't cashflow like you think upfront so going to random out of state markets where numbers look good on paper probably isn't the cashflow solution. 

    1Reply
  • Doug P.
    Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes
    1y

    I agree with @Ned Carey there are deals in every market. If buy and hold doesn't work, before jumping several states over, think about what does work in your area. Flipping? Creative financing? Wholesaling? Commercial?

    SFH haven't cash flowed as rentals in Kitchener-Waterloo in two decades. But that hasn't stopped me from cash flowing with creative finance. I haven't actually seen a market where buying on great terms to sell on great terms doesn't work. It's the monthly payment version of wholesaling (buy low to sell low) which also works in every market.

    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    1y

    @Arun Maheshwari

    The Real Estate Crash of 2008-2010 caused real estate prices to crash across the country - but didn't affect rent amounts. This caused a historically unique opportunity for investors - they could buy Class A properties and immediately cashflow when renting them out.

    This couldn't last forever, and it didn't, as excited new investors drove up prices.

    Eventually, Class A property values increased to the point that even increasing rents didn't allow them to cashflow upon purchase.

    So, the flood of new investors switched to buying Class B properties.

    COVID created a chaotic spike in both the sale & rental markets, attracting even more new real estate investors. According to CoreLogic, in December of 2023, almost 30% of home sales were to investors!

    Investment also spiked in Class A Short-Term Rentals (STR) and investors started paying higher and higher prices based upon anticipated STR rental rates, that exceeded sustainability based upon Long-Term Rental rates (LTR).

    Now we're seeing investors pouring money into buying Class C rentals - but, many are getting burned.

    In our experience & opinion, the main determinant of property Class is not location or even property condition, those are #2 and #3. The #1 determinant is the Tenant Pool.

    If you don't believe us, try putting several Class D tenants in Class A apartment buildings and watch what happens. Or try the reverse - rehab a property to Class A standards in a Class D neighborhood and try to get a Class A or B tenant to rent it.

    Unfortunately, many newbie real estate investors are jumping into buying affordable Class C rentals - expecting Class A results.

    In our opinion, Class C tenants have FICO scores from 560 to 620 - where their chance of default/nonpayment is 15-22%. See the chart from Fair Isaac Company (FICO) below:

    FICO Score

    Pct of Population

    Default Probability

    800 or more

    13.00%

    1.00%

    750-799

    27.00%

    1.00%

    700-749

    18.00%

    4.40%

    650-699

    15.00%

    8.90%

    600-649

    12.00%

    15.80%

    550-599

    8.00%

    22.50%

    500-549

    5.00%

    28.40%

    Less than 499

    2.00%

    41.00%

    Source: Fair Isaac Company

    According to this chart, investors should use corresponding vacancy + tenant-nonperformance factors of approximately 5% for Class A rentals, 10% for Class B and 20% for Class C.

    To address Class C payment challenges, many industry "experts" are now selling programs to newbie investors about how Section 8 tenants are the cure. If only it was that easy. Yes, the government pays the Section 8 rent timely, but more and more tenants are having to pay a portion of their rent. Then there are the challenges with Section 8 tenants paying utilities and taking care of their rental property.

    Investors should fully understand that Section 8 is not a cure-all for Class C & D tenant challenges, it's just trading one set of problems for another.

    We see too many investors not doing enough research to fully understand all this and making naïve investing decisions.

    [email protected]248-209-6824
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    2Reply
  • Joseph Guzzardi Jr
    Rental Property Investor · Member since 2019 · 411 posts · 148 votes
    1y

    @Arun Maheshwari Primarily South NJ would be best. Mercer, Burlington, Camden, Cumberland, Atlantic Counties. I own multiple investments in these counties. Happy to assist

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