Finding good value, the 2% rule, choosing a city

9 Replies

Hi everyone,

So here's my question.  I'm new to real estate but I'm coming to the table with experience in stock market value investing.  I'm very attracted to deep value situations, which to me means gross cash flow generation above the 2% mark (to give a general metric).  I also prefer to target the lower end of the middle class type neighborhoods, to avoid bad neighborhood headaches. From what I've been reading, one city which fits these criteria is Milwaukee.  I would love to hear if anyone knows of similar areas/cities that have similar values, especially within a 2-3 hour drive of New Jersey.  I'm interested in targeting a city, spending half a year to a year learning the neighborhoods and economic patterns, then starting to invest there.  I just want to know ahead of time that the city has an abundance of values that fit my criteria (as opposed to the occasional deal), so that's why I'm posting the question.  

Thanks for any and all insights and responses,

Zev Bannett

What's keeping you from investing in Milwaukee?

I'd be very interested in finding a Milwaukee in NJ.

Hey Bram, thanks for your response,

For me, the issue with Milwaukee is that it's not a place I know personally.  I'm thinking to learn it, but I live in Israel, with sporadic trips to the U.S, so I'm not sure how realistic it is.  Most of my visits are to NJ because that's where I grew up and lived most of my life, so I figure it's easier to learn those areas that are within driving distance of NJ.  Within NJ the only lower price point areas are Newark and it's surroundings, with attendant crime issues.

@Zev Bannett  At the beginning, you should definitely consider investing near your neighborhood.  Where is yours? (can't depict from your description)

@Bram Spiero There are quite a bit in NJ.  First, parts of Milwaukee are kind of suburb (one of my good friend lives nearby there).  But if we are talking about lower-income, relatively high cashflow neighborhoods, there are a few.  Newark / Oranges / South Jersey / parts of Jersey City comes to mind.  

@Che Chiu Wong my original neighborhoods are Highland Park/Edison and Bergen County.  I also have family in West Orange.  

The 2% kind of neighborhoods in NJ that come to mind are Philippsburg, Trenton, Irvington, East Orange, Newark, JC, Camden, etc.  You could look into those areas.

South Jersey definitely has some neighborhoods outside in Camden and Gloucester counties which are more "blue collar" suburban neighborhoods where you can buy some good multifamily residences. With regards to the 2% rule though I think a lot of that will depend on how much you're willing to put down. If you're familiar with New Jersey you know that the taxes are high. While South Jersey isn't as bad as Central or North Jersey, it is still much higher than PA and Delaware, but because you're in the Philly metro market, the rent rates are not comparably higher.

@Zev Bannett ,

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Raymond

Thanks Raymond:-) how do you do that on a smart phone?

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