Real estate investing inquiry, help.

9 Replies

Hi all, I’m a beginner when it comes to investing, currently living in NYC. I have decided to invest in a home in New Jersey to rent out. However, I’m inexperienced with NJ market and unsure which neighborhood to purchase a home that I will be able to easily find renters . It’s importent to note my budget for a home is 350K. Your help is highly appreciated.

@Farida Faisal

NYC is about 1.5hrs away from Philadelphia (maybe even closer, depend on where from and to your go). I'd say Philadelphia will take you further for the same price. You can get a duplex in a decent area and re tax would be significant lower than in NJ. 

I have clients from NYC that invest in Philly and they love it.  

Hi @Farida Faisal ,

Some places to look into are North Bergen, Newark, Bayonne, and parts of Jersey City. A lot of these neighborhoods drastically change from block to block so you will want to partner up with an experienced agent in that area and give them the criteria you are working with. Best of luck!

What part of the state are you looking in? If you are open to considering the entire state there are several areas in Central and Southern Jersey where that price point can get you more home and the rental market is strong. As a leader for a South Jersey brokerage for five years and a licensed agent in NJ and PA let me know if you would like to jump on a call to discuss other areas. 

@Farida Faisal There are definitely good areas for buy-and-holds in NJ, but you will most likely get better cash flow in central or south NJ as taxes are lower than northern NJ.  As @Chris Martino suggested, there are some areas of northern NJ where you can find some good returns, but you have to be careful and know what you're getting into.  

Philadelphia could also be a good market for you to consider as suggested by @Yuriy Skripnichenko .

Hi Farida! I am also living in the NYC area, and i thought about New Jersey before settling instead on Philadelphia as my starting point for investment:) As many others said, Philadelphia has some great value homes in various neighborhoods where you can find a strong cash on cash return, low price entry points, and ability to invest in multi family which was important to me from a numbers perspective.  

As Chris mentioned, Newark could be another good area to look into if you are really set on New Jersey, but agreed that you will want to make sure you pay attention to the specific block and area as that area can vary quite a bit block by block. 

Hi @FaridaFaisal,

Welcome to BP!

There is a lot of good advice above on direction. The most cost benefit way of maximizing your return in NJ  in regards to buying an investment is following NJ Transit and its stops whether express stops back into NYC or productive stops with good schools, rental numbers and communities for a longer occupancy of your tenant(s), Stop at Newark NJ at main station and pick up the train stops pamplets and indentify some towns you would be comfortable based on your capable pre-qualified buy in with liquid $$ and your debt to income can sustain. Then identify a active real estate investment friendly agent to assist in your search.

Let me know if you have any questions.

Regards

Joe Scorese

Hi @Farida Faisal , welcome to Biggerpockets!

I've been investing here in New Jersey, mainly northern NJ for the past decade. I mainly focus on investing in Multi-family homes, 2-4 families, as you probably already know that NJ has high taxes and makes it very difficult to make the numbers work. Bergen, Essex, Hudson counties are all great areas to invest, it all depends what you are trying to accomplish, most areas will bring a low ROI compared to areas outside of NJ. Having said that, It's not impossible to cash flow in NJ, it just gets a little more difficult and essentially have to be creative to perhaps purchase a property and add value to potentially increase the rental amounts currently in place. This has been my approach in most of my rentals.

The way I see it, as a new investor, you have a few options. 

1) Invest sorely for equity - With real estate prices rising, this is a topic that is becoming more common in the area. Some clients I have ran into have been looking to purchase around Jersey city mainly for the equity that the area is building, perhaps not looking to get a lot of cash-flow but betting on the fact that the area will increase in value bringing their property value up hopefully a few years down the row. (Obviously.. "but in this world nothing can be said to be certain, except death and taxes.") 

2) Invest for some equity and smaller cash flow - I want to say this is probably the easiest approach to take, because you can still find some properties on the MLS that cashflow slightly, perhaps to lower standards than what Biggerpockets shares, but can also build up equity with time fixing up and adding value to the apartments, which would lead later on to increasing rents.

(There are other variables when increasing rents, looking into rent control laws will help you with this, this is mainly for 3-families and above in most cities). I have noticed many agents don't speak about rent control so be careful with that because it can make or break your deal, do your due diligence specially if purchasing properties 3 family and above in most areas. FYI - It's my understanding that in Newark, everything is rent control if you don't live in the property).  

3) Invest in Newark and get decent cash flow - There are many blogs here in Biggerpockets that will speak positively and negatively about investing in Newark, make sure you read some of those to see what others have to say about investing in Newark.  If we speak about cash-flow in the northern new jersey area, Newark is probably one of the few cities that you can still find a very decent return on your investment, cash on cash return.  I also considered out of state investing earlier in my investment journey, I decided to invest in Newark sorely on the fact that I knew I would be close to my investment property to fix whatever issue that would arise. 

Out of state investing:

In regards to out of state investing, I have nothing against it, I just feel that I could get similar return investing in certain areas in New Jersey while still keeping my investments close to me and being able to drive to them if I decided to. Having said that many investors have successfully invested out of state so it is an option, just not my personal preference. 

I will conclude by disclosing, the points I have discussed are my opinion in this topic based on my personal experience and knowledge about the New Jersey market. 

What ever option you decide to take, do your due diligence, don't just trust what someone tells you.  If you are purchasing a rental property I would highly suggest going for a Multi-family in NJ then going for a SFH, unless it's an amazing deal; which honestly, are really hard to find even for a Investor/Real estate agent. 

Feel free to reach out if you have any questions.
Best of luck investing!

I have been an investor in NJ for the last 20 years. While currently finding a solid deal with cash flow and appreciation is difficult, as others have commented it is NOT IMPOSSIBLE.

Sometimes you need to look outside the box and and try non standard methods of finding property people wish to sell. While the MLS is a great source it is tough to find a deal that makes sense from an investors viewpoint.

I started out buying multi  family and have recently changed to single family and condos but seem to be looking at multi family again as prices have risen quite a bit over last few years...

A few counties not mentioned that I invest in are Union county and Somerset county. there is definitely some good value here if you look hard enough.

best,

Chris

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