New investor in NJ. 100k budget

19 Replies

Hi ! 

I’m a 29 year old living in Jersey City looking to buy with a budget of 100k. 

Being a first time buyer I am looking for recommendations on locations with good rental returns. Hoping for it not to be more than an hour away from jersey city where I live. 

Thanks in Advance ! 

What type of place you looking for?  Plan on living in a unit?  Rental?  Flips?  

Hey Rushda,

Cool name.

Have you thought about Philadelphia?

Just outside of Center City in the neighborhoods of Fishtown, Port Richmond, Northern Liberties and Kensington are some very high growth markets.

It’s only about an hour and 10 minutes away from Jersey City. It’s about two hours away from where I live in New York and it’s where I invest because the numbers make sense.

It’s the fifth largest population in the country and a lot of development and regeneration is going on.

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@Evan Torrens thanks for the recommendation. I would be open to Philadelphia. Any real estate agent you would suggest ?

Hello sir and welcome!

If you don't plan on living there I would recommend keeping it close to your primary residence or on the way to and from an area you travel frequently (Like work or something) Driving an hr or so out of the way each time there is an issue will really start to be annoying after a while trust me!

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@Rushda Hakim I live in Philly and can connect you with a number of VERY knowledgeable real estate professionals here.

@Rushda Hakim I recently purchased a duplex under your budget in Allentown. Lehigh Valley/Allentown is 1.5-hour drive away from Jersey City and offers great CAP rates. 8-12% depending on your risk tolerance and property values have been appreciating like crazy the past couple of years.

@David Ribardo - Anything else I missed?

Thanks @Raymond Y. I have been considering Allentown too and it’s good to hear that you have had a good experience. What are the rental returns like ? Any realtors you would recommend? 

I was wondering how Allentown compares to Trenton on rental prices. 

@Rushda Hakim , within your area I'd recommend looking at the Allentown and Philadelphia markets. Both have been appreciating strongly with good economic growth and have strong rental demand. I personally think the laws and taxes are more investor friendly on this side of the river, but that's not to say that people aren't crushing it in NJ as well.

I recommend new investors start by setting long term goals, and working backwards from them to come up with a plan to get there. What are your goals? What's your risk tolerance and level of involvement you are looking for? With the resources you have and current market conditions, what strategies will be the best to get there? 

When evaluating markets, I like to look at the average rents, average days on market, and average cost to purchase. I then can use these numbers to come up with an expected rate of return for my money. For example, in my old neighborhood of DeRidder Louisiana, I can expect to get $760 / month in rental income for a $100,000 property... but in certain areas in Allentown, I could expect to collect almost $1,800 for that same $100k property!

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@Rushda Hakim The property I bought should be around a 12 CAP. Depending on the area and condition, I would expect to spend 30-70k per door. Overall, you can easily find properties that meet the 1% rule even on the MLS, but obviously it won’t be in A neighborhoods.

Hi Rushda,

Great subject and a lot of good replies form BP members. I am wondering if you are considering investing in Jersey City? It seems like this is a trending area. I have seen a lot of listings there on MLS for multifamily properties. The prices seems pretty high though and the cash on cash return reasonably low compare to other area. But I know people enjoy leaving there.

I am in the same boat looking to buy multifmily investment property in North Jersey ideally 10+ units. I look for brokers MLS. Wishing you many successes!

Hi Rushda,

Where in Jersey City are you located?

The West Side/West Bergen/440/Country Village area is Jersey City’s best kept secret when it comes to investing!

Mark

@David Weintraub that would be great ! I will connect with you for RE agents 

@Raymond Y. good for you ! Very encouraging. Thank you. 

@Mark L. I’m in downtown grove street. Let’s connect ! 

@Marta K. I live in jersey city but it’s too expensive now. 

@Rushda Hakim   other cities in Hudson county are good options as well. you could consider union city, and west new york. they are roughly 30 mins away from Jersey city, and 25 mins to Manhattan on bus. 

Hi, Rushda. Welcome! I would recommend against investing in New Jersey as renter-landlord laws tilt heavily in favor of the tenant. If you have a bad tenant, you could have a protracted expensive eviction. Pennsylvania is more landlord friendly. I just sold a duplex in Allentown because it had appreciated rather well in the past two years. I plan to put my profits to work investing in mortgage notes, instead of another rental property.  Let me know if you want details on note investing. 

If you still want a buy-and-hold rental property, I suggest finding an area where jobs are growing, as that generally means rent rates and appreciation are good. I would not bank on appreciation, however. I would make an investment based upon cash flow, as that is what allows you to make your monthly expenses.

Do you want to be a landlord or an investor? A landlord runs everything themselves, including collecting rents (and hearing sob stories as to why rent cannot be paid on time) and finding tenants. An investor hires a property manager. Yes, it cuts into cash flow, but it eliminates headaches.

Do some research on what to include in a lease. Put as much on your tenants as possible (clogged toilets, loose hinges, etc., all utilities including sewer). The more they are responsible, the better they will take care of your property.

Take that $100,000 and leverage it into $350,000 (yes you could leverage it into $400,000, but you don't want to be cash poor) and buy a multifamily with as many units as you can find, preferably a triplex at a minimum. Fewer roofs, sidewalks, lawns, etc. per tenant helps to keep expenses down.

Isolate your business life from your personal life. Go to YouTube and search for Anderson Advisors Asset Protection.  I have no affiliation with Anderson, I just utilize them.  If you ever get sued (likelihood is high), you will want to have your business in order, they can help you to set it up very well.

Email me if you have more questions.

Check out a great app on google playstore to evaluate investment properties; Property Analyzer. It provides great hold and buy data that can be changed to see different results. There's a free version that gives most of the features but it does have ads. Still a great little app and very simple and intuitive to use. 

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