Real Estate Investor · Piscataway, NJ · Member since 2012 · 167 posts · 19 votes
Looking for opinion/advise of an experienced investor who know NJ and the tri-state very well. What area in NJ are best for holding rental properties. I picked NJ is because I live there. I am thinking/hoping to buy a property or two every year for positive cash flow. Any general tips is also welcome. I am new and never been a landlord. I have read BP, a couple of good books and now ready to invest.
Contractor · Milltown, NJ · Member since 2016 · 297 posts · 213 votes
9y
Oh boy, what a topic to discuss. Where to begin... New Jersey happens to fall in to the #1 or #2 spot for the richest state in the nation over the past several years, using per capital household income as the metric. This means you are dealing with a very educated homebuyer. NYC is the largest populated city by far in America, nearly doubling the second most populated city. Its workforce consists of the cream of the crop in its businesses. NJ/CT/Long Island are the suburban byproducts of this great city. NYC is the financial hub for America, therefore how long do you think it would take for all of the Ivy League financial geniuses and their underlings working in NYC to realize not only could they make megamoney while at work, but they could also make money(via a compounding equity build) while house hacking a multi-family in the suburbs while they merely live there? Post-housing crisis answer, not very long. So, now that the real estate investing population has flooded the NJ mls realtors with "show me houses that cash flow positive" requests, the end result is, a flood of buyers more than willing to househack a property that the rent may barely cover the owner's property taxes and utilities. This creates a supply shortage, and followed by an increase in asset price. In previous decades, '60's, '70's, '80's, '90's, NJ duplex owners would live rent free, in nice neighborhoods while their renters covered their housing expenses. Clearly not the case anymore. Unfortunately, unless you don't mind living in an extremely undesirable area, the opportunity just isn't there on the mls. Distressed multi-family properties in nice areas get sold very quickly, and the ones in really nice areas certainly are nowhere near entry level prices. The general consensus in finding multi-family properties at an entry level price point, is go to a state that ranks in the 20's for per capita household income, i.e. - North Carolina. You can find significantly cheaper housing, lower property taxes, with a lower educated population (not my opinion, these are government statistics). IMHO, competing with NJ's owner occupied buying population that is willing to overpay just to get a multi-family property will lead any investor down a disappointing road. The NJ owner-occupied multi-family homebuyer is looking at multi-families in nice areas as a means to build up more equity over time, whereas straight up investors are looking for investment grade positive cash flow, these are two very different concepts. Hope this helps shed some light on the topic at hand.
Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
13y
Thanks Al - Abdul, because of the 'relatively' low taxes and revitalization currently under way in the Brick city, I'm bullish on Newark. Particularly if you own something in a stable area. But forget about finding anything in a good location that allows you to cash flow adequately these days. At least not on the MLS. Best to utilize many of the techniques discussed in this great forum and deal directly with (distressed) owners.
PS - I hear Jersey City is good as well but I don't really know the area.
Investor · Union, NJ · Member since 2011 · 838 posts · 295 votes
13y
HI Abdul,
Jersey property taxes are killer but just means you haev to look a bit harder and more careful.....
Have you considered as a first buy maybe a 2 family and owner occupy it? Than later rent it out and move on? There are plenty of very nice 2 families in Union, essex and somerset county available. (Somerset county being cheapest tax wise by far)
I invest invest in Union township and live in Somerset. While Union township property taxes are high I am very comfortable investing in Union as schools are good, strong community town, very good mix of SF and MF homes as well as bus and train friendly commute to NYC.
Real Estate Investor · Piscataway, NJ · Member since 2012 · 167 posts · 19 votes
13y
@Ibrahim S and @Chris Masons : Thanks a lot, I will check out Newark city, Somerset and Union counties as you suggested. I guess property tax is the major problem in NJ.
Real Estate Consultant · Bloomfield, NJ · Member since 2010 · 2k+ posts · 1k+ votes
13y
Keith Lutz - in nice stable areas I am seeing below 1.5% (closer to your 1%) which (to me) means no real cash flow. In less stable areas (i.e. South ward of Newark) I see over 2%. At least I used to. Haven't looked in a few months but I do remember there being a disparity between the two areas.
Investor · Union, NJ · Member since 2011 · 838 posts · 295 votes
13y
I find it hard to apply the 2% rule her ein NJ due to taxes being so high. NOT to say you cannot cash flow here you can but I don't use the 2% rule when analyzing my properties.
New York City, NY · Member since 2012 · 253 posts · 7 votes
13y
Hi Abdul Rasheed, I am from the tri state area and Newark is definitely up and coming. The Prudential Center has drawn a lot of investment since opening its doors and more companies are expanding their footprint. Apartments across the River from Manhattan seem to be rising every month with low vacancies. If you are interested in industrial, the ports are busy too with Panama Canal expansion on the horizon.
Looking for opinion/advise of an experienced investor who know NJ and the tri-state very well. What area in NJ are best for holding rental properties. I picked NJ is because I live there. I am thinking/hoping to buy a property or two every year for positive cash flow. Any general tips is also welcome. I am new and never been a landlord. I have read BP, a couple of good books and now ready to invest.
Thanks,
Abdul
Abdul,
how has north jersey been treating you? did you make an investment?
Real Estate Investor · Piscataway, NJ · Member since 2012 · 167 posts · 19 votes
13y
Gerald Gatyas,
No, not in NJ. I did not know anyone who know the market really very well. I am actively looking at out of state possibilities Houston, Austin, Atlanta, Memphis, Saint Luise etc. through a broker who I recently met.
Investor · Tampa, FL · Member since 2013 · 2k+ posts · 1k+ votes
13y
The best areas for rentals in NJ are along the Mid-town direct train line into NYC. There's always demand for properties that are in walking distance to the train station. Rent are higher for these properties because of the convenience. Expect to pay more for the property as well however its nice to know you can always count on finding renters for them. I've had property on this train line since 1998.
Real Estate Investor · Piscataway, NJ · Member since 2012 · 167 posts · 19 votes
13y
Thanks Darren Sager. You are absolutely right I should know. For one thing I live there and travelled to the city for many years. I know the areas that you are talking about. However they do cost more, and property taxes are likely high. I am yet to do my research and analysis but I feel they are hard to cash flow. Right?
Investor · Tampa, FL · Member since 2013 · 2k+ posts · 1k+ votes
13y
Originally posted by Abdul R.:
Thanks Darren Sager. You are absolutely right I should know. For one thing I live there and travelled to the city for many years. I know the areas that you are talking about. However they do cost more, and property taxes are likely high. I am yet to do my research and analysis but I feel they are hard to cash flow. Right?
There are and will always be opportunity along the train lines. You just need to watch for them, or work with someone to find you them, and then be ready to move on them when they do become available.
For instance I've been watching a property in South Orange for quite some time. It was a short sale and it accepted an offer before I could get one in. It went to the bank and sat. Bank rejected offer and it is now back on the market. This home needs pretty much everything. Its priced below $200,000, its walking distance to the train. If you fixed it up and took advantage of the attic space it could turn into a gold mine. Still, rent for the first floor complete should be around $1600 when rehabbed. Top unit $2500. South Orange has a strong rental market.
Opportunities always come up. Did I say that enough?
Investor · New Providence, NJ · Member since 2013 · 38 posts · 14 votes
12y
Hey Darren,
Just out of curiosity did you continue to follow this property you speak of? Would be interested to know if it was eventually picked up and rehabbed how you envisioned it. As you know, I picked up my first duplex a couple months ago in South Orange and am always interested to hear how other investments in the area panned out.
Investor · Brooklyn, NY · Member since 2015 · 13 posts · 2 votes
11y
I'm also looking to invest in the north ward Newark. Zillow, trulia, Redfin have all led me to a dead end.. I've recently got in touch with a broker to keep an eye on the MLS, but still struggling to find any deals that meet my criteria for a 2 unit multi family.
Great thread for what i am currently looking for. I am new real estate investor interested in investing in rental properties along the train lines of central jersey.I live in Edison,NJ and has been exploring around metropark train station area. Most of the properties from MLS and realtor.com shows negative cash flow. @Abdul R. Did you find any decent properties in this area in the past few years? @Keith Lutz and @Ibrahim Huges. With the current prizes i am seeing more like less than 1% rule. Is that what you guys also seeing or am i missing something?
Clifton, NJ · Member since 2016 · 24 posts · 3 votes
9y
Hi All,
I also am finding this thread quite useful, but since this started over 4 years ago, I am wondering what investors are feeling about the latest in the rental market in NJ. I am new to this space and still just trying to learn and absorb as much as possible about real estate investing. I am a cautious person but still quite convinced that I would like to invest in a property by the end of 2017. Thus far, every deal I have analyzed shows negative cash flow in NJ. I live in Clifton, NJ and am finding that rents here do not yield proper cash flow due to taxes. I am trying to avoid Newark because it is not the safest of areas, but I am wondering if it is only those areas that will yield proper returns. Would love to hear from investors on their recent outlooks about what areas are good to look into. In addition, it seems that the traditional paths such as NJMLS, Trulia, Zillow, etc. are not the best in terms of finding the deals. What is everyone's recommendation on how to find the best deal? How does one get to these distressed property owners?
Bloomfield, NJ · Member since 2017 · 3 posts · 0 votes
9y
Hiral ... I live in Bloomfield and have the same questions as you do. I have a buddy that buys/flips in East Orange, Orange and Paterson, but I'm not super familiar or comfortable with those areas. MLS is no help. I'm curious how to find the distressed owners and offer them for their homes.
Clifton, NJ · Member since 2016 · 24 posts · 3 votes
9y
Yes, I've been trying to narrow which neighborhood for quite some time, and I seem to be a bit stuck on that step because everywhere I have looked thus far has no good deals. Hopefully, someone has some insight that can help.
Contractor · Milltown, NJ · Member since 2016 · 297 posts · 213 votes
9y
Oh boy, what a topic to discuss. Where to begin... New Jersey happens to fall in to the #1 or #2 spot for the richest state in the nation over the past several years, using per capital household income as the metric. This means you are dealing with a very educated homebuyer. NYC is the largest populated city by far in America, nearly doubling the second most populated city. Its workforce consists of the cream of the crop in its businesses. NJ/CT/Long Island are the suburban byproducts of this great city. NYC is the financial hub for America, therefore how long do you think it would take for all of the Ivy League financial geniuses and their underlings working in NYC to realize not only could they make megamoney while at work, but they could also make money(via a compounding equity build) while house hacking a multi-family in the suburbs while they merely live there? Post-housing crisis answer, not very long. So, now that the real estate investing population has flooded the NJ mls realtors with "show me houses that cash flow positive" requests, the end result is, a flood of buyers more than willing to househack a property that the rent may barely cover the owner's property taxes and utilities. This creates a supply shortage, and followed by an increase in asset price. In previous decades, '60's, '70's, '80's, '90's, NJ duplex owners would live rent free, in nice neighborhoods while their renters covered their housing expenses. Clearly not the case anymore. Unfortunately, unless you don't mind living in an extremely undesirable area, the opportunity just isn't there on the mls. Distressed multi-family properties in nice areas get sold very quickly, and the ones in really nice areas certainly are nowhere near entry level prices. The general consensus in finding multi-family properties at an entry level price point, is go to a state that ranks in the 20's for per capita household income, i.e. - North Carolina. You can find significantly cheaper housing, lower property taxes, with a lower educated population (not my opinion, these are government statistics). IMHO, competing with NJ's owner occupied buying population that is willing to overpay just to get a multi-family property will lead any investor down a disappointing road. The NJ owner-occupied multi-family homebuyer is looking at multi-families in nice areas as a means to build up more equity over time, whereas straight up investors are looking for investment grade positive cash flow, these are two very different concepts. Hope this helps shed some light on the topic at hand.
Investor · Union, NJ · Member since 2011 · 838 posts · 295 votes
9y
I have investments in Unuon county primarily Union township. I know this market very well and am very comfortable here. I generally shoot for a minimum of 14% cash on cash return.
There are deals out there you just need to know your market and know where to look. If you can get with a realtor who is investor friendly It will be a big hep.
Investor · New York City, NY · Member since 2015 · 49 posts · 24 votes
9y
As a new prospective investor in the Newark, New Jersey area (very new, my partner and I haven't even purchased our first property yet) I wanted to know @Chris Masons if you knew any investor friendly realtors worth speaking to with regards to finding these deals.
Banker · Philadelphia · Member since 2009 · 2k+ posts · 629 votes
9y
Hi @
Welcome to BP!
Born and raised in New Jersey and now reside in Philadelphia. Have a re portfolio in North & Central NJ still. Some items come to mind now that you are jumping into the RE business.
* Find a transactional Real Estate Agent - Someone that owns investment properties and they are willing to show you what they own and tour them. Transactional is key
* See what you are qualified for short term and long term to stay bankable
* Follow the train stops and schools that tie in to your foot print.