Jersey City, NJ · Member since 2019 · 10 posts · 3 votes
Hi Guys,
I am new to this forum and wanted to ask for some expert advise. I am looking to purchase a cash-flow rental property with about $100k cash/finance in the North and Central New Jersey area with a good cap rate (>7%) and good ROI cash flow. NJ is notoriously known for high property taxes and high housing price. Can it be done? What areas do you recommend?
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
7y
@Tao Chen are you thinking to buy a $100k property, or use the $100k as a down payment?
There are some good deals to be found in the Philly suburbs for $100k if you're looking for a fixer. I dont know anywhere, other than Trenton and Camden, where you can buy a turnkey rental in NJ for $100k.
Taxes are a big factor. I have a Single family in Burlington, NJ. I paid $55k for it and put $45k I rehab. My taxes are $5200/yr on that property
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
7y
@Tao Chen are you thinking to buy a $100k property, or use the $100k as a down payment?
There are some good deals to be found in the Philly suburbs for $100k if you're looking for a fixer. I dont know anywhere, other than Trenton and Camden, where you can buy a turnkey rental in NJ for $100k.
Taxes are a big factor. I have a Single family in Burlington, NJ. I paid $55k for it and put $45k I rehab. My taxes are $5200/yr on that property
Rental Property Investor · Levittown, PA · Member since 2016 · 109 posts · 97 votes
7y
@Tao Chen I agree with @Jason DiClemente
That good deals can be found in the Philly suburbs area, but I also believe that there are great rental property opportunities in Burlington County Nj despite the notoriously high jersey taxes.
I have two rental properties and have taken advantage of a niche market. I buy large twin properties. Since the houses are large, I’m able to collect top market rent for the area. And since they are also twins, the taxes are usually lower then the same size house, but fully detached. My property taxes are around $5000 like Jason, but my cash flow numbers are great. I’m cash flowing $550+ / month on each property.
I bought both properties well below market value, and was able to pull cash out in a refi.
I look into lots of rental property markets in the area and are always running and crunching numbers. I would be glad to talk in more detail if you’re interested.
I am also a real estate agent in both jersey and pa.
Jersey City, NJ · Member since 2019 · 10 posts · 3 votes
7y
Hi Jason,
Thanks for the reply. I was hoping to use all $100k to buy the property but to use it as down payment works as well. Though I am a fan of PA (low tax and low price), it is too far for me to operate. Logistics will be difficult to manage.
Jersey City, NJ · Member since 2019 · 10 posts · 3 votes
7y
@Joe Sadusky Thats awesome. I live in Jersey City and work in Edison NJ so I prefer to stay between those two areas as my time will be very limited. Burlington and PA is just too far for me. My friend suggested to purchase near Lehigh University but I had to turn it down due to the long distance. The high supply of student rentals in that area is quite attractive for rentals.
Rental Property Investor · Levittown, PA · Member since 2016 · 109 posts · 97 votes
7y
@Tao Chen definitely a good idea to purchase near a college. The need for rentals will be high.
Also to your comment on having $100k for investment, I suggest not using all of the money towards one single property and have all of your eggs in one basket. Think of it this way- if you have $100k readily available to invest... that is a 20% down payment (20k) on 5 investment properties priced at 100k !
(obviously there will be some additional out of pocket costs for closing and whatnot, but you get the point.
Good Luck with starting off and feel free to reach out with any questions!
Jersey City, NJ · Member since 2019 · 10 posts · 3 votes
7y
@Joe Sadusky Thanks for the recommendation. That does sound nice only if I can find the $100k properties with only $20k down. I will keep an eye out for those deals.
Rental Property Investor · Levittown, PA · Member since 2016 · 109 posts · 97 votes
7y
@Tao Chen another way to look at it- if you have $100,000 to invest and have the ability to secure a mortgage for more then that, the $100k could go towards a huge down payment on a more expensive, multi family unit. Its all about running the numbers and determining what works best for you and what you can actually afford.
Bordentown, NJ · Member since 2014 · 1 post · 0 votes
7y
Thanks for the info on Burlington County @Joe Sadusky. I've often thought about investing here myself since I live here too but worry a little about NJ taxes etc. Sometimes the opportunities that are closest to us we ignore!
Paramus, NJ · Member since 2018 · 64 posts · 14 votes
7y
@Tao Chen I have many investors from New York and NJ that invest in the Lehigh Valley area because its only a couple of hours away and possible to manage from a distance. Also cap rates of 10% + are not uncommon in the same types of areas you would be getting 7% caps in NJ. Most of the week I operate from my home in Bergen county and I wouldn't invest here because NJ is a tenant friendly state.
Rental Property Investor · NY · Member since 2018 · 571 posts · 332 votes
7y
@Tao Chen since it looks like you live in Jersey City, why don't you try house hacking instead? You may have better opportunity with FHA loans and putting 3% down. Your PITI can be paid off by your other tenants. Put the rest of your $100k to out of state investment where you can get better cap rates/returns.
Jersey City, NJ · Member since 2019 · 10 posts · 3 votes
7y
@Michinori Kaneko Funny you say that cuz I am already House-hacking in JC and have extra money to venture elsewhere. Prices in JC heights is too high for additional investment for now.
@Andrew Giunta Thanks for the input. My partners and I have full time jobs and I own 3 multifamily properties. At the moment, it is hard for us to manage anything outside of NJ.
@Grant Rothenburger Thanks for the welcome. Im super excited to see that people are replying to my thread.
I would be glad to provide my insights in the JC heights area if anyone has any interest to talk.
While people are still finding deals in NJ, it is a lot harder and takes much longer to find. Consider going out of state if you want to find deals sooner.
One of the ways to find deals is through networking. So consider joining REI groups found here on BP or through Meetup and network with others investors and wholesalers. As a matter of fact, we also host REI group in Northern NJ and meeting is next week. More details under my profile. You're welcome to join us.
Jersey City, NJ · Member since 2019 · 10 posts · 3 votes
7y
@Alina Trigub Thanks for the info and invitation. I am certainly looking to attend more events. I will check to see if the time works. I work in New Brunswick which makes the commute up North a bit inconvenient during rush hours.
Real Estate Agent · Jersey City, NJ · Member since 2014 · 218 posts · 50 votes
7y
@Tao Chen welcome to Biggerpocket! You could chekc out Union city, west New York and North Bergen. You can still find places offering 7% + cap rate after putting some updates. Three or more units house tend to have better returns. 100k is a little tight. For lower the down payment, you could always house back the place.
Real Estate Agent · Jersey City, NJ · Member since 2014 · 218 posts · 50 votes
7y
@Tao Chen the tax is high in west new york and north bergen as well....may be slightly lower than Union City. I haven't looked at the numbers in detail. I think rental market is stronger in Union City/WNY/North Bergen than heights/ Journal Square, lower vacancy rate and higher rents.
Montvale, NJ · Member since 2017 · 38 posts · 24 votes
7y
@Tao Chen welcome to BP. There are deals to be found if you keep looking. I work with a lot other investors I meet through REI meetups in NJ. I have recently found some small 2 family houses that cash flow, even though NJ taxes can be $5000 (that is low!). I would recommend you attend some meetups, stay active on BP and look at what others are posting in the real estate groups on FB. Most of my deals come through wholesalers (and we wholesale also) but I have several real estate agents bringing me off market deals.