Cashflow in New Jersey?

19 Replies

Hello BP members!

I live in Northern New Jersey and I am totally new at Real Estate Investing. I am eager to learn and make new connections with other investors to get out the rat race! 

Could you please help me with the following questions?

In your experience, how does NJ compare with neighboring states (NY, CT, PA) and also the rest of the USA for:

(1) cash flow and appreciation of real estate?

(2) ease of making deals and being a landlord?

Best regards,

Philippe

Hii Philippi

Welcome to BP! While I can't make direct comparisons to NY or Connecticut I can say the compared to PA, NJ is definitely a bit more challenging to get a decent return on your invested capital. This is true for many reasons but the two biggest in my opinion are cost of properties and property taxes. Both are considerably higher in NJ as well as insurance.

That being said, this is not to say you can't get a good return in NJ you just may have to look around and be more picky. I live and invest in NJ and investing out of state is something I have no interest in.

Thanks and good luck! Are you looking to invest in NJ or out of state?

Thanks and good luck

Chris

Originally posted by @Chris Masons :

Hii Philippi

Welcome to BP! While I can't make direct comparisons to NY or Connecticut I can say the compared to PA, NJ is definitely a bit more challenging to get a decent return on your invested capital. This is true for many reasons but the two biggest in my opinion are cost of properties and property taxes. Both are considerably higher in NJ as well as insurance.

That being said, this is not to say you can't get a good return in NJ you just may have to look around and be more picky. I live and invest in NJ and investing out of state is something I have no interest in.

Thanks and good luck! Are you looking to invest in NJ or out of state?

Thanks and good luck

Chris

Hi Chris.

Thank you for your answer. I look primarily for investing in NJ for proximity for my first property. But if the numbers don't add up, I will look out of state.

Thanks, 

P.

@Philippe Schulligen I invest in CT and am not as familiar with NY or NJ, but I would imagine that they are all fairly similar with the exception of NYC and the boroughs. 

These three states represent the northeast well: high taxes, high cost of living, stricter regulations for landlords and many areas with declining populations. 

With all that being said, there are many opportunities in every one of the states. Some areas with great school districts, some with very good commutes to high employment areas, and some with great universities.

Personally, I rather invest in my backyard where I know the area and can recognize the opportunities rather than invest in someone else's backyard with slightly better deals. (If the deals are much better outside, that will change the criteria.)

Happy investing!

HI, Philippe, 

Welcome to the community!

I am more familiar with the rental situation in North NJ. Generally speaking it is easy to find tenants in NJ. The rental situation is vary favorable for a landlord in towns with great commute and good schools. Remember that some NJ towns are more attractive for families with kids (north Bergen County), while others attract commuters (Seacaucus), while others are great for young families or young professionals. Remember about these soft factors while deciding on a type of property - this would help keep your vacancy rate low and help you find the best most qualified tenants.


Hey @Philippe Schulligen , like @Chris Masons mentioned property taxes usually kill any cashflow in North Jersey, The only properties that seem to cashflow are triplexes and quads just because the taxes are distributed better amongst the multiple units.

There are areas with subsidized lower taxes, for instance we bought a 4 family property in Garfield, NJ because they have state aid that offsets the local property tax. 

We pay $11k for our 12 bedroom quad, but if you split that amongst the four units. That's only $2,800 in annual taxes per unit - so the taxes only take away ~$230 in rent a month. Not too bad. Especially since we can get $1700/month for the units due to our proximity to the city and all the close by mass transit options into the city.

We held an open house for our rental last year, and had over 30 groups of tenants come to our property. So no shortage of renters.

Anyway my advice for cashflow is look for a triplex or quad with low taxes

The towns you can find 3's and 4's are usually the C grade and lower towns.  It's harder to find them in towns where you can find good rents and chances of great appreciation.  You can find good duplexes in B level towns that produce and appreciate for long term wealth. Those are your best long term investments in my opinion.   If you can find a 3 or a 4 in those towns even better, but they rarely show up.  

@Philippe Schulligen Northern NJ is set up to be the best place in the NYC area to invest long term.  CT won't touch it.  Long Island wont touch it.  NJ is the only place which is set for the largest mass transit investment in the history of this country.   Everywhere else is set for status quo.   NJ is going to be the most sought after place over the next decade.  Get in before the project starts.  

@Olga Roginkin  @Philippe Schulligen  If you don't mind, what North Nj town would you suggest for duplexes and multi-family properties? I am interested in buying and rehabbing multi-family properties in North NJ. I would hold for cashflow and then sell if they happen to appreciate.

@Patrick Martone Based on @Sunny Burns input regarding taxes I did some research on http://www.nj.gov/dca/divisions/dlgs/resources/muni_stateaid.html

Here are the top towns with state tax aid in NNJ.

Municipality County Total Aid (in %)
West New York Town Hudson 16.37507007
Jersey City Hudson 10.66306517
East Newark Borough Hudson 10.33334336
Kearny Town Hudson 5.678665512
Prospect Park Borough Passaic 4.752427831
Garfield City Bergen 3.835086527
Bayonne City Hudson 3.709005869
North Bergen Township Hudson 3.207188838

@Philippe Schulligen great info! Wow 16% for West New York. 

So not sure how helpful this video will be, but if you wan't some propaganda as to why purchasing in New Jersey is a good decision you can watch this very well put together video, its 15 minutes long though. https://geniusdecision.com/video/ I think it was sponsored by Sotheby's Real Estate.

@Philippe Schulligen  Welcome to Bigger Pockets!

@Patrick Martone , I agree with @Sunny Burns 's logic. Yes, Garfield is a good option. Coincidentally it is on the above list!

I would also consider Bayonne (I love Bayonne), and Nutley, Lyndhurst, Rutherford, Rochelle Park. 

@Philippe Schulligen

Congrats on getting started Philippe. I would say take your time and look into each area of interest and get a feel for what fits YOU the best. Whether Long Island PA or NJ, you can't go wrong if you have a good team and process. I went PA about 3 years ago and don't regret it. With that said, there's plenty of good opportunities to be had in all of your areas.

Go to some meetups in your areas and network to get more opinions. I'm sure it'll open your mind up to more as well. They only way you'll fail is not doing anything at all!

Best wishes.

I've been looking into east orange. I think there is a lot of potential there. Bloomfield is another up and coming area. Best of luck to you!

@Rafael Norat I just come back from visiting some SFC in Philadelphia today. Do you have tips on PA? Did you invest in Philly?

@Philippe Schulligen

I have a great contact in the philly area that lends and rehabs himself. PM me and I will forward. He really knows his market there.

I would suggest just listing your areas of interest and then taking time to personally make contacts there and see which one fits your bill. Where I invest in PA is pretty hard to get good property managers and rehab crews off the bat. Even with references. So, I would suggest doing some investigation in you areas of interest to make sure you have all the right people around you to make it  a successful venture.

Great thread, interested in where you ended up investing. Im in the process of purchasing a 2 family around MLK lightrail in Jersey City, bit above 300k, just remodeled. Taxes seem crazy low at 4k/yr or so. Ideas on the area, lot of big condo complexes on the corners being built i see.

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