Whats your criteria for buying a rental in NJ?

[Suril Dalal]

Listening to the most recent podcast from BP, it got me thinking about what criteria I should have in mind when looking at potential rental properties. Just off the top of my head, you'd think of the real estate thumb rules, like the 50% rule, the 2% rule, ect. I'd also say the area you're purchasing in, is it a big rental town, what are the avg rental costs for the property you're looking at? Even the costs of fixing things in your potential rental.

What are some things you guys look at? Whats your criteria for NJ?

[Eric Waterman]

2% rule is tough to find in NJ, especially on MLS, given the high holding costs and general real estate prices. Hey, nothing is impossible...but you may need to go to rougher neighborhoods to get 2% deals in NJ. I want to buy in good school districts and good neighborhoods. Depends on what your goals and strategy are. I'd be interested to know if anyone is finding 2% deals in NJ. Think about it, say 3/2 SFR rents for 2k/mo, you'd need to buy all in at 100k, including any renovations. You can find 100k houses, but will they rent for 2k? At least in my market a house renting for 2k is going to sell for 300k or more. Again, you may find a really motivated seller by doing some direct seller marketing, so you may be able to pick up a property cheaper. Also the 2% rule is a guideline, you have to analyze each deal on its own merits.