Where to Invest in North NJ (Near NYC)?

19 Replies

Hi everyone, 

I'm new to the site and have been enjoying reading through all the discussions.

I am considering buying a place somewhere in North Jersey (Jersey City, Newark, Bayonne, Harrison, etc). I currently work and rent in NYC but am interested in purchasing a unit which may have the opportunity to rent out part of it. What's the best place in the North Jersey area that is still close to NY, easy to rent, most growth potential?

Budget: <$800K

BR/BA: 2BR/1BA (for myself) + at least 1 BR/1BA for tenant (Flexible)

With your budget I'd look in JC Heights and Communipaw areas. I think there's still a lot of room for growth, particularly in Communipaw, and there's good and relatively quick access into the city. 

@James Smith you have a good budget. you could consider 2 - 3 family houses in Journal Square, or you may consider heights, union  city, west new york, or weehawken. they are very close to Manhattan, 20 ~ 30 mins away from port authority on bus. 

@James Smith  All of those areas are easy to rent with good growth potential. I would also consider the location of your work as it might be better to take the bus vs. PATH. 

A couple of months ago, I was thinking of househacking around Jersey City or Union City, but I decided to continue renting and invest out of state. It sucks to have to pay rent, but there is an opportunity cost to house hacking. If you purchase a $500k duplex and rent out one side, you will most likely not cash flow or breakeven at best. On the other hand, if you take that money and invest in another market, the cash flow from the investment property should cover your rent in NYC. The downside is that it is out of state, but if you can get over that fear, the numbers would suggest investing out of state.

@Raymond Y. yes there's an opportunity cost to house hacking but your numbers which suggest investing out of state is better probably isn't taking into account any appreciation. You typically get good cash flow or appreciation, but not both. The areas where @James Smith is looking are experiencing pretty rapid appreciation which doesn't appear to be slowing down. Median sales price for 1-4 family homes in JC Heights increased 40% YOY in Q4, 18% in Journal Sq, 15% in Bayonne, 22% in West Bergen, etc. If you're looking for your tenant to cover your carrying costs then these areas aren't going to work, but if as James asked, you're looking for someplace easy to rent and with growth potential, then Hudson County looks pretty good to me.

Hi James,

Here are my opinions to your questions:
Closest to NYC: Depending if you’re working uptown or downtown, it’s either Union City/Weehawken or Jersey City. JC has more mode and access to Manhattan with 4 PATH stations, Ferries, Bus.

Easiest to rent: IMO, Jersey City is easiest. Then Weehawken, and maybe Bayonne.

Most growth potential: IMO, Harrison and Newark with their lower price points might have more room to grow - but there are still plenty of new developments planned in JC and Bayonne.

Overall, I think JC fits all three of your criteria the best. Prices have run up the past couple years but with your budget, there may still be some attainable deals. Good luck! Message me if there’s more I can do to help.

Just a little disclaimer: I grew up in JC so these opinions might be biased. 😬

Talking about biased opinions, I grew up in Passaic. All those areas are super close to the city. Depending where in NYC you have Passaic, Montclair is beautiful, Hackensack, Teaneck, etc. depends if you wanna be closer to the Lincoln Or Holland Tunnel or the GWB. Also as far as the out of state goes, if you rehab the house hack (FHA 203k always great) you could definitely beat out of state returns. Plus have a close eye and learn landlording etc.

James,

What’s your life like outside of work? Do you work late? Do you go out? How important is proximity to the city itself?

I think you have a lot of options here.

@Jason Lee You are correct that my numbers aren't taking into account any appreciation. Appreciation is a very market specific topic that I am sure we can write essays about and it is more volatile than returns from rent. From the growth numbers you mentioned, betting on appreciation could be lucrative as well if you are willing to take on the risk. 

Journal Square isn't necessarily an easy place to be finding deals these days.  Amiright? 

I live in Passaic as well and there's several things going for it.

1. Route 21 straddles it which leads directly to Route 3 (Lincoln Tunnel) or Route 46/80 (GWB). You also have buses and a train station which provides easy access to NYC.

2. The schools in Passaic have vastly improved in the last 5 years as demonstrated by improving test scores, graduation rates and AP course participation. Plus they are opening two new high schools next year. That's a huge draw for families.

3. Rents for a 2 to 3BR apt vary but you should be able to get $1,200 to $1450/mo especially if your property is closer to the park section (Passaic Park).

Feel free to inbox me if you have any questions.

Thanks everyone.. these responses are quite helpful.

It seems like my best bets are:

Jersey City (JSQ > Heights > Communipaw)

Bayonne

Weehawken

Union City

Newark

Harrison

W New York

Passaic

I appreciate all of the feedback. While buying something in a diff market is a feasible option as well.. I don’t want to deal with the hassle of managing a rental in another location.

@James Smith Be sure to look at taxes very carefully when considering this purchase, in Norther NJ taxes are often the cashflow killer. Here is my $.02 on the towns you've mentioned

Jersey City is going through its first re-assesment in 30 years and taxes are going through the roof in many cases

Bayonne is ok if you can find a good deal, Inventory is low throughout North NJ and Bayonne is no exception just make sure you buy close to the path for the best value and the lowest vacancy. I think Bayonne has great potential for the future as well

Weehawken- More tight inventory, high taxes and slightly over valued prices dont let that stop you from looking though, your budget is healthy that will help, just make sure you find places where you can add value to the property. The cost of your upgrades in many areas here will be higher as well as people will be in search of the HGTV style units

Union City is a solid bet, mainly fixer uppers, but be careful not to over renovate and make sure you are comfortable with the vacancy rates (similar advice for West New York)

Newark is probably going to show you your best return the taxes are low as are the prices of many of the properties but make sure you work with a person that knows the area and puts you into the right section & property for you and your investment objectives (similar advice for Passaic)

Also look at Secaucus, Lyndhurst, Rutherford & Clifton.

Good luck

no love for Kearny?

Curious. Does Newark's boom have any type of effect on nearby places like east orange, orange, Irvington and Bloomfield? 

We have a multi family in Kearny it's an easy commute to the city, I'm at the Harrison path in under 10min. Plus we have a little more distance from Newark. Taxes aren't cheap but they are lower than Harrison. Properties are getting transformed hugely the last year. Older homes are being modernized and old industry is being knocked down for large high end apartments. Vermella Crossings is still under construction and on both sides of town now so I hear. Parts of Kearny, North Arlington have NYC skyline views.

Born and raised in jersey city. I own 4 units and it’s getting tight with inventory. Only downtown jersey city is mainly getting 80%-300% increase in taxes. My properties aren’t in downtown, so i received a decrease.

Everyone else’s tips are good to go. In my eyes, if it’s not a decent deal, jersey city is done but don’t let me discourage you. A lot of properties are over priced or needs tons of work & that’s all I’ve been seeing. I still keep my eyes open for opportunities though

Any opinions on the cities slightly below like Elizabeth, Linden, Rahway, and Union?

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