Analyzing rental properties in northern NJ

[Ruchik Gandhi]

Hello everyone,

I am new to the real estate journey with a focus on the northern NJ market. Reaching out to other investors: one thing I have noticed is that it is impossible to achieve positive rental cashflow at 80% LTV financing in northern NJ mainly due to high taxes and high property prices. As such, it seems the minimums required in the property prior to purchasing recommended by experts almost never meet (1% rule, positive cashflow of minimum $100, CoC return of 12% or higher, etc). If going by these rules, it seems like there are no good properties to invest in northern NJ. Am I missing something? I assume vacancy rate to be 10%, is that too high for northern NJ? Does investing in norther NJ mean you have to rely on appreciation to recover negative cashflow?

I appreciate your help with this. Thank you in advance.

[Richard Wilson]

Quick question for everyone in this thread, are we taking into consideration "bonus rooms" that some homes offer? Even though, not technically legal, basements and attics are still being rented across Jersey and can bring in an additional $800-900 in income. I know the 1% rule is quick and dirty, that's why I was curious if you had spoken with a realtor who knows North Jersey well, as those "bonus rooms" are not listed on MLS.