What are the Best Towns in NJ for Multifamily Investing?

Question

Hi BiggerPockets Community!

Happy New Years!

I currently live in Bergen county and am trying to live in one of the units and rent out the other unit.

Looking for a safe neighborhood with the ease of renting out at minimum 2K.

Hoping to get a not too old multifamily house for under 850K.

I would love to hear your thoughts on which NJ towns are best and why!

Thanks :)

Peter Tverdov · Answer

No offense, but you have no idea what you're talking about. "Elizabeth and schools top notch" do not belong in the same sentence. Unless you're talking about a private school that is in Elizabeth, their schools are a disaster.

Peter Tverdov · Answer

If something is incorrect I am going to call it out. The guy is a broker in another state giving people advice on school districts in a town with extremely high crime and poverty where the public schools are absolutely dreadful. Murders, rapes, gang activity, etc in that city. I have lived near that area most of my life and was there twice since my first response to the post. So yes, I will call that out when it's clear someone doesn't know what they're talking about. People will search and see this post for years and see incorrect info. If that makes me a bad guy, fine but people have the right to know the correct information from a local.

Anthony Marin · Answer

@Jennifer Lee

Hi Jennifer, with your budget of $800K you can buy a multi almost anywhere in NJ.  Since I work and invest in Essex, Union and Hudson counties, I will give you the best places in my backyard I think you should invest with that budget.  You can buy a large recently built 3 family house in the Ironbound section (best area) of Newark for about $700-$800K.  Those apartments are renting for $2300-$2600 per month.  Close to NYC, great bars, coffee shops and restaurants and a good base of quality tenants.  I would also suggest Elizabeth as @Alexander Szikla said along with Bayonne and Belleville.  Good Luck!!

Alexander Szikla · Answer

Big fan of Elizabeth, NJ here. Good proximity to NYC with a strong working class base. Amazon warehouse nearby. Schools are top notch since they get lots of federal money. And tons of new development happening.

Joe P. · Answer

Hi Jennifer, happy new year. Now that I'm done with the pleasantries...You're going to get hosed on a deal like that.

Assuming FHA loan, your payment on ~800k loan will be almost $4,000 a month. So what's the draw? What kind of background do you have to be able to afford 4k+ on mortgage alone (not even factoring in taxes!) because any vacancy means you'll be paying that.

Spending big money like that for 2k rent isn't an investment. If you said you wanted to pick up a duplex for 200k with 25% down, and be able to rent a unit for 1k (very doable) then it would make a ton more sense. You're now covering (hopefully) every dollar in PITI and hopefully some reserves, meaning you live as close to "rent-free" as possible and saving a ton of money for the next investment.

What you've described is buying a super expensive mansion-multi where someone covers a small fraction of your very high costs of living. At that point you're not an investor, just someone probably dealing with a high-maintenance tenant on a very expensive house.

Lets assume your minimums hedge to the middle of the curve...call it a conventional loan on 25% down of a 700k duplex, renting out at 3k a month. It becomes a little more palatable with your monthly payment around 2300 a month before factoring anything else, but still not cash flowing to get you ahead.

I know you wanted "best towns" advice and frankly, if those are your numbers, it simply doesn't matter. You can live almost anywhere you want.

Tony Kim · Answer

Hi @Jennifer Lee,

100% agree with what @Anthony Jeffers posted.

After quickly skimming through the MLS there are certainly a few options worth considering and also well below the price point you mentioned in your OP.  Additionally, the tax rate of ~1.5% is a bargain to say the least.  The only concern would be the crime rate for some of the neighborhoods that do show the best opportunities, albeit there seems to be some positive YOY changes.

Echoing what @Anthony Jeffers said, there will undoubtedly be improvements in JC with the changes that he mentioned. Here's an older post about some of the JC nabes that are of interest.  I hope this helps.

https://www.biggerpockets.com/...

Anthony Jeffers · Answer

@Jennifer Lee

Hi Jennifer,

I live in Jersey City. I see a lot of construction happening, mainly condo buildings. They actually may be over building, which causes more supply than demand, resulting in fierce competition for tenants. It’s already happening in some areas. Recently a owner of a multi-family in the downtown area, told me he was only able to secure a tenant, by giving rent concessions, to compete with the multitude of new condo buildings offering 1 month free rent and other amenities.

There are some niche opportunities in Jersey City in the areas that have yet to see the full benefits of the changes happening here. It’s coming though. Many Hasidic Jews have moved into the heart of what many consider the worst parts of the city. They are buying homes, opening businesses and places of worship. This is a sign of change coming.

Major development is underway on route 440 in Jersey City, including the extension of the cities light rail system into what will be known as the Bayfront. Condos are springing up for blocks around this development.

https://youtu.be/GFb1ykF5VLo

Jennifer Lee · Answer

Hi!

I will be commuting to work in Essex County, but I assume access to public transportation will be pretty important for the ease of renting out?

School ranking doesn't matter, and I would prefer towns with low property taxes (around 1-2%).

It looks like Jersey City has a very low tax rate and there are some multifamily houses that are in 500-700k ranges.

What are your thoughts about Jersey City?

Yaroslav Tashak · Answer

@Joe P. Unfortunately there isn’t many multifamily properties under $600k in Bergen/Hudson county. If you run the numbers on enough properties you can find one that works

Ashley Kebreau · Answer

Hi @Alexander Szikla I've been looking into West Bergen NJ, do you have any insight on this area and rental/ tenant quality/ turnover? I currently live in upper manhattan and would love to move to NJ, I'm still familiarizing myself. Thank you

What are the Best Towns in NJ for Multifamily Investing?

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