Making #s work in New Jersey (Bergen/Hudson County)

[Mike Adams]

I am trying to figure out how realtors are pricing multi-families that do not cashflow. There are some properties I've looked at in Edgewater and Cliffside Park that bring in 3k for a 3 unit, but are asking 1.2m+. How do they think anyone could get a mortgage on the property? We've not been able to touch NJ real estate for a few years due to this. I can make numbers work in Westchester, but Bergen and Hudson counties, nope..

Any suggestions? How are you guys dealing with it?

[Tony Guarino]

Originally posted by @Mike Adams:

Originally posted by @Joseph Guzzardi Jr:

@Mike Adams 2-4 unit properties aren't really appraised or valued based off of rents/income. They are typically based off of other comparables. The income is really just a small percentage of the picture. 5+ units it's a different story

 By all means. If you know of any deals in 3 unit or higher non rent controlled buildings, I'd be interested. Mostly Bergen, Hudson and Passaic Counties.  Essex county's taxes are ridiculous.

 I think what Joseph is trying to say is that anything from 5 units and up are evaluated differently. Instead of using comparable sales, they use the income approach to determine value. For example if a property grosses (x) and has property specific expenses of (y). X-Y= Net Income. Then the net income is divided by the cap rate to determine it's value. Commercial real estate is a different game. 

P.s. I feel your pain. I have the same problem in South Florida. Even now the commercial markets in Miami are starting to see ridiculously low cap rates.