we are thinking about buying a townhome in the mount laurel/cherry hill Nj area. Looking as far as Voorhees, Cinnaminson, Delran, Marlton NJ. I know it has to cash flow so I am definitely running the numbers; some of them seem to work with higher rents and even with PM, I can probably make $200-300 a month all in.
Does anyone have a perspective of investing in these areas? do they rent easily in the area? I am looking at 3 bed 2 bath. We think potentially folks who want to commute to Philly would be our target market.
Are there any specific towns I should look at or stay away from? Any particular communities more desirable? I know these are a lot of questions -thanks so much for any information!
I’m a local investor here in south Jersey and recently purchased a town home in Mount Laurel. Here’s a couple thoughts:
1. 3/2 townhomes in good shape rent very easily. The rental market is in high demand here so you won’t have trouble finding a renter.
2. Marlton, voorhees, Cherry hill, mount laurel are great target areas because you are going to find a high quality tenant - great schools, job market etc
3. Be careful of some HOAs… the town home we just purchased is not in a HOA… phew. HOAs can be somewhat restrictive, more so in a condo though. I would just make sure the community you're searching in has active rentals… you'll need to do this anyway to see what you could rent the unit for.
4. Older towns like Collingswood, Haddon twp, Audubon, oaklyn are older communities so you’re less likely to find a ton of condos there. But real estate in those areas are booming, a lot of people love the suburban life.
Hope this helps
Thanks so much! @Jacob Culleny
We love Mount laurel but are struggling with the price points. I am out of state NY investor so it’s hard to make many trips but we want to narrow down communities /developments so we can target those -any developments or subdivisions you would recommend that you like especially for easy renting, Attracting good quality tenants and reasonable hoas either in Mount laurel or towns close by that also cash flow ?
Any in the surrounding areas ? Since you bought in Mount laurel, did you feel certain areas within Mount laurel are better in terms of amenities or commuting to Philly ?
Thanks so much !
I have a few rentals in Collingswood, NJ so I’m familiar with the areas you mentioned but haven’t invested in any townhomes. Jacob’s comments seem spot on, you should be able to find quality tenants in any of those areas. If you can narrow it down to a few complexes you should do a letter writing campaign and try to get an off market deal. Typically all the units are basically the same so you’ll know it checks off most of your boxes when you get a reply. Good luck with your search!
I currently have 2 rentals in Cherry Hill, one is a townhouse. Both rentals were purchased as foreclosures and before the boom we have experienced.
Both properties rented within a week. One tenant is going on year 3 and another just entered year 2.
I have been looking for the next deal and the price points are just too high for me to cashflow.
HOA fees can make or break your cashflow. HOA dues can also increase or special assessments can be assessed. As far as cashflow, I like to see more than 200 a month (depending on your price point and cash on cash return). I am cautions to use a valuation/appreciation strategy in this market. I don't think that there is a crash coming but it has to level off at some point.
I like to see a monthly cashflow of $450 or better on my properties or 20% cash on cash ROI.
Just don’t force a deal. Establish your parameters and stick to them. Happy investing.
@Joe Martella I'm still finding things to work on! Actually just passed one on to a flipper :). Call me
@Nadia Hale , I concur with Jacob, All those areas will cash flow less but should be much less headache. I'm in Audubon, have rentals in different towns in the area and finding tenants has been 0 issue, finding GREAT deals takes much more ongoing work and patience.
@Kevin Santos thanks for chiming in! so how does one find these deals? Ive run numbers on what's on the market in the towns mentioned (didnt look in Audubon yet thought but I will) and the CoC is less than 5%. I don't want to add in appreciation as who knows what will happen to the prices in next couple of years.
What is a good CoC return you think?
Such a difficult question to answer… all depends on what you want, the amount of work involved and strategy.
However you'd be hard pressed to find high COC returns in areas like Marlton or Mount Laurel. In middle of the road type areas I'm still finding 8-9% with relative ease and room for improvement.
I've been doing the BRRRR strategy though yet to refinance, bought 2 in last year and will have 0 money left in after refi (massive reno projects), so it all depends on your capability, and how much grind you want to put in, in my opinion...
The more work, the higher the return should be.
What is a good vacancy and capes rate to use for townhomes built 2000 onwards in south Jersey ? I am using
5% for vacancy ,
10% for capex and
10% for management abs $100 A month for maintenance
is this too much ?
Being conservative doesn't hurt. Those numbers are a good estimation in my book. Maybe slightly high for vacancy if anything but again, being conservative is good.