I'm looking to invest in a 2- or 3-unit property in Newark, NJ (I live in NYC/Manhattan). My goal is to find a value-add rehab, refinance, and hold for cash flow (15%+ cash on cash return).
Let me know if any of you have advice for Newark.
Also, I started puting together some background on Newark (PDF attached - very rough draft), wanted to share with the forum since some of you might find this useful, in addition to Newark re-development plans. Let me know if you have comments on any of this information also
I'm not investing in Newark so I can't offer advice there, but I did see you posted your question 9 days ago and have no responses so I'll offer a solution that may at least provide you some answers. As I have a number of NJ keyword alerts I see questions about Newark and investing in north Jersey (particularly for investors in NY) at least 2 or 3 times a week. If you perform a search above for Newark or (if you're privy to the various neighborhoods therein) its subsections, you may get more answers than you could ever hope to use. Try a few different searches as well as maybe some county names of interest to you and you should walk away with a good starting place. You might also want to take note to the volume of those threads to get an idea of how much competition you're walking into of other people seeking the exact same properties as you to help you determine how to proceed further. Good luck!
From what I have seen - more and more people are looking at Newark as Jersey City prices become out of reach. The only advice I would give is that while it is important to do your research- the most important research you can do is physically going to different parts of Newark to really get a feel for where you would want to invest or not invest.
Hi @Scott Starrett , owning property in Newark myself and also managing property for clients in Newark with our Management Company, I'll give you a few things to consider when thinking of Newark as a place to invest:
1) Get familiar with their rent control laws for one, they are the most strict in all of New Jersey I feel.
2) Definitely as @Matthew Filepp mentioned, the best thing you can do as part of your due diligence is get familiar with the areas you want to invest, not only by doing online research but by driving around and perhaps even walking around the areas you want to invest.
3) Everyone has this concept of finding a value-add rehab, however, Newark or NJ is a different beast, similar to NY. For one, there is a ton of competition. Unless you are going to live in the property (Which is probably best for this type of scenario).. It is a bit difficult to find something to purchase at a discount, low enough that you will have enough money to hire a contractor, perhaps get a hard money loan to finance it, and add enough value that you will be able to save a decent amount in the purchase worth the time it will take you to manage the entire project. I'm not saying is not possible because I have done it, but it is definitely not as easy or its not something I would suggest for a first purchase.
In Newark there are enough margins to perhaps make 10-12% Cash on cash returns without having to do all the work in finding the deal, rehabbing, financing, etc. Sometimes you can get even higher.
4) Definitely go for a 3 family, not a 2, the numbers are better with 3 and higher.
My goal is not to discourage, but to give you a realistic perspective, we all hear successful stories from investors outside of New Jersey, and although the stories sound amazing, achieving some of the out of state numbers in NJ could be more challenging than most may think. Keep on researching, and do the walk-throughs in the areas you want to invest.
And most important of all, don't get "Analysis Paralysis"...
Let me know if you have any questions, always willing to help. Best of Luck!
This is an ongoing thread that captures all the development projects that are going on in the newark area. good resource if you are looking to map out where development dollars are going:
There are some parts of Newark in designated "Opportunity Zone", which allow for zero capital gains tax if you hold for 10+ years (among other rules).
Here's a map -- select "Qualified Opportunity Zone Tract" on the "layers" button --
I'm an investor and Realtor from Newark NJ. if you would like to move forward are start off please don't hesitate to ask any questions.
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