South Jersey! Why is there no chatter on BP about the impact on REI with the impending loss of 5000 jobs (and more job loss coming) on South jersey Real Estate

12 Replies

Hello South Jersey-ans,

I am one that believes in one persons loss is an others gain (NOT BEING MEAN HERE BUT REALISTIC) 

Is there now an opportunity to buy low now and sell high later now? I have heard the chatter all the way up to Southern Ocean County about the job losses caused by the 2 casinos closing in a couple days in Atlantic City NJ and maybe another one in a couple months as my friends whom are B & H ers (and bought to high) have tenants that rely on the casino industry and they were just notified by there tenants they may be forced to leave. This is is an area that was also impacted by Hurricane Sandy. 

I have many NY investors that are looking for oceanfront and bayfront properties. Their is definitely going to be a ripple effect and many more than the 5K are going to be displaced at some point. When is the right time to buy? Should I wait a little longer till the real impact is felt or do I start to market my "We buy houses now" without really knowing how low prices might go(and will in my opinion). 

Any feed back from South Jersey ans would be appreciated... 

@Ana Nomys  

  Would not want to be an apartment owner or buy and hold investor in that area right now.

You could have a mini GFC event with rents imploding

AC rebound will not be quick.   NJ casino industry will likely see some dark times .  Pennsylvania, Delaware, and New York all have casinos now.   AC  banks on NYC and Philadelphia both of which have casinos of there own. In my opinion AC will really have to alter the approach and do something that makes people want to drive 2 hours other then a casino which most can now get to in less then 1 hour. 

I grew up in Brigantine. The direct impact of the casino closings will not be an exodus of bay front/oceanfront property owners. Most of the casino workers are service workers (waters/maids/dealers). Most of the waterfront owners are NYC/Philly residents or retirees. 

If you were to market, I'd choose a peripheral market that will still have a tourism draw (Ocean City, Brigantine, Avalon, etc). I think Atlantic City = Detroit in many ways. Always has been. 

Good luck either way. 

@Ana Nomys There were plenty of signs for a year or so now... with Philly and NYC having their own casinos definitely had a huge effect on Atlantic City casinos P&L and will for the duration. Its was already a strained economy qualifying for the EB-5 program even. My prediction as far as REI goes is that there will be many fire sales in the A.C. housing market coming soon.

Kudos,

Mary

Thanks ALL for your input and if there are any others that wish to put there .02 cents in great. I have investors flush with cash and crews ready to move on Rehabs to flip but if there is no one to sell to because of the downturn and job loss should I just head back North and not waste my time for now. 

Not good times for AC, the city has to do something to separate itself from the competition because at the rate it's going it will be a shell, see Detroit. 

I do not know about the specific area mentioned here other than the news stories.

What I do know from talking with lots of investors is that the cold and rust belt states except for urban core in a lot of instances are dying off.

I see many retail centers going dark, home values falling, older generations are migrating away to warmer climate states.

I am sure there are some absolute gem areas in the colder climate states with pockets to invest in. I am just hearing some of the colder climate towns are dying off and raising property taxes to try and offset county and city budgets. When no new business or development comes in the area starts hurting. When taxes are raised to compensate it has a trickling effect. Many of these areas more people are going on government assistance etc. to survive.

Most of my commercial clients see the sun belt states as more promising for investment.  

Joel, would you say that the values for commercial assets cost more in the sunbelt states as compared to the rust or cold belt states? Roc

Roc,

I think you can get better deals in Texas than you could in New York or Chicago.  I routinely see retail centers in the 8+% cap rate.  Joel, are you seeing the same?

Mark

I think in some of the colder climate states for the urban core caps rates are too compressed for retail unless suburban to rural.

The caps you find there at a 9 are in okay areas. This versus the warmer climate states we are getting 8 plus caps with median income of 100,000 or higher with strong growth and with 25% down have cash on cash around 14% non-recourse 10 year term loan with 30 year amort.

Lenders like to see at least 50,000 population in  a 5 mile radius and not a negative population growth trend. A few percent might be normal due to building crashing years back but high single digits to double digits shows a deeper problem on the micro level where the property is located.  

Those warmer climate areas due to continued demand have a higher chance of cap rate compressing for equity resale growth in a few years.

The areas with low caps already even with quality there isn't much farther the caps can compress.

@ Joel Owens Thanks 

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