Question for the Newark crowd.
I source off-market 2-4 units in Paterson and Passaic City — direct owner outreach and tax delinquency lists, not MLS. Most of the active buyers I'm finding are Newark-based, which raises a question I can't answer from the seller side.
Are you actually buying in Passaic County, or does your box stop at the Essex line?
I ask because on paper the product looks similar — older 2-4 unit stock, comparable rents, cheaper entry. But I assume there's a reason more Newark operators don't cross over. Contractor networks? Rent comps you don't trust? Something with the city itself?
And for anyone who does buy in both:
1. What percentage of ARV are you underwriting at in Paterson versus Newark? Is there a spread?
2. Are you pricing tenant-occupied 3-families differently there?
If you're buying in 07501, 07503, 07513, 07524, or 07055, tell me your criteria and I'll only reach out when something actually fits.
Realtor · NJ · Member since 2020 · 104 posts · 31 votes
1mo
Hi Stefano. I assist many investors purchase in both Newark and Paterson area. The market rents are higher in Newark and appreciation is moving at a more rapid pace. I'd love to discuss in detail as my clients are always looking for off market inventory in both areas.
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
1mo
Stefano, on paper, Paterson and Passaic may look attractive because the entry price is lower, but I’d want to get very comfortable with the block, tenant profile, property taxes, inspection requirements, local enforcement, rent collections, and the actual cost of managing older 2–4 unit buildings. A deal that looks better on price can lose that advantage pretty quickly if turnover, repairs, or collections are tougher.
For tenant-occupied properties, I'd underwrite them more conservatively than vacant ones. I'd want to see the leases, payment history, security deposits, open violations, utility responsibilities, and whether the current rents are actually collectible and supported by the condition of the units. I also wouldn't rely too heavily on a percentage-of-ARV rule. The better question is whether the finished property still produces enough cash flow after taxes, insurance, repairs, vacancy, CapEx, and management.
You may also find that contractor and property-management relationships matter more than geography. If an investor already has a strong team in Newark but has limited experience in Paterson or Passaic, that execution gap should probably show up in the price they’re willing to pay.
One thing that may help your deals stand out is communicating the tax side too. On a value-add 2–4 unit, buyers may want to know not only the projected rent and ARV, but what the renovation and depreciation picture could look like. Depending on the property and the investor's tax situation, a cost segregation study may accelerate depreciation on qualifying components. That doesn't make a bad deal good, but it can improve the after-tax return on a deal that already works.
Keep the rehab scope detailed from the beginning too. Flooring, appliances, building systems, and other improvements may receive different depreciation treatment, so good documentation can become valuable later.
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