Is NJ a good place to focus investments?

Question

Currently live in SF but am from New Jersey and want to grow my rental portfolio. I have been focused on Jersey City given the proximity to NYC and have a view that prices in NY are slowly going to make folks move to Jersey City and surrounding areas.

Looking to expand my portfolio and go into multi-family but wanted to understand if others have evaluated the market and broadly NJ and any suggestions? Rental market looks strong to me

Max Vishnev · Answer

I think anything within an hour commute of NYC will do well for you as a long-term "buy and hold".  I'm personally very bullish on Jersey City, particularly certain sections that I believe have a lot of room for growth.  It's a healthy rental market, with close proximity to Manhattan, and prices (both to buy and to rent) are certainly a lot lower than what you would pay for a similar unit or property across the river.

It's also been a competitive market to buy in, for the reasons I listed above as well as low inventory, but there are deals to be found in any market.  You just have to have clear goals and expectations.  Northern NJ is mostly an appreciation play.  You should be able to cash-flow a bit (not much after accounting for prop management fees), but don't expect the same returns (on a cashflow basis) that you would get in more remote areas or in tertiary metro markets elsewhere in the country.

However, with headline inflation at 7% now YoY, I think buying real assets in a market like NYC Metro with a long enough time horizon is a great way to build wealth and to hedge inflation risk -- both from a price appreciation and rental income appreciation angles -- so a DUAL hedge.

William Kwong · Answer

I put up a 2 family recently in Greenville and got 9 offers in two days. It's competitive to say the least...to @Max Vishnev point, I think it to be more of an appreciation play as well. My seller purchased his property for 230K and in 5 years we got offers for 460K. Granted, they did some renovations to the property but it's cash-flowing and its principal has been watered down. Within NY Metro I only see things going up. *Insert Crystal Ball Here*

Hope this sheds some light. (Keep in mind not all properties are like this..)

Kevin Manafi · Answer

@Aditya Samarth Rental demand and pricing are very strong in NJ. Jersey City has been hot for years due to the proximity to NYC and multi-family housing supply/demand there, so competition is and has been fierce. However, there are still neighborhoods and pockets that are lagging behind where deals can be potentially be found, but with a likely trade-off in neighborhood quality.

It's hard to recommend specific areas without knowing your investment goals, budget, ideas/plans, but as @Max Vishnev said, there are deals to be had in every market. It just takes more persistence to find them in Northern NJ.

I'm an investor and investor-agent in Northern NJ--I'd be happy to connect and learn more about you and your investment objectives.

Cameron Braig · Answer

Congrats on getting started.

Some good metrics to utilize when selecting a target market and submarket can be; population growth, job growth, job diversification, rent growth and income growth. Depending on timeline and strategy these can help filter out some of the noise and help better target prospective markets.

Christian Clumpus · Answer

I am in the process of buying my first investment property in Union City a couple blocks from the Heights, a 2 family in the upper 5's.  With some cosmetic improvements to each unit I expect to be cash flowing 1200-1400 per month...

Aditya Samarth · Answer

@Max Vishnev @Kevin Manafi Thanks for the responses here!

To add more clarity, I’m focusing on the Heights and Journal Square areas as they provide the highest quality of tenants. Know a friend of mine that invested in a Greenville, Jersey City multi-family and is dealing with evictions and other problems.

My goal is to build cash flow, enough to whack down the principal. I have a current condo i closed on 2 months ago in Journal Square area which was a great deal - new construction, 30% property tax abatement and i filled my tenants within 15-20 days of closing and i make $650 in net cash flow after all expenses. Now i can keep on doing the same but want to expand into multi-family

I am evaluating a couple Heights properties right now in the $600-$900k range for multi-family. I’m definitely new to multi-family and will likely get a prop manager but generally wanted to understand if others have evaluated the economics of these places before. Some of them definitely look like they will need work which i want to avoid as i don’t have much expertise in that

Stephen Chatto · Answer

What's the Eviction Process in Hudson County?   Make sure you factor that into your numbers.  What's the Local Rental Inspection and Registration Process in Jersey City?  I don't know but there is a town in NJ near me that is almost not worth dealing with they are such a pain.  Who's going to manage it?   Are they going to be able to quickly handle issues, and stay on top of collections?  How long do they take to turn over a unit.  If the price is right, and there is GOOD Cashflow.   Go for it.

Is NJ a good place to focus investments?

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