Multi-family Units in Newark and Jersey City NJ

[Jessica Soares]

Hi Everyone,

I am new to BP and real estate investing in general but have been following some large (8 units+) MFDs in some rough areas of Newark and Jersey City with numbers that sound good and am wondering if anyone here has experience with owning MFD in these low-income areas and whether you can give me your opinion on whether it's worth the risk associated with the areas/tenants, etc? I grew up in the Ironbound in Newark and went to school in Newark, so I know the areas well. I have nothing against low-income housing but the numbers I'm seeing look too good and I'm wondering if the deal is that good, they must be selling b/c the headaches aren't worth it. Any advice, thoughts would be most appreciated by this newbie! Thx.

[Steve Wilcox]

I invest in buy and hold on multi units in newark, elizabeth, irvington, and east orange. I do so because I like the cash flow and deal with the head aches. BTW- Ironbound is not the same animal as any other area of newark.

This is not for the faint of heart- people steal copper, vandalize vacant properties just because, ect. I personally work with managment which comes with a cost for quality manager in these areas.

Who's numbers are you looking at that are so good? Do they factor into account vacancy rates, high repairs and maintenance costs, professional management.

Also keep in mind if you are looking at small apartment buildings 5-10 units these are the least desirable of any properties in these areas.

The cashflow is good, there is money to be made, and you can provide a very valuable service to a family or person who really needs it. However it is cheap and has high cash flow for a reason- not everyone has the stomach or cajones to do business in these areas.