NJ Real Estate Market Trend
I am currently in San Antonio and have been for the last 4 years (Seller's Market - Hot). The deals are here but with lower margins and a lot of competition. The 70% rule does not work here in San Antonio - does it work in NJ?
Originally from NJ I have considered the idea of returning to NJ where I have worked as a GC/developer all my life. 4 years ago when I left, the RE market was down. Now after 4 years I am thinking that there may be potential to pick up good investments - buy & holds, wholesales and flips. I am aware that the market has not bounced back yet.
Looking for any and all information on how investors are fairing in the NJ market. What is trending and where? Also interested in NY, PA and DE.
Most Popular Reply
Hi @Michael Jones --
I'll throw in my $.02 as an NJ native with the disclaimer that I don't own any real estate locally. I'm curious as to what your previous experience was like rehabbing up here.
There is so much variety among submarkets that I'd be surprised if there's a one-size-fits-all answer. The top-tier urban areas like NYC (Manhattan/Brooklyn/parts of Queens mainly) are trading at such ridiculously low cap rates that the primary method of generating significant returns is with value-add strategies -- at least in the commercial realm. And even then, there is stiff competition depending on the size and scope of your project. Lots of institutional and international money around these parts.
In the higher-end suburbs near NYC (Long Island, Westchester, northern NJ, etc.), I'd be surprised if the 70% rule holds on traditional SFH flips. I briefly explored rehabbing something in my hometown in northern NJ. I spent an afternoon driving through several neighborhoods in town, and the biggest problem I encountered was the dearth of properties in distress. Hardly any lots even suffered from overgrown landscaping or exhibited traditional signs of distress, so I found few leads worth following up on. Granted, that's a small sample from a more upscale suburb, so your mileage would certainly vary in -- let's say -- Newark's war zones. The flip-side of that, though, is that the resale values will almost certainly be there in the suburbs if you can locate the right deal. Can't really speak to velocity metrics/days on market.
For buy & holds, I've found that traditional guidelines don't really hold true up here. Properties don't really meet the 2% rule anywhere except in lower income areas, and the 50% rule is distorted by NJ's exorbitantly high tax rates. Having said that, there are certainly plenty of investors who have succeeded with buy & holds around here. Over the long-term, capital gains have been significant thanks to appreciation, but banking on that is obviously a risky proposition.
I'd love to hear others' thoughts on this. Best of luck.