Where would you invest if you were in my situation (Live by Nyc)

Question

Most of the books I read and people on forums like biggerpockets are either investing in low priced markets or buying homes for a long term appreciation play. Im in Bergen County NJ and cap rates are abysmal. If you got a mortgage you probably wont even break on 95% of the properties I have been looking at.

Single family plays are near impossible here, the land and taxes are just too expensive. Im not looking to flip but rather buy and hold. I dont want to be a 3 hour flight away from my properties as I would like to at least be within a 4 hour drive if something went horribly wrong. I would use a property manager as well.

Eventhough im in a better position than most to invest (500k cash) it seems like most markets anywhere near me are either dying but have decent hypothetical returns or are way too far out of range for investment. I would love to hear what someone would do in my situation if they were just starting out. Ive been staring at properties for half a year now, but I just don't know where to start. My goals arent appreciation plays, I need to get at least a 6.5%-7% cap rate with appreciation or if higher than that I could care less about appreciation.

Where would you personally invest if you were in my shoes?

Kevin Hill · Answer

I think the market in Bergen County right now is over inflated. If you are in real estate for the long haul, I would park my money on the sidelines for now until the market turns. Keep looking for the right deal in the meantime, but be patient. Buy low and it’s very hard to find those good deals right now. It’s too much of a seller’s market and we are experiencing low housing inventory levels. There is increased competition from owner occupants on properties that are listed on the MLS, who are often outbidding investors. There are a lot of signs that we are nearing the end of another real estate up cycle. We hit the bottom of the market in Bergen County back in the 1st quarter of 2011, so it’s 7 years later of rising home prices, it won’t last forever. Just like the stock market, the real estate market is cyclical.

Kurt Kwart · Answer

Atlantic City but I'm biased and have been here for many years. I have a couple development projects and rentals in the area. We also host a meetup in AC. gotta love Philly too

Michael Gansberg · Answer

@Andrew Smith - I have a bunch of experience investing in the Capital District, I believe that area(Albany, Troy, Waterford, even as far north as Mechanicville) could suit your requirements. Downtrodden areas in PA also might work(and would be closer.) I'd look for areas that have old housing stock and are charming but have fallen on hard times. Make sure the cap rates are good, but also check recent population changes. Can you find an area which has fallen on hard times, but people are starting to return due to low cost of living, ease of living/commute etc? If you can- then try to pick up some properties with good bones and see if you can catch the beginning of a wave of gentrification. Michael

Chris Martino · Answer

@Kurt Kwart, great thank you!

Kurt Kwart · Answer

We post the meetups here on BP We have an email blast too http://eepurl.com/cNOTHb

Chris Martino · Answer

Hi @Kurt Kwart, I am in the Philly area and have recently become interested in AC as well. Do you have a link to the meetup you host in the area.

Alex V. · Answer

@Andrew Smith south jersey, philly area, and upstate NY all have places with decent returns that are driving distance. There are pockets of Newark that are a little nicer than most and have solid cash flow numbers as well. Your profile says you live in Hillsdale? I grew up in RV and went to PV. Am up your way pretty frequently and am happy to grab a beer and discuss more options. Honestly I would explore other areas too. If you are paying a property manager what difference does it make other than psychologically if a property is a 3 hour flight or a 4 hour drive? You're not going to be answering maintenance calls anyway.

Cesar S. · Answer

Have you looked at Hudson county? I know Jersey City is getting pricey but there are still some good deals in Bergen Lafayette that I've been unable to get. I have a couple of properties in the heights and downtown , tons of appreciation happening there . Since it sounds like you want cash flowing properties your best bet is out of state (Midwest) or even PA. Good luck!

Stephen Kunen · Answer

I would recommend Lehigh Valley as well. It’s about two hour drive and the area seems to be developing in the right direction. There is quite a bit of competition now but you can probably partner up with someone who has time and local experience but not so much capital, in order to get good deals.

Cesar Sabio · Answer

Andrew, I completely understand the issue your going through. I’m originally from jersey city, Nj and know your area very well and personally never entertained it as an option to invest because of your same reasons. I now live in PA and have been investing for about 6 months in the Lehigh valley and Berks county areas of PA which are no more than a 2 hr drive from your area in Jersey. Since, I’ve been able to land 3 deals and have contracts going for 2 more. You have a very good position from a capital perspective to do some major moves in an area like this. PM if you want to link up and maybe we can talk about potential opportunities out here. I’m scaling my business very well out here and would be happy to talk about the potential. Cesar