Newbie from Newark, New Jersey

[Cesar Ramirez]

Hi,

I'm a real estate newb from North Jersey looking for a 2-4 unit to house hack, while always keeping an eye out for that mythical ~70% deal. I've been listening to the Podcasts over the last couple months and have been reading the occasional blog post for the last 3 years. After reading a few books and making a couple meetups I think I'm ready to make a deal and start to build up my portfolio.

My issue is the couple agents I spoke with simply returned typical things I've already looked at on zillow and often don't make sense from a financial standpoint.

Can anyone with experience in this market provide me with some insight?

Am I expecting too much out of this market?

Am I not looking in the right places or for the right people?

Thanks,

Cesar

[John Errico]

@Cesar Ramirez welcome! Northern New Jersey is *extremely* competitive at the moment, particularly for stuff listed on the MLS (multiple listing service) like you'll likely find on broker websites, reposted on Zillow, etc. Many deals in the most desirable areas go to all cash buyers and are under contract frequently the day, or a handful of days, after hitting the MLS.

If you're looking for deals in the area, I'd either suggest looking in slightly less desirable areas (like, say, parts of Newark, East Orange, other parts of Essex County), and/or positioning yourself and your finances such that you're either able to make all cash offers, or pounce on deals as soon as you see them. You could also seek out alternative ways of sourcing deals, like identifying wholesalers, marketing/mailing campaigns, foreclosure auctions, and so on.

I think it's also valuable to consider that you don't necessarily need to have the absolute greatest deal of all-time for a property to still make financial sense, and for you to get valuable experience as an investor. Some of the precepts that you might hear on BP, podcasts, etc. are not super relevant to investing in north Jersey (at least in my experience), so try to look at deals from a cash flow or cap rate perspective rather than expecting insane returns. (Not saying that you are, but just tempering your expectations). 

One reason why rents/returns are relatively low in the area is that the area presents itself as a fairly conservative investment opportunity. You're basically betting on the long-term viability of NYC (which is why, either directly or indirectly, most people are here) which, at this point, is probably a pretty great bet. So, in return for needing more money to sort of play the game, and for somewhat compressed returns, you get a pretty stable asset: it's unlikely that property values are going to absolutely crater (although some parts of NJ have experienced this), and I think even more unlikely that rents are going to crater. If you buy a property now that makes sense regardless of property appreciation, you can probably rest assured that whatever rent you're getting or expecting to get is going to be, at worst, stable for the foreseeable future.