Cashflow in New Jersey?

Question

Hello BP members!

I live in Northern New Jersey and I am totally new at Real Estate Investing. I am eager to learn and make new connections with other investors to get out the rat race!

Could you please help me with the following questions?

In your experience, how does NJ compare with neighboring states (NY, CT, PA) and also the rest of the USA for:

(1) cash flow and appreciation of real estate?

(2) ease of making deals and being a landlord?

Best regards,

Philippe

Darren Sager · Answer

The towns you can find 3's and 4's are usually the C grade and lower towns.  It's harder to find them in towns where you can find good rents and chances of great appreciation.  You can find good duplexes in B level towns that produce and appreciate for long term wealth. Those are your best long term investments in my opinion.   If you can find a 3 or a 4 in those towns even better, but they rarely show up.

@Philippe Schulligen Northern NJ is set up to be the best place in the NYC area to invest long term.  CT won't touch it.  Long Island wont touch it.  NJ is the only place which is set for the largest mass transit investment in the history of this country.   Everywhere else is set for status quo.   NJ is going to be the most sought after place over the next decade.  Get in before the project starts.

Sunny Burns · Answer

Hey @Philippe Schulligen , like @Chris Masons mentioned property taxes usually kill any cashflow in North Jersey, The only properties that seem to cashflow are triplexes and quads just because the taxes are distributed better amongst the multiple units.

There are areas with subsidized lower taxes, for instance we bought a 4 family property in Garfield, NJ because they have state aid that offsets the local property tax.

We pay $11k for our 12 bedroom quad, but if you split that amongst the four units. That's only $2,800 in annual taxes per unit - so the taxes only take away ~$230 in rent a month. Not too bad. Especially since we can get $1700/month for the units due to our proximity to the city and all the close by mass transit options into the city.

We held an open house for our rental last year, and had over 30 groups of tenants come to our property. So no shortage of renters.

Anyway my advice for cashflow is look for a triplex or quad with low taxes

Jonathan Makovsky · Answer

@Philippe Schulligen I invest in CT and am not as familiar with NY or NJ, but I would imagine that they are all fairly similar with the exception of NYC and the boroughs.

These three states represent the northeast well: high taxes, high cost of living, stricter regulations for landlords and many areas with declining populations.

With all that being said, there are many opportunities in every one of the states. Some areas with great school districts, some with very good commutes to high employment areas, and some with great universities.

Personally, I rather invest in my backyard where I know the area and can recognize the opportunities rather than invest in someone else's backyard with slightly better deals. (If the deals are much better outside, that will change the criteria.)

Happy investing!

Rafael Norat · Answer

@Philippe Schulligen

I have a great contact in the philly area that lends and rehabs himself. PM me and I will forward. He really knows his market there.

I would suggest just listing your areas of interest and then taking time to personally make contacts there and see which one fits your bill. Where I invest in PA is pretty hard to get good property managers and rehab crews off the bat. Even with references. So, I would suggest doing some investigation in you areas of interest to make sure you have all the right people around you to make it  a successful venture.

Sunny Burns · Answer

@Philippe Schulligen great info! Wow 16% for West New York.

So not sure how helpful this video will be, but if you wan't some propaganda as to why purchasing in New Jersey is a good decision you can watch this very well put together video, its 15 minutes long though. https://geniusdecision.com/video/ I think it was sponsored by Sotheby's Real Estate.

Philippe Schulligen · Answer

@Patrick Martone Based on @Sunny Burns input regarding taxes I did some research on http://www.nj.gov/dca/divisions/dlgs/resources/muni_stateaid.html

Here are the top towns with state tax aid in NNJ.

Municipality

County

Total Aid (in %)

West New York Town

Hudson

16.37507007

Jersey City

Hudson

10.66306517

East Newark Borough

Hudson

10.33334336

Kearny Town

Hudson

5.678665512

Prospect Park Borough

Passaic

4.752427831

Garfield City

Bergen

3.835086527

Bayonne City

Hudson

3.709005869

North Bergen Township

Hudson

3.207188838

Olga Roginkin · Answer

HI, Philippe,

Welcome to the community!

I am more familiar with the rental situation in North NJ. Generally speaking it is easy to find tenants in NJ. The rental situation is vary favorable for a landlord in towns with great commute  and good schools. Remember that some  NJ towns are more attractive for families with kids (north Bergen County), while others attract commuters (Seacaucus), while others are great for young families or young professionals. Remember about these soft factors while deciding on a type of property - this would help keep your vacancy rate low and help you find the best most qualified tenants.

Drew Slew · Answer

Great thread, interested in where you ended up investing. Im in the process of purchasing a 2 family around MLK lightrail in Jersey City, bit above 300k, just remodeled. Taxes seem crazy low at 4k/yr or so. Ideas on the area, lot of big condo complexes on the corners being built i see.

Philippe Schulligen · Answer

FYI, I started another thread on  affordability of the different states.

Some people mentioned higher taxes and insurance for non-owner occupied properties.

Does this apply to NJ and PA?

Philippe Schulligen · Answer

@Rafael Norat I just come back from visiting some SFC in Philadelphia today. Do you have tips on PA? Did you invest in Philly?

Cashflow in New Jersey?

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