Northern NJ Rental Markets

[Jonathan Cavallone]

Hello everyone! New to the BP forum but definitely not new to BP! I just graduated college and am ready to buy my first investment property in Northern NJ. I am pre-approved and ready to go. I have been making offers in the Hoboken/Jersey City area, but the places I am looking at are selling for too much for the numbers to make sense. I am looking for something in the 180-250 range but it seems as though the cash on cash return I would receive from most of these properties are in the low 4-6% range.

Northern NJ investors, what kind of cash on cash returns are you guys seeing on your properties where you are putting 20% down? What are some good cash flowing areas in Northern New Jersey? 

Any feedback is appreciated, thank you!

[Max Vishnev]

@Jonathan Cavallone Hi Jonathan, you've gotten some great feedback already from other members, but I thought I would add my two cents as an Northern NJ Realtor and property owner.  You have to be realistic about your budget and the areas you are targeting.  As @JonathanGreene pointed out, you aren't going to find much in Northern NJ in at 250k or below.  In my experience, it would either be a small, outdated condo unit, a distressed single-family, or a "knock down" 2-family in a rough area.

I agree with other comments that an FHA/owner-occupied house hack would be your best bet, because:

a. You can put down less and afford more (lenders count expected rental income toward DTI (debt-to-income ratio)

b.  You gain priceless experience as a landlord living on the premises.  It would be much easier to renovate, manage tenants, and maintain your first property when you're actually living there and not trying to manage from afar (or pay a prop mgr)

c.  You can then parlay those skills and experience into a 2nd property -- either the next house hack or a standalone investment property

If this is your first foray into real estate investing, I strongly suggest going the house-hacking route vs. living with your parents and managing an investment property from a distance.  Yes, the latter might sound more convenient, but in reality, it's much more likely to cause stress, headaches, and potential losses.  

Hope this helps,

Max