Newark, NJ Advice & Redevelopement Plans

[Scott Starrett]

I'm looking to invest in a 2- or 3-unit property in Newark, NJ  (I live in NYC/Manhattan).  My goal is to find a value-add rehab, refinance, and hold for cash flow (15%+ cash on cash return).

Let me know if any of you have advice for Newark. 

Also, I started puting together some background on Newark (PDF attached - very rough draft), wanted to share with the forum since some of you might find this useful, in addition to Newark re-development plans.  Let me know if you have comments on any of this information also 

https://www.newarknj.gov/viewer/redevelopment-plan...

https://www.dropbox.com/s/dcs0vcdn21ww7kh/2018%20N...

[Moises Mari]

Hi @Scott Starrett, owning property in Newark myself and also managing property for clients in Newark with our Management Company, I'll give you a few things to consider when thinking of Newark as a place to invest:

1) Get familiar with their rent control laws for one, they are the most strict in all of New Jersey I feel. 
2) Definitely as @Matthew Filepp mentioned, the best thing you can do as part of your due diligence is get familiar with the areas you want to invest, not only by doing online research but by driving around and perhaps even walking around the areas you want to invest. 
3) Everyone has this concept of finding a value-add rehab, however, Newark or NJ is a different beast, similar to NY.  For one, there is a ton of competition. Unless you are going to live in the property (Which is probably best for this type of scenario).. It is a bit difficult to find something to purchase at a discount, low enough that you will have enough money to hire a contractor, perhaps get a hard money loan to finance it, and add enough value that you will be able to save a decent amount in the purchase worth the time it will take you to manage the entire project. I'm not saying is not possible because I have done it, but it is definitely not as easy or its not something I would suggest for a first purchase.
In Newark there are enough margins to perhaps make 10-12% Cash on cash returns without having to do all the work in finding the deal, rehabbing, financing, etc. Sometimes you can get even higher. 
4) Definitely go for a 3 family, not a 2, the numbers are better with 3 and higher. 

My goal is not to discourage, but to give you a realistic perspective, we all hear successful stories from investors outside of New Jersey, and although the stories sound amazing, achieving some of the out of state numbers in NJ could be more challenging than most may think. Keep on researching, and do the walk-throughs in the areas you want to invest. 

And most important of all, don't get "Analysis Paralysis"... 

Let me know if you have any questions, always willing to help. Best of Luck!