Trenton, NJ

[Mark Resnick]

Hi Everyone,

I am new and looking for a place where I can buy an investment property to rent out. I was told Trenton, NJ is a great place to get good cash flow. Can anyone tell me more about their experience owning there? Any advice would be helpful. Thanks

[Aly W.]

All true about Trenton. We bought our first rental property in '08 for $60K, when the market was crashing. It seemed a great deal since the previous investor had paid about $80K. It was a 4/1.5 row house, basement, yard, rented for $1000 a month for most of the 10 years we had it. 

Our first tenant was an education in just about every way. Section 8 sounds like easy money, but it's not, same with TRA/TANF. After our 3rd disaster with those programs, we rented to those with jobs. Our 2nd property was a 3/2 rowhouse, paid about $55K for it, rented mostly for $900 a month for the 10 years we had it. Sold them last year in the low $40s. At least the mortgages had been paid down enough to walk away with money, and they had cash flowed well most of the time - minus vacancies, damage and evictions.

Late fees sound great in theory. Our experience was that once a tenant got behind on the rent, late fees only added up to an eviction. Many people, and not only in Trenton, don't have enough savings to sustain a job loss for very long. If they don't/can't/won't pay, file the eviction immediately. Sometimes they can get help through Social Services or Catholic Charities, but those organizations are also strapped for cash. 

We had an excellent attorney in Trenton, who does most evictions there. Have an attorney write your lease in Trenton, since they'll be handling the eviction - $300 (at the time), 6 weeks, $100 for the sheriff, and done. Evictions for non-payment are easy. For anything else, plan on more time and money.

Things may have changed, but you'll need a landlord license and every 2 years, a chimney/boiler inspection. The city loves to send violation notices for overgrown yards, whether they get the address right or not. We'd gotten quite a few of them over the years, for the vacant properties on either sides of ours. You'll spend quite a bit of time on the phone straightening that out. No matter if your lease says the tenant must maintain the yard, plan on paying for lawn care and extermination.

Water/sewer is lienable...if your tenant doesn't pay the bill, you'll have to or the city will put a lien on the property. If the bill is in your name and you plan on charging the tenant, great - but if they don't pay, you cannot shut it off. You'll have to evict. If it's in their name and they don't pay it, the city could take months before they shut it off...and at that point, the tenant will likely abandon the property, and you'll be stuck with the bills.

Insurance and taxes are high. If the property is vacant for more than 60 days, the insurance company can, and likely will, cancel the policy. They will not insure what they consider a vacant house. And not too many companies will insure in Trenton, and lack of competition keeps the rates high. Maybe they won't notice the house is empty - maybe they will.

We were ignorant about a lot of things as first time landlords. Trenton was  great education. Pricey at times and extremely stressful at other times, but we don't regret it. Just don't expect to sit around counting easy money. You'll work for it - or pay a management company to work it for you.

And keep in mind that almost all pets in Trenton are pit bulls.