Any specific house-hacking tips for New Jersey properties?

Question

Hello team,

I live in New Jersey, and I empathize with my fellow neighbors of the state about the comparatively higher property rates and property taxes.
Average Multi-Family homes (with just 2 units) go for $500,000+. From reading a lot of articles as well as books published by BiggerPockets members, I understand that House-Hacking is a fairly easy and convenient way to enter the rental-property investing game.

Can anyone advise me on how efficiently I can use New Jersey as my starting point?

I thank you all in advance for your patient responses to concern.

Dominic Rosato · Answer

As someone house hacking in Jersey City myself, I'd say go for it! It seems like you've done your research, and while the prices here are high, the rewards are too.

Your first focus should be on determining what YOU want - Near NYC? Quiet Suburb? Good school district? Find out your needs and wants. At the same time, you can work on determining your price range. Investor friendly realtors and lenders should help you accomplish both of those.

Your needs, along with your price range, will allow you to narrow it down to certain neighborhoods and choose the one thats right for you.

Best of luck to you, and feel free to reach out with any questions regarding North Jersey!

Ecaterina Katerina Morosan · Answer

Hi Rahul, where in NJ are you looking? In NJ, property taxes can be high, so you want to focus on areas with lower taxes. Also, you would want to occupy smaller unit and rent out larger unit for better rent roll. Are you looking for the tenant to cover your mortgage expense completely? That might not be possible in NJ market but it will mostly covered with the right property.

Ryan Thomson · Answer

@Rahul Kini I don't have NJ specific advice except that house hacking is often a better financial strategy than renting.

Here are some resources I found really helpful on my journey:

1. For podcasts I really like the House Hacking episodes on Bigger Pockets Podcast and other channels. Here is a playlist with the best House Hacking Podcasts I’ve found: https://open.spotify.com/playlist/4A6uLsPfdWEMmJhG4TSjyb?si=743bb403548f47fb

2. Great beginners guide: https://www.biggerpockets.com/blog/wp-content/uploads/2022/08/Ultimate_Beginners_Guide_BiggerPockets.pdf

3. The Book on House Hacking Strategies by Bigger Pockets is also a fantastic book

4. Happy to talk if you want more advice

5. Connect with a realtor who understands house hacking and has invested themselves

6. Connect with a lender to see what you qualify for and how you can improve that situation

7. Go to local Real Estate meetups and learn from people there

Earl White · Answer

Few thoughts:

(1) Submit offers on more than 2-units - you can go up to 4 for a conventional and FHA - I have multiple clients that have done this (though you can ask your loan officer for specific qualifications)

(2) For mortgages - you only usually need to occupy for one year and then can switch to a rental and then use that income for your next mortgage "Borrower must occupy, establish, and use the Property as Borrower’s principal residence within 60 days after the execution of this Security Instrument and must continue to occupy the Property as Borrower’s principal residence for at least one year after the date of occupancy, unless Lender otherwise agrees in writing, which consent will not be unreasonably withheld, or unless extenuating circumstances exist that are beyond Borrower’s control." In other words, you don't need to think per say in short term as it is a long term strategy if you plan to quickly go to 3 properties, 4 properties.

(3) You may have to target some specific neighborhoods you can afford. I have some clients doing house hacks in Netcong, Dover, rehab househacks, Paterson, North Bergen (convering 2-family to 3-family) Belleville, Irvington. Not saying any of those are great but if the concern is the costs are just too much you may have to just be creative and open.

Mark F. · Answer

You need to seek out Nothern NJ content along with general RE learning. Why? Investing here is unlike most areas due to some of the things you've mentioned. Jonathan Greene is a good source, specifically his YouTube shorts. He's been on the BP podcast a few times. Shawn McEnteer puts out specific Nothern NJ YouTube content as well. Also go to NJ meet ups. You'll get a sense of how the market is and the investors up here are. I can't emphasize enough how different it is to invest here that the rest of the country perceives.  I've read numerous NJ specific threads, when BP had a good NJ forum which they've since gotten rid of and refuse to reinstate, and a lot of responses would be from out of state and the advice just didn't apply. Cash flow is tough, not impossible, to find but our appreciation and rent raises are generous. House hackers like myself are rewarded and it can change the trajectory of your financial life. Property taxes are obviously high but picking the right towns can help tremendously. Landlord/tenant laws are unusual and most LL are unaware, especially town by town. Yet there are counties that are more LL friendly than others (hint- it's the ones that are purple, not overwhelmingly blue). Vacancy rates in our area is insanely low; you can rent out a decent place at market rate in the middle of winter, I did. As you can see we have pros and cons. I can handle the cons so I like investing here. Reach our with specific questions. Good luck.

Cheryl Schuck · Answer

Do you have any ideas in mind as to where you would like to live? There are some great deals that may be in areas that you might not want to live in, yet they are "cleaning up" those areas and they are hot at this time!

Some areas are going for more than $500k yet their monthly rental amounts are significantly higher than in the lower price point areas.

I'm here should you want to discuss areas in the northern, north western and central part of the state.

Any specific house-hacking tips for New Jersey properties?

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