All Forum Posts by: John Errico

Hi @Mark J., for sure! Yea I've invested in Newark and EO. I would say, with both areas, it's very much worth it to spend some time getting to know the neighborhoods and blocks there. Newark, in particular, is a geographically huge area, and there are some parts of Newark that make for, at least, acceptable (or even good) investments currently, whereas there are other parts that are less so. That may change in the next 5-10 years, but, right now, it's very much block-by-block. EO is the same way: some areas are OK, other areas are difficult to make work. Depending on where you live/your work schedule, and your real estate desires (and where you invest) it may be advantageous (and still economically viable) to hire a property manager to mange tenants in the area. You might find success with Section 8/government assistance type tenants--again, sort of depends on where you're renting out and what you're doing. Stabilized properties, with tenants paying market rent who pay consistently and on time, are (generally) going to do quite well in the area, but finding qualities tenants can take time and be moderately challenging.

I originally focused on Hudson County when I began investing, because this was where I was living and seemed to have a good combination of fair deals and (generally) higher quality tenants. Most of the easy buy-and-hold deals I saw 3-4 years ago in Hudson County have gone away, so I've increasingly been focusing on Essex County, sort of following the NJ transit line west. 

A lot of the "rules" that you might see on BP I sort of throw at the window when looking at things in north Jersey. I'm mostly interested in either cap rate or cash-on-cash returns for buy and hold properties. Appreciation is sort of an added bonus, but if the numbers make sense when you buy it, you'll be OK so long as rents don't crater (which I find very unlikely) and expenses don't skyrocket (which is similarly unlikely).

There are a bunch of north Jersey investors on BP, a lot specializing in Newark and surrounding areas that I'm sure have a lot of insight as well. I haven't been investing in Newark for as long as some people here, so I'm sure they have more nuanced views of what's going on there. 

Good luck!

Hi @Mark J.--I've been having a fair amount of success with both buy and holds and fix and flips in north Jersey. Pretty much all of the properties I've ever purchased around here would certainly qualify as "value add" plays--so stuff that was run down for whatever reason, where I forced appreciation by improving/renovating the property, oftentimes usually substantially (and then enjoyed appreciation, as well, when the broader property market increased in general). I still see buy-and-hold and fix-and-flip type deals around the area, though, on the MLS, those deals have been pretty rare for the past 1.5-2 years (although, in the past few months, I've seen a few more of them). If you're looking for something turn-key that will cash flow, that's going to be pretty rare, with the notable exception of some of the areas you suggested in your initial post: Newark, EO, etc. (which, in my opinion, are fine areas in invest in, if you have an understanding of the possibly management challenges and etc. you might encounter). I've definitely seen tons of multi-families on the market in those areas for well less than $300k--I'm sure there are many currently, some of which are at least arguably turn-key ready/ready to rent.

It undoubtedly is true that it takes more money to "play the game" in northern New Jersey than in other areas. The flip-side, however, is that rents are consistently healthy here; vacancies are generally low across the board; and, in some way, betting on northern New Jersey is a way of better on NYC (since, even if people may not actually commute to NYC, that's obviously the reason why the area is what it is). It's pretty easy to build a strong "thesis" around investing in northern NJ where the downside risk is fairly minimal, if you buy smartly. The upside may be somewhat more limited as well (though, at least, my returns have been healthy in the past few years) but I think it's a fairly solid play for almost any investment strategy you want to deploy. Within 15-20 miles of NYC in NJ you have essentially every type of property/housing/income/etc. level you could ever want.

I've primarily been focusing more on fix-and-flips than long term buy-and-holds in the last 12-18 months, which is somewhat a reflection of the real estate market, but there still certainly are deals for buy-and-hold investors.

Re: taxes--I see this come up a lot on BP with regards to north Jersey, and I'm always somewhat confused. I think taxes are obviously a big issue when living in the property, as your own primary residence. But, for an investment, usually taxes are baked into both the value of the property, and rents. If the numbers make sense considering your expenses (like taxes), then it's a good deal--if not, then it's not. Perhaps there is some (not unjustified) fear about taxes increasing and messing with returns... but that's probably true of almost any area. Taxes are high here, but rents are generally pretty high, as well, and property is priced where it is relative to that reality. 

Best of luck!

@Paul Jurczyk to second @Diana Tian's comments: you should be aware (if you're not already) that all of the cities you mentioned have very different rent control laws, many of which are quite unfavorable for larger multi-units. (Notably, say, Union City). You can find, on the MLS, deals that look great if you assume market rents for all the units, but the reality is often that rents are way below market (and you can do virtually nothing to change them). Market rent, cash-flowing larger multi-families are quite difficult to find (and, even then, it's not really a value add play, since you're not able to increase rents).

I see wholesale "deals" for smaller multi-families in Hudson county not infrequently, but truly good deals are (obviously) more difficult to come by. 

Hi Dedde: there's some good discussion about this in other topics here (like, this thread recently: https://www.biggerpockets.com/forums/311/topics/65...), but, to summarize:

I think the areas surrounding Newark, like East Orange/Orange are quite popular for investors currently, and where I'm actively investing. You can find essentially any/every type of property you might want within 5 miles of Newark--ranging from uber-expensive single families, to very cheap multi-family properties. The sort of trade-off is usually cost and ease of renting: so, you'll find what, on paper, seem like pretty solid deals throughout Newark/the Oranges/etc., but, in reality, might be a challenge to stabilize and rent out. Vacancy, however, is super low throughout the northern NJ area so, if you have a property that you want to rent out at market rates, you won't have a problem finding tenants. Your appetite for investing in these areas may depend on your comfort level of renting to tenants that are generally living paycheck-to-paycheck, in areas that are (generally) higher crime.

Renovations costs, etc., will vary tremendously with the location and the property. Most deals in the current market are not going to be turn-key ready, so be prepared to do anything from a full gut renovation to some heavy aesthetic work to make it presentable. You can find multi-family properties in the greater Newark area for ~$100k or less (that require substantial rehab), all the way up to $1M+ (that require less rehab, and/or are in stronger areas). Obviously, your cash flow and other metrics will vary from fantastic deals, to deals that don't make any sense at all!

Because northern New Jersey is so dense and varied, my general advice would be: explore some of these areas by car/foot. Get a sense of the neighborhood and geographies. Pull up Zillow or equivalent just to get a sense of where the market is out (don't rely on it for information about actually buying properties), and then ask questions here or on other local NJ communities about specific neighborhoods/areas/rents/rehab/management etc. Even smaller (geographical) cities can be very block-by-block, and many local investors are familiar with cities they invest in with that level of granularity. 

Best of luck!

Hah, thanks @Account Closed! I upgraded to Plus because I wanted to post in the marketplace (though I haven't really taken advantage of that recently). I've thought about upgrading to "Pro," but I don't really take advantage of any of the forms/property analysis/etc., type stuff, so I'm not super show if it's worth it. Maybe for a better forum signature, hah. 

There's a great group of northern-NJ based investors on BP, so definitely feel free to PM me if you ever want to grab coffee/a drink/etc. Best of luck!

Hey Stephen R Johnson I am not so worried about a market correction for rentals if the property is cash flowing OK right now. In my mind, the value of the property is sort of irrelevant, and the main concerns are rents and vacancy. Your expenses are going to be basically fixed, and the only way rents are (probably) going to decrease in the greater NYC area is due to a lot of new supply, or some big economic event/natural catastrophe/terrorism etc. that makes living in or around NYC suddenly undesirable. I’m not really worried about that either so much in this area. If anything, you could argue that rents will be even healthier in a recession because home ownership may be less attainable. I think if you can find solid cash flow properties in, say, East Orange, you shouldn’t be super concerned even if their value decreases in the shorter term due to some macro economic events. You can get both Section 8 tenants and non-government assisted tenants in East Orange. There are pros and cons to both... but, I think, if you are thoughtful about picking tenants and management you should be ok. Best of luck!

@Joshua Goldberg if you're willing to drive an hour of Hudson county there's basically any type/class of property you could possibly want. Sort of depends on your desire to be within proximity of public transit to, say, NYC and your tolerance for living/investing in areas that may be seen as less desirable. Some general thoughts:

Hudson County is very competitive right now, but there are still some "marginal" areas that offer investment opportunities. Greenville, in Jersey City, has a pretty negative reputation (some areas are quite unsafe), and is not particularly well situated to public transit, but certainly offers buy and hold opportunities currently in your budget. Sporadically, you may also be able find deals in Union City, North Bergen, and West New York, and other ares of JC, but those areas are quite competitive.

Essex County (which includes Newark) is also quite competitive, but, if you're willing to invest in less desirable areas like Newark (not the Ironbound, though, which is going to be too expensive for your budget), East Orange, or Orange, there are lots of opportunities for pretty solid cash flow. The problem in those areas (similar to Greenville) is stabilizing the property: so finding quality tenants that will pay rent on time, in an area that is at least safe enough where you'd feel OK doing renovation work, collecting rent, etc. There are deals you can probably find on the MLS right now in East Orange and Orange below $400k that will yield some pretty good cash flow.

Passaic (in Passaic county) can also yield some deals, though I haven't personally invested in the area. 

All of the above areas are pretty block-by-block, though, so if you're not familiar, I'd recommend spending a few weekends driving around and getting sense of the areas. All of those cities have "good" and "bad" areas (and are priced accordingly), so it may be in your best interest to be a little bit picky about exactly where you want to invest.

I'm not as familiar with further west and/or south--if you drive basically an hour west of Hudson county you'll be in essentially farm country, hah. I've invested in Hudson, Bergen, and Essex counties, primarily for buy-and-hold properties, and have done quite well.

Best of luck!

Antonio feel free to PM me if you haven't found anyone yet. Is the building occupied? I know of at least 2-3 guys/companies that could probably take care of it for a reasonable price.

@Peter Arboleda generally, in New Jersey, a landlord can keep all or a portion of the tenant's security deposit due to unpaid rent. This is one of the enumerated reasons for keeping a security deposit (that, and damage to the property beyond normal wear and tear) (http://www.nj.gov/dca/divisions/codes/publications/pdf_lti/sdepsit_law.pdf). Without knowing additional information, it is likely that the landlord could (and probably would) keep the security deposit of the non-paying tenant in the circumstance you're describing. If you're actually buying such a house, though, I'd consult with your attorney to try to figure out exactly what's going on.

@Account Closed there's a pretty strong group of northern New Jersey investors on BP. I own a bunch of properties in Hudson and Bergen counties, and have been doing some flips and other projects in Essex, including one in South Orange. If you ever want to compare notes or the like feel free to PM me, would be happy to lend my thoughts and/or help if relevant!