In Northeast

Watching Jersey City become one of the hot spots for investing in New Jersey real estate over the years has made me incredibly proud. After the housing crisis, I took a bet on the area and started buying, rehabbing, and selling property there as a side gig. It was a calculated risk and it paid off. 

It wasn’t long before my part-time job turned into a full-time real estate investing career—a career that I love. But recently, I started to wonder if flipping houses in other parts of New Jersey could produce the same or similar potential ROI. After all, the city doesn’t always make the news as one of the best places to invest in. So, to satisfy my curiosity—and yours—I did a little research.

Flipping houses in NJ can be an incredibly worthwhile venture

The Market for Flipping Houses in NJ 

What I discovered was that buying, renovating, and selling houses in New Jersey is a bit of a rollercoaster ride. In the ten years since the housing crisis, the Garden State has bounced back economically, but not at the same speed or to the same degree as other states. And recovery isn’t being felt evenly across the board. So, whereas real estate investing opportunities in Jersey City are still strong, properties bought and rehabbed in Atlantic City may only provide weak returns for now.

Unemployment Rates and Wages in New Jersey

In New Jersey, unemployment rates continue to be some of the highest in the nation. According to the Bureau of Labor Statistics, the state ended January 2022 with an unemployment rate of 5.2%. There are many factors involved, such as a shrinking labor force, but weekly wages have been increasing. From September 2020 to September 2021, New Jersey workers saw their wages increase by 4.1%.

In fact, both men and women in NJ now earn more than the national average. With historically low interest rates, it’s understandable that many have wanted to break into the property market. And because property prices have been skyrocketing, many investors have been trying to get into the market any way they can. 

NJ transactions

But because high unemployment usually correlates to higher crime rates—and a smaller pool of potential homebuyers—deciding where to buy investment property in New Jersey requires that you consider your exit strategy in relation to the viability of local economies. Increasing prices might not matter if the property buyers aren’t qualified.

New Jersey’s Property Tax Rates

Currently, New Jersey has the highest effective property tax rate in the country at 2.49%. Even more, some of the most populous counties, like Bergen, have the highest volume of homes with property taxes above the new $10,000 deduction cap, notes ATTOM Data Solutions

Homeowners who already feel the pinch of paying high taxes may feel the extra burden as well, especially with rising inflation. With the cost of living in New Jersey being more expensive than most of the country, homeowners in some counties may find it difficult to maintain their properties and pay mortgages if they have to account for higher taxes too.

Median Property Taxes by County 

Atlantic $4,536
Bergen $8,489
Burlington $5,567
Camden $5,587
Cape May $3,763
Cumberland $3,744
Essex $8,117
Gloucester $5,376
Hudson $6,426
Hunterdon $8,523
Mercer $6,245
Middlesex $6,258
Monmouth $6,917
Morris $7,707
Ocean $4,325
Passaic $7,544
Salem $4,352
Somerset $7,801
Sussex $6,111
Union $7,443
Warren $5,907

Source

Home Prices Continue to Increase Despite Foreclosures

Unfortunately for homeowners, this increased financial strain is already hitting home—and hard. Although foreclosure activity has recently dropped, New Jersey is countering the trend. According to ATTOM’s 2021 U.S. Foreclosure Marketing Report, New Jersey remains one of the five states with the highest foreclosure rates. 

That means the number of homeowners who can’t meet their mortgage payments is on the rise. If you have a way to approach these distressed homeowners before they’re foreclosed on, you have the opportunity to buy and renovate a property cheaply and see potentially good returns when you sell.

Despite what might seem like a bleak forecast for New Jersey’s housing market when considering the uptick in foreclosure activity, home prices statewide continue to increase, according to the U.S. Federal Housing Finance Agency. High and rising home prices typically indicate increased demand, and that’s what we’re seeing in many areas. Jersey City, Haddon Heights, Sea Isle City, Newark, and Hoboken are just a handful of communities where homeowner interest and median home sales prices are expected to increase in the coming year.

Flipping houses in NJ does have the potential to produce good returns and could even help you get your real estate investing career started. But to excel at it, you have to do more than focus on the best towns to buy investment properties. You have to find good leads on undervalued homes regardless of where you are. 

Investing in real estate anywhere is hard work. Still, provided your expectations are in line with the realities of the job, flipping houses is good business—and that includes New Jersey. And aligning yourself with a supportive team from an established brand that helps you generate quality leads is a great way to establish yourself.

The Best Places To Flip Houses in New Jersey

What are the best places to buy investment property in New Jersey? As always, location matters. 

  • Asbury Park. Who doesn’t want to live in a beachfront city? Asbury Park’s home values have been steadily on the rise for some time, but there’s still variance in the market. You can find little brick starter homes for $200k as readily as you can find $1,000,000 mini-mansions. That means homes have a lot of room to grow.
  • Bayonne. Bayonne property values experienced quite a jump in 2021. This South Jersey neighborhood is being extensively developed, leading to additional transportation, amenities, and job and business growth.
  • Summit. A high-end market located close to New York City, Summit can be a gamble. You may need to sink a substantial investment into a property here, but it can be worthwhile. Summit properties frequently exceed $1 million and historically move very quickly.
  • Weehawken. Weehawken homeowners experienced an extraordinary tax cut back in 2018. While that means fewer distressed properties, it also means that a buyer’s dollar goes further—making the area more desirable for cost-conscious purchasers.

And, of course, you need to know your market. Flipping houses in South Jersey will be different from flipping houses up north; the market and buyers are different in each. 

How To Find Houses To Flip in NJ

So, you know where you want to start investing, but how do you actually find properties to purchase in New Jersey? Here’s a quick breakdown of where to look:

  • Distressed properties. As mentioned, New Jersey has one of the highest foreclosure rates in the country. You can start by finding the owners of distressed properties. Software tools can help you sift through tax records and deeds, title searches, and upcoming foreclosures. But it can take time to find the right property—you have to do a lot of detective work.
  • Auctions. Properties that have already been foreclosed on will frequently come to auction. You can snag some great deals at an auction, but you need to have actual cash in hand. If you can’t close by the end of the day, you will walk away empty-handed.
  • Lead lists. When you’re first starting out, you may be encouraged to purchase lead lists. Lead lists are third-party lists of homeowners who may be interested in selling their properties. These people usually own properties in your zip code. While this can lead to leads, it requires a lot of calling and a hefty amount of fortitude.
  • Word of mouth. Once you’ve done enough marketing and built your brand, leads start coming directly to you. People want to deal with someone personable and trustworthy, often willing to cut them a deal too.

Once a property has come to the open market in New Jersey, it’s probably not a good lead. You’ll be competing with private buyers, e-buyers, wholesaling companies, and investment companies. Your ultimate goal should be to snag a great property before anyone else even knows about it. 

The Best Houses To Flip in New Jersey 

The ideal house to flip in New Jersey is the house you know you can flip. Don’t pay too much for a property, don’t invest too much in the flip, and don’t try to sell the house for more than is reasonable.

The New Jersey market is moving quite fast, with housing values increasing steadily over the last few years. But that doesn’t mean every property is ideal to flip. Find the right neighborhoods and get to know more about them. Flipping a condo in Asbury Park is more likely to yield good results than trying to flip a mansion in Trenton. 

A property that’s been recently flooded and requires major structural problems may ultimately end up being too expensive, but you need to crunch the numbers to be sure. Meanwhile, a property that requires just a few cosmetic updates may already be priced pretty close to its market price, especially within a hot market.

Identifying a good house to flip takes training and experience. Working with a mentor or networking with other real estate professionals will give you a better understanding of which properties are great to flip and which could leave you in the red.

Flipping Houses in North Jersey vs South Jersey 

North Jersey is typified by high-value properties and higher property tax rates. Its close proximity to NYC means a lot of people are making the commute. It’s an expensive place to live, but there are great schools, excellent suburban developments, and larger properties. Median prices in Passaic County have risen to $450,000 as of 2021.

Meanwhile, South Jersey is significantly more affordable. There may be slightly fewer amenities and smaller homes, but there’s also less traffic. Many people who love South Jersey cite its down-home charm and less NYC-influenced hustle and bustle. Camden County’s median prices have risen to $251,000 alongside Gloucester County’s $274,000—but these prices are still much lower than North Jersey.

In some South Jersey counties, prices have surged by 20%. This strong property market indicates a lot of house flipping growth potential. At the same time, many North Jersey markets have also surged by 15% over the last year alone.

Those who are just starting out in the world of house flipping may find themselves priced out of North Jersey quite fast. But South Jersey offers more opportunities for affordable properties and it’s perfect for beginners.

Meanwhile, those who would rather try a “big flip” of a million-dollar property may find themselves drawn to the North Jersey market.

Set Yourself Up To Start Flipping Houses in NJ

By becoming a HomeVestors® franchisee years ago, I knew I made the right move.

As a franchisee, I don’t have to run around town trying to find undervalued houses to buy and renovate. Instead, motivated sellers of distressed homes in Jersey City find me. They’ve either seen one of the nationally-recognized “We Buy Ugly Houses®” billboards, watched a HomeVestors commercial, or heard an ad on the radio. 

Sure, generating quality local leads on distressed properties is easier now, but so is getting valuable support when I have questions about the market or need recommendations for what’s trending with homebuyers. That’s because, in addition to having access to proprietary marketing tools and resources that have helped me build my business, I have a network of other HomeVestors® franchisees and a Development Agent mentor whose combined expertise and advice help me stay in business. And no matter where you choose to invest in New Jersey, as a HomeVestors® franchisee, you can have the same.

Set yourself up as an investor the smart way. Contact HomeVestors to discuss if flipping houses in NJ is the right move for you! 

Each franchise office is independently owned and operated.

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