Watching Jersey City become one of the hot spots for investing in New Jersey real estate over the years has made me proud. After the housing crisis, I took a bet on the area and started buying, rehabbing, and selling property there on the side. It was a calculated risk and it paid off. It wasn’t long before my part-time job became 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 returns. After all, they don’t always make the news as one of the best places to invest. So, to satisfy my curiosity—and yours—I did a little research.
The Market for Flipping Distressed Houses in NJ
What I discovered was that successfully buying, renovating, and selling houses in New Jersey looks like a mixed bag. In the ten years since the housing crisis, the Garden State, overall, has bounced back economically, but not at the same speed as other states or to the same degree. And, recovery isn’t being felt evenly across the board. So, whereas real estate investing opportunities in Jersey City are going strong, properties bought and rehabbed in Atlantic City may only provide weak returns—at least, for now.
Part of the reason for the disparity is the difference in statewide unemployment rates and wages. Unemployment across New Jersey has held at about 4.7% over the last six months, which is only slightly above the national average, according to the Bureau of Labor Statistics. But, the number of discouraged workers has dropped and median weekly earnings have risen. In fact, in New Jersey, both men and women now earn more than the national average. But, upon closer inspection, the numbers vary from city to city. In Jersey City, for example, unemployment is down from last year and closer to the national average. Atlantic City, however, is at 7.5%. 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.
It’s also important to note that recent changes to the federal tax code, which will cut allowable tax deductions, and increase in local property taxes could also create an uneven impact across the state. Currently, New Jersey has the highest effective property tax rate in the country and it’s recently gone up again. 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. So, homeowners there who already feel the pinch of paying high taxes can expect to get punched with an even higher tax bill next year. With the cost of living in New Jersey being more expensive than most of the country, homeowners in some counties may find it becomes harder to maintain their properties and pay their mortgages if they have to account for higher taxes too.
Unfortunately for homeowners, the increased financial strain is already hitting home—and hard. Though foreclosure activity dropped to a 12-year low nationwide, with foreclosure starts at a record low overall, New Jersey is countering the trend, according to ATTOM’s Year-end U.S. Foreclosure Market Report. Not only are bank repossessions at an 11-year high—up by 19%—the Garden State had the highest foreclosure rate of any other state in 2017. And, some cities, like Atlantic City and Trenton, posted the highest foreclosure rates of any U.S. city. So, 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.
But, 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.
So, flipping houses in New Jersey does have the potential to produce good returns and could even help you get your real estate investing career started. But, to really succeed at flipping houses, you have to do more than focus on where the best towns to buy investment property are. You have to find good leads on undervalued homes no matter where you are. Of course, with the right real estate lead generation system in place, that should be easy.
That said, investing in real estate anywhere is hard work. Still, provided your expectations are in line with the realities of the job, flipping houses is a good business to build—even in New Jersey. And, aligning yourself with a supportive team from an established brand that helps you get the leads is a great way to set yourself up for success.
Set Yourself Up to Successfully Start Flipping Houses in NJ
By becoming an independently owned and operated HomeVestors® franchisee, I set myself up for success as an investor years ago. For example, as a franchisee, I don’t have to run around town trying to find undervalued houses to buy and renovate—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. So, getting local leads on distressed properties is easy. 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 marketing tools and resources that have helped me build my business, I have a network of other HomeVestors® franchisees 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.
So, set yourself up to succeed as an investor. Contact the “We Buy Ugly Houses®” team to discuss franchising opportunities in New Jersey today!
Each franchise office is independently owned and operated.