While reviewing some of the state’s real estate investment classes with my former colleague, Rich, he asked if he could expect the programs to suggest where to buy rental property in New Jersey for the coming year. I told him it was possible, but that it might ultimately depend on where he decided to pursue his training. He would generally be better off connecting with investors who like to keep their fingers on the pulse of the real estate market, like me. This inevitably led to a conversation about areas around the state where investment property holds the most promise, too.
Where to Buy New Jersey Rental Property in the Coming Year
The high cost of owning a home throughout New Jersey, which is fueled in part by how much homeowners are taxed, prevents many residents from comfortably affording a home anywhere in the state. In fact, 10 of the top 20 cities with the highest number of renters are in New Jersey. In some communities, like Union City and West New York, that percentage reaches close to 80%. And, this phenomenon isn’t anything new. New Jersey has been full of renter cities for over a decade.
It’s not just that New Jersey is home to the highest property tax rate in the nation that encourages more people to rent than buy in many areas. The Garden State also attracts New York-based professionals who can’t afford to buy or rent in the Big Apple and, therefore, choose to commute in from cities across the state line, like Newark and Jersey City. And, because they may have no intention of working or living in the area long-term, buying a home in either state likely doesn’t seem like a financially prudent choice to make.
So, provided you have a way to find undervalued New Jersey properties for sale, whether they’re multi-family units or single-family homes, it’s possible to both meet the steady demand for rental units and generate a good passive income from investing in them. As for where you should look to find the potentially best returns, here are the cities that top my list:
- Newark. Just over a year ago, ATTOM Data Solutions ranked Newark as one of the top 25 markets showing significant single-family residence (SFR) rental growth. With crime on the decline, local job opportunities on the rise, and easy commuter access into Manhattan, it was easy to see why. And, though average apartment rents decreased slightly from October of 2017 to October of 2018, that change likely reflects the increase in development in new units at that time, which has since slowed—especially in the multi-family sector. Even so, with its relative affordability as a rental community and nearness to New York, overall demand among renters has remained steady. Since Newark is the most populated city in the state, I expect that demand—and investor interest—to hold in 2019.
- Weehawken. What’s great about Weehawken, other than its proximity to the river and New York City beyond it, is the low cost to buy and rent compared to nearby hotspots like Jersey City and Hoboken—though, that’s not sure to last. But, for the time being at least, Weehawken provides a potentially easy entry point for purchasing SFRs to hold as rentals for investors who want to try their hand at being a landlord in New Jersey. Then, as more homebuyers spill over from the town’s pricier neighbors and help to drive median home sales prices further north, your opportunities to sell your investment for even greater returns should also go up. In the meantime, the cap rates aren’t bad—and, neither are some of the views.
- East Orange. Another east side city with a high population of renters, East Orange also boasts a low vacancy rate relative to other large New Jersey towns—less than 20%, in fact. Additionally, unemployment has dropped in the area as well as property crime and the number of families living in poverty. On the other hand, the median household income is up, though not enough to increase the number of people who can afford to buy a home. That has, in turn, probably helped the jump in median rent that the city is seeing. Not yet on the media’s up-and-coming neighborhood list, or on every investor’s radar, this underdog town that is often overlooked may be worth looking into. After all, if you can buy low enough and take advantage of rising rents, your returns could put you in the green.
Since local real estate markets can shift and affect where—and when—you should buy, renovate, and sell your investment property or keep it as a rental, knowing where to invest in the coming year isn’t all there is to becoming a successful investor. It takes a lot of hard work, dedication, and expertise, too. It also takes an ongoing source of investment property leads with good rates of conversion. Luckily, the place you can best learn to become an expert is also where you’ll find a great source of leads.
Where to Find Qualified New Jersey Leads
Having worked with him for years, I knew enough about Rich’s personality to correctly suspect that he’d make a successful independently owned and operated HomeVestors® franchisee, like me. He’s a man of integrity and he works hard at whatever he does. Provided he’s got access to all the tools and resources he needs, the man can be unstoppable in his pursuit of success. And, because he—and all of us here at HomeVestors—get qualified leads from motivated home sellers because of the “We Buy Ugly Houses®” national ad campaign, he’s now added promising real estate investor to his list of accomplishments.
Learn how to put your finger on the pulse of New Jersey real estate investment trends by picking up the phone to call HomeVestors and becoming a franchisee. You’ll get the training and the qualified leads you need to pursue success.
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