The Best Places to Buy Investment Property in New Jersey for 2018
My first glimpse of the ocean took place a few decades ago in Spring Lake, New Jersey, a tiny seaside town between the more notable Asbury Park and Point Pleasant. My elderly aunt had a summer home there. When my uncle wanted some company on her return ride from our neighborhood in Northeastern Pennsylvania, I jumped in the car without hesitation. After an eternity in my Uncle Jim’s Lincoln, briefly viewing the waves and whitecaps exhilarated me. Long before GPS and having no desire to consult a map, I had no clue how we got there or where I was but that’s immaterial. The memory, featuring salt air thick enough to chew on, is indelibly burned in my brain.
Years later, when I began my real estate investment pursuit in New Jersey, I knew I had to get a better feel for my whereabouts. I couldn’t simply plop down significant dollars on homes in the Garden State before performing my due diligence. Starting my venture in Pennsylvania, I didn’t ignore the prospects for return on investment east of my hometown. I noticed how the best places to buy investment property in New Jersey sprung from New York City demand spillover and the allure of beach properties. My legwork revealed that buying opportunities existed beyond the Piedmont and Atlantic Coastal Plain, two of the four Jersey regions where landforms and geology differ as you move between them.
Buying Investment Property in New Jersey: Where Are the Best Places?
My research on where to buy investment properties in New Jersey properties led me to towns in addition to the ones that had geographic kinships with the Big Apple and the City of Brotherly Love. The Ridge and Valley region in the northwest shares borders with Pennsylvania and New York in the Tristate area, and the Highlands offers more mountains and valleys that present interesting possibilities, also. Since that first trip to the Jersey Shore, I’ve been scouting home buying deals all over the state’s four regions. Let me share what I’ve discovered.
I like underdogs and prospects that fly under the radar. While no town with a short commute to Manhattan totally fits that description, Hoboken and Jersey City seem to be on everyone’s list of established stars. Consequently, as rising property values continue to price buyers out of the market in those two cities, demand has increasingly been finding its way to Weehawken. The median list price in the cliffside town is significantly below neighboring Hoboken. In addition, cap rates in Weehawken hold a slight edge over Hoboken as well.
It appears that buy-and-hold investors could benefit from another trend in Weehawken. A recent property tax revaluation was performed in a town that already held the highest property tax rates in Hudson County. The reassessment resulted from a lawsuit won by recently established residents. The filing held that property tax bills created a marked inequity between new homes on the waterfront and older dwellings whose valuations sat at less-than-market levels for the past 23 years. The tax map changes could cause some distress for homeowners who teeter on the brink of affordability. As a result, more sellers will come to market, and determined investors could snap up good deals from owners pressured to exit Weehawken quickly.
If Weehawken is winning to the north of Jersey City and Hoboken, Bayonne appears to be gaining favor to the south. Property values have increased steadily since 2012 and brokers, realtors, and current residents sense a sea change in a town that is beginning to attract new renters and buyers looking for value. Their optimism stems in large part from a wave of new projects—both residential and commercial—in the last stop along the Gold Coast. Couple new development with single-family home values that fetch about half the price of Jersey City units and the potential for growth beckons investors.
One recognizable piece of advice in almost all financially motivated transactions is to follow the money. Median home sales prices in Bayonne grew from about $248,000 in 2012 to $283,000 through July of 2017. While individual buyers help tilt the arrow upward, the more pronounced swings might be propelled by about 4,000 new housing units completed within the next six years. Part of that new construction initiative includes a revival of the city’s Military Ocean Terminal that had been mothballed since 1999. City officials also eye the possibility of ferry service between that peninsula, Staten Island, and Manhattan. This area looks set to spike.
Buying homes in a town that seemingly has it all is typically a good bet. The aptly named Summit, New Jersey offers tree-lined neighborhoods, excellent schools, and steadily rising property values. Oh, and if you’re a fan (who isn’t?), it’s also the birthplace of Meryl Streep. Summit public schools rank toward the top of the heap and there are an additional 18 private educational institutions that accommodate students from K-12. A stone’s throw by train or car from New York City, Summit also sits about 10 minutes from the Newark International Airport.
Finding a good real estate deal in Summit might be a bit difficult but definitely worthwhile, as the market, like most others close to the Big Apple, demands premium prices. More than half the homes listed for sale top $1 million in value, which turns out to hover right around the median. Investors could benefit from motivated sellers whose mortgage interest deductions have now been capped at debt levels of $750,000 and below for 2018. While no real estate investment is a sure thing, purchasing homes in a high-end market such as Summit leans more toward safe than speculative.
In the 141-mile stretch of the Jersey Shore region, few communities hold the allure of Stone Harbor. Situated just north of Cape May—one of the nation’s priciest beach locales—this seaside town leans more toward the sleepy, residential category than the bustling boardwalk havens of Ocean City or Wildwood. Prices range from the high $200s for a small one-bedroom bungalow to $10 million for a four-bedroom, four-bath, upscale beachfront property. Strong demand always exists for coastal homes and luxury home investors might see increased supply in the wake of the Tax Cuts and Jobs Act of 2018.
Somewhat to the chagrin of certain real estate industry professionals, the new tax legislation signed into law in December 2017 could create a significant buying opportunity on properties valued at $750,000 or greater. The new law limits to $10,000 the amount of state and local property tax that can be deducted from taxable income. Since the median home value in Stone Harbor rings in at over $1 million, many homeowners who depend on that deduction to help defray the cost of ownership may be looking to sell. Furthermore, analysts expect luxury home values nationwide to slip by about 10% and that dip could mean a boon for buy-and-hold investors.
There is indeed a duality in the coastal New Jersey real estate market, especially as the compass points north. While the pricier markets trend toward the southern tip, better bargains can be found about 100 miles north in the storied town of Asbury Park. Anchored by revitalized attractions such as Asbury Lanes, the town made famous by Bruce Springsteen has seen an influx of twenty-somethings and young professionals who are digging the scene once again. Along with the iconic music venue, 1101 Ocean Ave.—a luxury 16-floor residential space adjoined by a boutique hotel—is expected to be completed in 2019.
Million-dollar units on the way symbolize the resurgence of a town that had once been the sullied sibling of the rest of the Jersey Shore hamlets. With a project aimed at New York money, investors would be wise to take notice. Median home prices surpassed the lows seen after the financial crisis of 2009 and double-digit growth was posted for the annual period from mid-2016 through mid-2017. The difference between Asbury Park and its Cape May County cousins? About $800,000 in median home value. Buy-and-hold investors seeking more affordable beach options might want to get in on the action before the getting actually gets too good.
One individual’s loss is often another person’s gain. Such is the case with the foreclosure rate in New Jersey. Filings in the state actually decreased overall in 2017, but the Garden State still held the highest foreclosure rate in the nation. Nowhere was this phenomenon more evident than in Camden County, where 2,329 homes were listed for tax sale but the region’s total activity declined about 11% in the past calendar year. Southern New Jersey median home prices sit well below the counties in the north that classify as New York City suburbs by nature of their proximity to the Big Apple. Some of the Philadelphia metro areas such as Cherry Hill could spell bargains for investors.
Cherry Hill stands out as a viable alternative for buyers and renters who work in Philly but continually get squeezed out of Center City and suburbs along the Main Line. Pricey single homes east of downtown and whopping Center City rents have families and single professionals scrambling for more affordable options. Cheaper housing options and quick access—a 20-minute commute by car—present appealing options for people who desire big-city attractions and a small-town lifestyle. The glut of foreclosures in Camden County have kept home values in Cherry Hill relatively stable and with buyers fleeing across the Delaware River, prices could very well see steady growth with all else remaining equal.
In the northwest corner of New Jersey, natives mix with transplants—careerists and retirees—from the five boroughs of New York City who desire a more serene pace of life than the constant urban grind. Bedroom communities have been established in areas along the Delaware River on the Jersey and Pennsylvania sides of the border. Many of these former New Yorkers trade off shorter trips to work for single-family spreads on ample wooded lots in gated communities and lakefront developments. The Sparta area has 22 lakes and the lure of affordable, rural living on big city wages helps commuters tolerate the unpredictable 94-mile round trip. For those folks that avoid driving, NJ Transit trains and private bus lines provide continuous service to Port Authority.
Higher property taxes have accompanied the flow of residents from New York City and eastern New Jersey. While property values have been on the rise, they haven’t come close to levels seen in Bergen and Monmouth Counties. Median list prices in Sparta are about half of what you’d find an hour southeast but the growing infrastructure and school systems have posed residents with tax bills that weren’t initially packed into their budgets. Consequently, affordability issues have forced many homeowners to seek quick sales and a number of undervalued lakefront fixer-uppers and single-family homes can be had at bargain prices.
When I began to branch my real estate portfolio out of state, I needed more guidance than my own instincts could command. After all, I was venturing into relatively foreign territory and, even though I had investing experience, there was still a lot to learn. That’s why I decided to become an independently owned and operated HomeVestors® franchisee. I leveraged the expertise of my seasoned Development Agent who was as eager to share his vast experience in real estate investment as I was to learn.
Contact HomeVestors® today to see how you can form the same powerful relationship.
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