Top 5 Counties to buy residential investment property in New Jersey
You’ve finally decided you want to be a real estate investor. Or, you’re a seasoned investor and now you’re looking for new territories to help expand your business. . Either way, it leaves you with the question: Where to invest next?
The question can be staggering and can sometimes put a delay on action – which is the root of the success. Here’s the top five counties to invest in to help you narrow down your next residential target area.
- Essex County
Despite popular belief, Essex county is at the bottom of this list. When looking at multifamily units, investors flock to cities like Newark, Irvington, East Orange, and Orange which are currently prime areas for finding multifamily units. With the exception of East Orange, the remaining cities also provide a more tax-friendly environment to keep monthly expenses low. Location next to the New Jersey Transit Mid-town Direct train is extremely valuable attracting commuter traffic as tenants. While Multifamily units are popular in these particular towns, stepping outside these cities such as Maplewood, South Orange, Montclair, Glen Ridge, or West Caldwell where taxes are usually higher can cause a damper on potential cash flow. Not to say there aren’t investment opportunities, however, don’t expect to find a plethora of inventory for sale that also offer low taxes on a monthly basis. You’re more likely to find single family rental properties or even flip opportunities in other cities. All in all, Essex county offers a ton of investment opportunity in regards to foreclosed homes considering 1 out of every 578 homes are foreclosed on which puts Essex County near the top of counties with the highest foreclosure rate.
- Bergen County
With nearly a million people living in the county alone, cities like Edgewater, Cliffside Park, Leonia, and Fort Lee offer direct access to the George Washington Bridge, giving commuters a straight shot into Manhattan and the Bronx. In fact, the proximity to New York offers various modes of transportation for those living in Central and East Bergen county. It also helps that Bergen County has a tenant market that is just about even with the homeowner market according to the 2015 US Census. When it comes to finding the deal, that might be a little harder than one would expect. These 4 cities alone have an average foreclosure rate of 1 out of every 1288 homes which means an extremely low foreclosure inventory for sale. Again, not to say that finding a great is not possible, but it’s going to take a bit more elbow grease. Jut know that once you do find that deal, it’s going to be extremely rewarding.
- Hudson County
A NY commuter’s paradise of cities to choose from that offer the “city like” feel unlike no other county in NJ. Jersey City, with its historic NJ/NY PATH train, ranks as the top city in Hudson County to invest in. Hoboken is right behind Jersey City as they compete for top dog. Step foot into this county and you’ll notice all the luxury rentals, residential multifamily units, and commercial multifamily properties that spread throughout the cities. I’m actually working with an investor who has a 10 unit apartment building in Union City that is currently beginning it’s renovation phase and should be ready by the summer of next year. Harrison has also seen some major development over the past few years and I expect it to continue. Although East Newark and Kearny aren’t directly next to the train line, you can find a good deal of residential multi-family units to help you meet your investment goals. As you can expect from “Little New York,” Hudson County is definitely not cheap and Hudson County actually has the 2nd lowest foreclosure rate in the state, 1 out of every 1218 homes, behind Cape May County. You’ll be better off finding deal via other methods other than the foreclosure market in Hudson County.
- Union County
With a median investment sales price of $171k, Union county offers bargain prices and inventory to choose from when making your investment decision. The city of Elizabeth is the headliner when it comes to multifamily investments with a good mix of 2-4 units properties that have favorable taxes which put the positive cash flow odds in your favor. While I’ve seen investors have success flipping in the cities of Plainfield, Hillside, and Roselle, definitely understand that homes in these areas are not selling off the market in 4 days for a price above asking every day. Flippers understand this and are sure to price their homes competitively – if not, their flips can sit on the market more than the investor would like to and as a result, incur more holding costs than originally budgeted. Union township in Union County is a city that investors flock to for investment opportunities. With an average home price of 275k, investors see this particular city along with others as lower risk territories compared to flipping in the more affluent cities of Union County like Springfield, Westfield, and Summit to name a few. Union County is right behind Essex County with a foreclosure rate of 1 out of 764 homes.
- Middlesex County
With a foreclosure rate of 1 out of every 1118 homes, median home sale price of 328k, and median rent price of $1,300 , Middlesex county offers the best of both words when it comes to risk and ROI. Inventory of multifamily homes are more on the scarcer side with rental homes attributed for about 35% of housing population. If you are able to purchase a rental property, it’s safe to say that a tenant should not be hard to find at all, especially in the city of New Brunswick which leads the rental market – ever heard of Rutgers University?
The best investors know their market inside and out. It doesn’t necessarily have to be a market where they live at although it may be easier to get started in an area that you live in considering you would know it well. Diversification can be helpful in order to keep your deal opportunities coming through the pipeline. Where does YOUR city rank?!