Investing in New Jersey….What??!!
December 11th, 2008Yes, I know.. I will be fortunate if more than 20% of the people that see the topic headline actually clicks to read this article. But hear me out. In conjunction with our business in Mississippi and Florida, I have diversified my business plan back to my home state of New Jersey, specifically the New York City metro markets, both urban and suburbs.
For the most part, a lot of New Jersey Real Estate maintained decent values thus far. Of course, being the neighbor to NYC, the financial hub of the world spurns job growth. Yes and no, depending on the industry. Unless you have a lot of experience on Wall Street, don’t expect to come into investment banking. Many other sectors are very strong, especially healthcare and education.
In January 2005 a 2 family home in Clifton, NJ, a nice suburban town 11 miles west of New York City sold for $489,000 and had rental income of $2,400 total. In fact, over 150 2 family homes were purchased in the same area for round about the same price. Today we are picking them up for under $300,000 from banks and short sales. Rental income on this same building is $2,600, and the potential for growth in Clifton, due to it’s possible high school expansion and proximity to the city, public transportation, and corporate headquarter locations, Clifton may be a nice area to buy multi-family.
For homeowners, My most recent client is a 28 year old school teacher. She lived with her parents since college and has been on a salary for over 5 years of $42,000 which escalated to $49,000. She has saved quite a bit of money and is ready to but a “deal.” Instead of going for a condo or single family home, she was adament about buying one of these 2 family homes. We just contracted for a semi-updated 2 family home in a great neighborhood for $280,000. Tenant is paying on one side $1,250 per month in a 2 bedroom 2 bath unit with finished attic. The downstairs unit, a 2 bedroom 1 bath and finished basement is vacant, perfect for my client to live in. Using FHA financing which requires 3% down payment, her total monthly payment including taxes/insurance came to $2,040. My client now owns a 2 family home in a great area and less than 5 minutes to her job for $790 per month, approximately one week of pay from teaching.
The reason I told my story on the teacher is that right now is an unprecedented time with low interest rates and very low housing prices. It’s the best buyers market we will likely ever see. People like my school teacher are in the driver seat to start their foundation in building wealth thru real estate, even if she doesn’t seem to think that way. She just wants a home and worry about the future value later. I think she will be surprised in 10 years when she will be 38 and have enough money saved and equity gained to have available investment options that I will try to get her to look at.


