Some places are easier to be from, than live in. Sadly, New Jersey has gotten that rap for a long time. In the 1970’s parts of New Jersey had serious crime problems and suffered with riots, with many deteriorated areas of towns growing worse. We all stood by and were stunned at the tremendous damage done during Hurricane Sandy in 2012 to much of the state. New Jersey is resilient, though, and has fought a good battle to clean up, come back, and is up and recovering well. Let’s talk about investing in real estate in New Jersey’s rebirth.
- Things are a little different in New Jersey, and have been for a long time
- New Jersey in a major industrial player even now
- There is a reason New Jersey tags read “The Garden State”
- New Jersey is part of the New York shadow, but holds its own
- New Jersey has worked hard to fix its woes
- Taxes in New Jersey – Ouch!
- What is pushing real estate investment in New Jersey?
- Why the shift from multi-family dwelling to rental property in New Jersey?
- Where to look for investment residential real estate in New Jersey
- Property tax reassessment will be the real estate wild card, and not a good one
- Can you make money doing short-term rentals?
- High taxes, going higher assessments, and 5% return – why not make better money?
Things are a little different in New Jersey, and have been for a long time
Originally the land of the Lenape, a Native American matrilineal tribe traced back at least 2,800 years, New Jersey was originally settled by the second wave of New World colonizers. It is interesting to note that it was from other colonies rather than Europe. This created an early culture of diverse ethnic backgrounds as well as varied religious beliefs. This pattern continues today in many parts of New Jersey, with more even mixes in many areas and a more tolerant attitude. A pivotal location during the Revolutionary War, General George Washington’s Continental Army spent several winters in New Jersey, and the famous painting of Washington Crossing the Delaware is from – you got it, New Jersey. New Jersey was also the first state to ratify the Bill of Rights, and the first to give property rights to women and blacks.
New Jersey in a major industrial player even now
New Jersey became a large industrial state with six main manufacturing cities during the 19thcentury. With close proximity and lying between New York, Boston, Washington DC and Philadelphia, New Jersey was strategically located and had good harbors and river access. It continues to be a mix of industry, suburbs, and agriculture/maritime industry. No Civil War battles were fought in NJ, but it is interesting to note that after sweat- shops became manufacturing norm, New Jersey refused to ratify the abolition of slavery. The first research center in the US was thought to be Thomas Edison’s Menlo Park facility. A major shipbuilding location, New Jersey built a massive amount of the armaments provided to US and Allied troops during WWII.
Not everything in New Jersey is city, either. Southern New Jersey has sandy pine forests and lower population density than many places in the east. You can find steep river cliffs, beautiful shores, cranberry bogs, and large swatches of agriculture in many areas of the state. The Garden State is a large agricultural, seafood and dairy producer helping feed the eastern seaboard. Blueberries, cranberries, asparagus, and many vegetable crops grow in the fertile soil. New Jersey also utilizes a great deal of nuclear energy for power, lowering their use of fossil fuels and the resulting carbon footprint.
With a subtropical humid climate, New Jersey still has some winter, but is more temperate due to proximity to ocean and all the bogs, marshes, and peats formed during its early days of glaciation. With its position on the Atlantic seaboard, though, New Jersey has seen increased hurricane events, such as the devastation of Floyd in 1999 and more so, Sandy in 2012.
New Jersey is part of the New York shadow, but holds its own
As part of the greater New York and Philadelphia statistical areas, Jerseyites tend to get treated like a bedroom community for both those cities and Washington, DC. While it is true a lot of folks work in those three towns, or surrounding areas including Annapolis, with nearly 3000 miles of highway and 12 commuter rail systems, it assures people can get to work and where they need to go both inside New Jersey and to the immediate surrounding states. New Jersey is also situated well for international trade, thanks to two of the busiest international airports in the nation, the third busiest port in the country, and over 1000 miles of freight rail line to move goods and services. The very diverse population supplies cross cultural talent, language ability, and understanding making international finance, technology, pharmaceutical companies and other multi-national concerns at home here.
New Jersey has worked hard to fix its woes
New Jersey has put a huge effort into urban revitalization, improving school systems, and controlling crime. Their hard work has paid off, as New Jersey now has 30 of the 100 safest cities in the U.S. according to the FBI. They also have the third lowest property crime level in the entire country after cracking down hard on criminals. This has led to population increases as people move back or to New Jersey finding prices more equitable for real estate than many surrounding areas. As the most densely populated state in the nation, it still faces challenges, though, especially in larger, older cities like Newark. Newark is the fourth poorest metropolitan area in the US, making efforts to improve challenging when tax dollars end up in the suburbs.
Taxes in New Jersey – Ouch!
As one of the most heavily populated states with one of the smallest footprints, Jersey (as the locals tend to call it) has the second highest per capita income in the nation. Due to income disparity, high valuations, and other issues, taxes take a bite out of budgets. Cumulative taxes in New Jersey are the highest in the nation. Even so, retail centers and malls are an increasing draw from New York especially, due to a substantially lower sales tax rate.
It is interesting to note that New Jersey is now the least dependent state in the Union on federal money overall, but also has the fourth lowest ROI for taxpayers on money paid out to the federal government. Part of this is due to wage disparity, and the high rates of Medicaid paid out at the state level. Since all real property is taxed, the tax structure needs to be taken in to account when you consider investing in real estate, especially rental property or flips, in New Jersey.
Taxes affect every business, but when you own a business like my lead gen business, you do not get such a big bite taken out. You do have to pay income tax, especially when you make the kind of money I do now, but I have it to pay, thanks to the 80-90% return on investment I make. Find out how I make it here https://www.bestrealestatedirectory.com/lead-gen/
What is pushing real estate investment in New Jersey?
Since the end of the recession and recovering from Sandy, New Jersey has seen a fairly steady upward movement in property values. There are a few things pushing this trend besides people moving in to take advantage of medical, manufacturing, and transportation jobs, or government work in surrounding states. One is that New Jersey, due to increasing valuations and the wage disparity, leads the nation in foreclosures. That fact has affected valuation in some areas. There is another factor, though, back to the tax issue. New Jersey is undergoing a statewide reassessment program on property values to adjust property taxes. It is expected that owners of distressed properties will not be able to keep their heads above water and pay the increases, and foreclosures and delinquent tax deeds will become increasingly available. More on this serious challenge later.
The international trade zones, numbering five, is another push on valuations. With a surge in international trade, values go up, and infrastructure needs are increased. Often those zones come with long-term reduction in corporate taxation to encourage companies to move to New Jersey. While great for revitalization, it places additional burden on the tax structures. The move of companies to locate to New Jersey, though, has increased employment and unemployment is now at a low 4.8%.
One of the big challenges in New Jersey real estate investment is finding a good parcel, as the supply of properties is low and demand is high due to local investors pushing to find investment property to repair and rent. Rental demand continues to increase, and less units are available. There is also a low rate of new development of any kind in residential property in the state, forcing the available supply into higher sales figures. Because of these factors, new buyers, solo buyers, tend to find themselves in heated bidding wars, often with local real estate scouts and investors already having an “in” or inside information to get their bid accepted first.
Why the shift from multi-family dwelling to rental property in New Jersey?
New Jersey, especially in major metropolitan areas, is heavily built around brownstones, walk-ups, and multi-floor housing due to the small area of the state. When the recession hit, many previously solvent long-time property owners found themselves with vacancies, increased tax base, and deterioration they could not afford to repair. Many multi-family units have come available for purchase and renovation, to be added to the rental pool.
And there are a lot more renters now, both from economic issues during the recession years and those displaced by Sandy near the shores. Even seven years later, many people are not settled or repaired due to the massive backlog of insurance issues, and insurance companies often force sales of damaged properties without repairing due to the high cost of doing so. The displaced, as well as the influx, have pushed the average rent in New Jersey to $1,900 a month for an average 2-bedroom flat, a figure many cannot afford.
Not sure about you, but if I have to pay $1,900 a month for a 2 bedroom flat, I want it in some place like Maui or a little seaside town in Mexico. The nice thing is, with my business, I can take it anywhere in the world I can get a signal for my laptop. I can be skiing in Colorado, surfing in Brazil, or hiking in a Dominican rain forest and be making money. I just got back from an extended trip to the Orient, and money flowed into my accounts every day from my lead gen business. Pretty nice for a 30 year old! Check out this link to learn how I became my own boss and can afford to live pretty much anywhere in the world I want now https://www.bestrealestatedirectory.com/lead-gen/
Where to look for investment residential real estate in New Jersey
Believe it or not, some of the best places to look if you are willing to deal with the bidding wars, short supply and taxes are the cities you would least think about – Hoboken, Garden City, and Newark. There has been a lot of revitalization and growth in all these towns, and Newark has the advantage of being across the bridge from New York, making it an ideal spot for rentals and commuters. Another advantage of living on that side of the bridge is New Jersey has an excellent public school system, and with the lowest crime figures in 50 years, Newark actually is not such a bad place to get work and move a family.
Residential real estate is expected to grow about 5% this year in New Jersey. This is an ok figure, but the new property tax assessment may off set a lot of it, since the average valuation is $327,500. Note that the median sale price is slightly over $274,000 – meaning homes do not sell for near listing price. Employment and business growth has tapered off a little which may let real estate settle some. The luxury housing market in most New Jersey boroughs appears to be satiated, so investors will be looking to derelict properties to renovate and flip for rentals. Overall, investing can work out as long as the economy holds. Foreclosures may offer the most opportunity, with the highest rates around Atlantic City.
Due to the small footprint and tight quarters, commercial property is a tough go in New Jersey. If you are expanding a local business or in a revitalized area, you might be able to find a good buy, but expect to pay a high per square foot for any commercial location that is accessible, safe, and can provide a return. Rental property is always an option, but much of the in-town, older area property is held by larger groups, families, trusts and estates. Larger parcels simply are too costly for most people to invest in and make a return, due to the increase in international commercial activity.
Property tax reassessment will be the real estate wild card, and not a good one
Overall, it is worth watching the property tax reassessment. New Jersey has not reassessed property taxes in over 30 years (you read that right), so most property is worth around +400% of the last assessed value. That is why many investors are speculating that many people will not be able to afford the new tax rates. This will be especially true in older neighborhoods and poorer areas of towns. It is going to take someone who has local knowledge to know what might turn up, and what rental rates will be, to make a good investment decision. Any way you look at it, though, New Jersey is not a place for cheap. Little property, even derelict, is available for under $200,000.
And if you are looking at renting, take into account location to commuter rail, schools, and management costs.
Can you make money doing short-term rentals?
On-line short-term rental was a viable option, until October 2018 when the New Jersey legislature passed a new tax. Now rental owners are not only required to pay income tax, sales tax of 5%, but also an additional hotel occupancy tax of 5%. This, combined with the fees to the online companies, cleaning costs, and other factors, have made it more difficult to make a tidy profit. The catch for the property owners is that these taxes must now be added to the short-term rental charge, and then remitted to the state. This has raised short-term rental fees considerably making them not nearly as attractive compared to standard hotel stays.
High taxes, going higher assessments, and 5% return – why not make better money?
One of the things I looked for when I started to hunt for a decent business was a good ROI – return on investment. I do not consider 5% – which does not allow for management fees, increased taxes, or slumps in the economy – a good return. I make 80-90% on all my lead generation properties. What I have is digital real estate, without the headaches and expenses of physical real estate. I got into this business after a long road. Let me share.
I used to have the corporate 50 hr/wk job for $35/k a year, which I got right out of college. I thought I was doing great, until I realized fast that it would not pay all the bills being on my own in a big city. I realized I had to find a second income, so I got into MLM’s. I had heard of them, they looked easy enough, and thought I could make something. Hah. I learned I had not heard the truth, they were not easy, and the only guys that make anything were those way above me. I spent a lot on memberships, classes, inventory, and made squat. So I kept looking, and decided drop shipping would be great. I made a little money, and was doing ok, but was working stupid hours, had no life, and had a ton of money tied up in inventory and supplies. I still was not making enough to really make any investments or save.
One thing I learned was to continue to read, study, and get more information. It was one of those nights of research I ran into an article online about a guy named Dan who had figured out how to build lead generation sites on the internet to help businesses get more clients and grow. Now that was interesting, as I knew most business owners were not very well versed in how to market their services. I did some digging and found out that the Dan guy seemed legitimate and had a good reputation, so I clicked on this link https://www.bestrealestatedirectory.com/lead-gen/ to get some more information.
Dan actually called me himself to share about what he was doing. I liked the fact he was close to my age, and was doing his own work. He had put together a set of training videos about how he was doing what he was doing, and offered a lot of information, facts and figures. The tuition was not bad, and I thought it might be something that I could do, and sure be easier than what I was doing, so I signed up. The first thing I did in about six hours was build this website.
I thought it was going to be really hard, but I found out it was pretty easy, actually. I followed the training and found a client for the site really fast. The customer was very happy to get the extra leads for work, and agreed to pay me $750/mo for renting him the results that came in. He is still with me, five years later. I have made over $36,400 on this site, and I never touch it hardly at all.
Back to the story, though, I kept on building new sites and learning, while keeping my job. It was some work, but I knew that anything I did that would get me ahead honestly would be work. In five months I was able to turn in my resignation from the corporate job and become my own boss full time.
Yeah, it was a little scary at first, but so is Newark at night. And it took some work. But the thrill of seeing my bank account grow, and becoming my own boss in charge of my own schedule, seeing my work pay off for me was absolutely great.
Five years after that first talk with Dan, I will make well into seven figures in my lead generation business this year. I never dreamed it would grow so big, and continues to grow. There is so much business out there, more than I can ever even put a scratch into of the list of who needs help and who is willing to pay for that help. It was not hard to learn how to do it, either, and you sure do not have to be a computer guru to do it.
How would you like to own a million dollar agency in five years, through what you can learn and do from the comfort of your own home? That is exactly what I did.
If you want more than 5% less taxes, click this link https://www.bestrealestatedirectory.com/lead-gen/
No one will pester you, put you on harassing sales call lists, or take it wrong if it is not for you. Not everyone wants to put in a little work for a lot of reward. Do you?
One of the nicest things I learned is I can run this business from anywhere. I have customers all over the world, and my office is my laptop bag. That and a carry on and I am set for Cabo for a week, or two…or more.
Trust me, Cabo is a lot nicer and less work than anyplace in New Jersey. So click the link and let me explain how to get there. I might have to call you back if I am out catching a wave or some sun or partying somewhere, though.