Best Places to Invest - NJ and PA

Best Places to Invest In Real Estate in New Jersey and Pennsylvania

by on March 12, 2020 2:40 pm under

Before we get into areas that are good to buy investment property in, lets first look at what exactly makes an area a good investment. What it comes down to is supply and demand.

What defines an area as being good for investment property?

Is there enough demand to justify an investment, so that a property is easy to sell or rent out? Is there a good balance of supply, so that there arent too many empty properties looking for someone to buy or move in? There are many factors that go into determining if the balance is right. Lets look at them, starting with the big picture factors.

Choosing the right area to invest in

One of the biggest factors is population growth. You want to know if people are moving into the area faster than theyre moving out of it. This will determine demand for properties. Its good to look both at the greater metropolitan area and the specific zip code and town, to get a complete picture of whats going on in the area.

If the metro area is rapidly expanding but a specific zip code isnt, that could be a sign that there will be growth in that zip code in the future as surrounding areas get too crowded and expensive.

Or the opposite scenario, where metro area population is going down and the zip code population is going up, could mean that the entire area could be moving into a downturn and the zip code is not far behind.

The next thing to look at is job growth, which goes hand-in-hand with population growth. Are companies adding more jobs? Also consider if there might be upcoming job growth for example, a big corporation could be planning on moving into that town, signifying a possible upcoming population boom. A business-friendly town or county (where the local government incentivizes companies to move into the area) is also a plus, as it can spur job growth in the future as well.

Its also important to make sure that the job market is diversified. If everyone in the area depends on one company or industry, the area could be in big trouble if that industry or company fails or moves out of town.

Also dig into median salary and unemployment rates in the area. Is the salary rising over time? Is unemployment low or dropping? You want a healthy area that will continue to prosper, with no sign of economic depression or slowdown. After you identify a few possible areas, its time to zoom in and look at smaller picture factors, that will affect how easy it is to sell the property.

Choosing the right neighborhood to invest in

The first factor to consider when looking at the smaller picture is what well call convenience. Basically, people value houses that are close to jobs and public transportation.

People also care a lot about walkability. Can they walk to public transportation? Can they walk to parks, restaurants, and shops? Are there sidewalks in the area? You can check the walkability of an area on walkscore.com.

Look for good neighborhoods that are desirable. How are the schools? Are there parks, local shops, restaurants, bars? Are there trees or views? Is it a safe area? What are the crime rates like?

Another thing to consider is that millennials are set to become the biggest group of home-buyers in 2020. The older end of the generation is approaching 40 and the bulk of the generation is in their early thirties, so theyre entering their prime buying years.

While they generally prefer to live in urban areas, many millennials will be looking towards the suburbs to find housing they can afford so theyll want their suburban neighborhoods to have the same perks as urban areas, like being able to walk to local shops, restaurants, bars, parks, and transportation. The younger generations also prefer smaller houses, perhaps a factor of watching the housing crisis unfold in 2008.

Also take note of HOAs they run the gamut from helpful to extremely frustrating organizations that can hinder your ability to renovate and sell your property. If the neighborhood youre looking at has an HOA, you need to do a lot of research into the rules and guidelines to make sure you dont create insurmountable problems later on.

If your goal is to flip the house, you want an area where home values are on the rise. You definitely dont want to pump a bunch of money into a property and then sell at a loss. But, you dont want to rely on appreciation. If it doesnt appreciate, which is a possibility, youll be underwater. Relying on appreciation is speculative. And speculation is not a good real estate strategy, no matter the situation.

Which brings us to our next point the 70% rule.

The 70% rule is that the maximum price you pay for a property should be 70% of after-repair value (ARV), minus repair costs. Say youre looking at a house that you can sell for $200,000 ARV. 70% of that is $140,000. Then, subtract the estimated costs of repair. Say they are $30,000. That means that the maximum you should pay for the property is $110,000.

The number one thing you should be looking for are undervalued properties and markets. Thats the easiest way to guarantee a good return on your investment. With that said, lets dig into some areas in New Jersey and Pennsylvania that could be good to invest in.

Best places to flip houses in New Jersey

According to Zillow, the state of New Jersey saw 1.8% growth in home values in 2019, and projects 3.7% growth in 2020. Unemployment rate is 3.5% as of January 2020, right on level with the national unemployment rate of 3.6%, which is a good sign.

Northern New Jersey benefits from its proximity to New York City, and home values are rising across the board. Safe to say that the area will continue to grow as people working in Manhattan look for more affordable housing within commute range of the city, and Millennials look to the suburbs for more space and better schools for their children.

Southern New Jersey benefits from its proximity to Philadelphia, which, while not as robust as the NYC area, is still showing year-over-year growth in both population and jobs.

Northern NJ

East Orange, NJ

  • Zillow home value: 14.7% growth in 2019, 7.6% projected in 2020
  • Median listing price: $259,950
  • Median sale price: $223,500
  • Average days on Zillow: 150

Elizabeth, NJ

  • Zillow home value: 10.2% growth in 2019, 4.9% projected in 2020
  • Median listing price: $309,500
  • Median sale price: $286,300
  • Average days on Zillow: 131

Irvington, NJ

  • Zillow home value: 19.9% growth in 2019, 8.1% projected in 2020
  • Average days on Zillow: 114

Jersey City, NJ

  • 32nd best market in US for 2020 on PwCs emerging trends 2020 report
  • Zillow home value: 3.2% growth in 2019, 4% projected in 2020
  • Median listing price: $599,000
  • Median sale price: $484,400
  • Average days on Zillow: 126

Newark, NJ

  • Zillow home value: 8.5% growth in 2019, 5.6% projected in 2020
  • Median listing price: $282,496
  • Median sale price: $232,500
  • Average days on Zillow: 135

New Brunswick, NJ

  • Zillow home value: 6.9% growth in 2019, 5.1% projected in 2020
  • Median listing price: $266,300

Paterson, NJ

  • Zillow home value: 11.7% growth in 2019, 6.1% projected in 2020
  • Median listing price: $269,900
  • Median sale price: $264,800
  • Average days on Zillow: 137

Southern NJ

Cherry Hill, NJ

  • Zillow home value: 3.3% growth in 2019, 3.9% projected in 2020
  • Median listing price: $275,000
  • Median sale price: $257,800
  • Average days on Zillow: 109

Gloucester City, NJ

  • Zillow home value: 6.9% growth in 2019, 5.9% projected in 2020
  • Median listing price: $103,200
  • Average days on Zillow: 119

Gloucester County, NJ

  • Zillow home value: 3.6% growth in 2019, 4.2% projected in 2020
  • Median listing price: $198,900
  • Median sale price: $190,800
  • Average days on Zillow: 107

Monmouth County, NJ

  • Zillow home value: 0.4% growth in 2019, 3.2% projected in 2020
  • Median listing price: $489,900
  • Median sale price: $401,300
  • Average days on Zillow: 116

Best places to flip houses in Pennsylvania

Zillow reports a 4% growth in home values in 2019, projecting 4% growth in 2020. The unemployment rate is 4.7% as of January 2020, about a percentage point higher than the national rate.

Youll notice that there arent very many areas in Western Pennsylvania on this list. Thats because Eastern Pennsylvania is currently growing much faster than the western part of the state. Western PA is suffering from a lot of the same issues as the Midwest in general.

Western PA

Pittsburgh, PA

  • 38th best market in US for 2020 on PwCs emerging trends 2020 report
  • Zillow home value: 5.2% growth in 2019, 4.6% projected in 2020
  • Median listing price: $224,900
  • Median sale price: $185,900
  • Average days on Zillow: 80

Erie, PA

  • Zillow home value: 4.3% growth in 2019, 4.6% projected in 2020
  • Median listing price: $89,900
  • Median sale price: $82,800
  • Average days on Zillow: 90

Eastern PA

Philadelphia, PA

  • 25th best market in US for 2020 on PwCs emerging trends 2020 report
  • Zillow home value: 5.3% growth in 2019, 4.1% projected in 2020
  • Median listing price: $234,900
  • Median sale price: $176,200
  • Average days on Zillow: 84

King of Prussia, PA

  • Zillow home value: 4.2% growth in 2019, 5% projected in 2020
  • Median listing price: $375,000
  • Median sale price: $357,500
  • Average days on Zillow: 60

Scranton, PA

  • Zillow home value: 3.5% growth in 2019, 4.4% projected in 2020
  • Median listing price: $98,250

Allentown, PA

  • Zillow home value: 5.4% growth in 2019, 4.9% projected in 2020
  • Median listing price: $144,200
  • Median sale price: $131,300
  • Average days on Zillow: 74

Bethlehem, PA

  • Zillow home value: 3.5% growth in 2019, 4.1% projected in 2020
  • Median listing price: $235,900
  • Median sale price: $186,200
  • Average days on Zillow: 70

Easton PA

  • Zillow home value: 5.5% growth in 2019, 4.1% projected in 2020>
  • Median listing price: $284,950
  • Median sale price: $192,800
  • Average days on Zillow: 74

Reading, PA

  • Zillow home value: 12% growth in 2019, 5.7% projected in 2020
  • Median listing price: $78,700
  • Average days on Zillow: 80

Harrisburg, PA

  • Zillow home value: 0.8% growth in 2019, 3.3% projected in 2020
  • Median listing price: $75,000
  • Average days on Zillow: 88

Of course, this isnt an exhaustive list its meant to be a starting point for your own research. Now that you know what makes an area a good investment, youre ready to take the next step in your real estate journey.

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