New Jersey Hard Money Lender
The Jersey City real estate market is very hot right now. This might sound crazy to residents who were here 10 or more years ago, but the area has made a huge comeback. Back then, purchasing a property downtown on the waterfront with similar square footage to a hot dog cart would be laughable.
Today, that same, small space could sell for over a million dollars! If funding can be secured and the right property is pinpointed, the potential can be ideal for real estate investors in the area.
There are plenty of hard money lenders and private money lenders that service the Jersey City area, but none are quite like Rehab Financial Group. RFG redefines creative real estate lending, with fast draw releases and less cash to close.
The Jersey City Real Estate Transformation
While New Jersey has been called "the armpit of New York," features like the breathtaking views of Manhattan along the water, convenience of commuting to the city, and low price per square foot of real estate have helped it transform into a preferred market for both New Yorkers and transplants. The turnaround of Jersey City in general, which constantly makes top rankings of "foodie" restaurants, hip bars, and latest trends for the fit and health conscious, has certainly increased the desirability of homes in the area.
The majority of homes in downtown Jersey City have been converted from single family brownstones to condo apartments, with rent starting at $2,500 for a 1 bedroom. This should be very attractive to a real estate investor with back from a private or hard money lender. Any property located from Paulus Hook to Newport Green or eastward towards the NJ Turnpike could run about $700,000 for a 1 bedroom condo. A house rehab at the right price in these areas would make a great investment, especially considering that the potential sale price of a 2+ bed condo or single family home is well over 1 million dollars.
The Jersey City Heights area has been the next up-and-coming neighborhood for out of towners who can't afford Brooklyn. They now find themselves home shopping in the Jersey City Heights as their "Williamsburg" among the yoga studios and chic coffee shops. It’s hard to believe that not long ago it was considered unsafe to be out at night in this area. The same applied for Journal Square, which has recently provided ample inventory for investors. They are hoping for a transformation like the change the downtown area has gone through.
The hottest areas near Jersey City for real estate investment are the up and coming Greenville and Bergen/Lafayette sections, which is where majority of today's investors find properties to flip. Moving outward from the Jersey City area is Newark, another hot spot. With the recent relocation of the Mars headquarters to Newark as well as plans to extend the Newark train station, investors are bidding over the asking prices to get their hands on what are affordable rehabs in an area that has a low tax rate.
Newark is still very diversified and not by any means an owner occupied market. Bordering Newark are the Oranges, which are other areas that investors have been very active in lately due to the flood of competition in Newark. While West Orange is a more upscale neighborhood where homes turn around for high market value, East Orange is the area in which investors are seeking and finding properties. Similar to Newark, there are many vacant homes on streets that are being taken over by developers to try and up the market value.
1) Greenville/Bergen Lafayette Sections of Jersey City
Profit Potential = 10/10
Greenville & the Bergen Lafayette sections of Jersey City are becoming the next sought after "hot spots." Investors can find a rehab for a flip here, but will need to take note that most of these homes were built in the early 1900s and have never been updated. Plaster walls, original kitchens, lead paint, asbestos, etc. could easily run up a rehab budget once the walls are taken down and all the home's surprises are exposed.
The turnaround on a purchase of say $190k with $70k or so rehab, could easily sell for around $400k, and that's with mid-grade finishes. You can be very successful here if you can get your hands on the very limited inventory. With the turnaround success of downtown Jersey City and the Heights, bar and restaurant owners are also establishing themselves in the area and continually increasing the credibility that Jersey City has as a whole. This carries over into Bergen Lafayette area and attracts out of towners that just think it's all the same due to the "place to be" reputation without knowing the differences of the area. It's a clever way to run a business while promoting gentrification.
Profit Potential = 9/10
For someone looking for passive income, Newark would be the market to look into. Multi-family homes could bring in roughly $1400 per unit at minimum. $4200/month is a great net income with taxes roughly around the $4,000/yr range. Newark is tricky though, as the Ironbound district was the first to turn around. Investors can mainly be found on the outskirts of the town in Roseville by Branch Brook Park and Vailsburg, which isn't far from Seton Hall University. There is a strong potential to rent to college students both here and in University Heights, which is by NJIT.
Weequahic has a more residential feel to it. You would be more likely to find an investment in Newark around $100k or under in some parts, which in Jersey City is very unlikely. As of late, and only within the past two months, multi-family homes in Newark have risen in popularity. Rehabs are now starting around $150K. This is driving higher prices for this type of property. The market is still a buy and hold market, but it's definitely at the tail end where full value is quickly coming. A couple years of rental before turning around and flipping will be the best bet to make the most return on your investment. The market is still high enough to make some profit on a flip if an investor wanted to get in, get out, and move on to the next property.
3) East Orange
Profit Potential = 8/10
East Orange is right behind Newark in terms of up-and-coming markets. It's a little less saturated with investors, but there is still opportunity if you are patient. The attraction to East Orange is the ability to acquire rehabs at low cost and the fact that it will eventually follow in Newark's footsteps since it's the bordering town. This is especially true in the area that borders Bloomfield, as Bloomfield is a more residential town full of "hip" areas that includes cafes, restaurants and bars. East Orange is desirable due to its proximity to all of this growth.
A downside to the area are the local taxes, which are roughly $10k/year. With multi-family homes available, however, it would be easy to make up for that expense in rental income. Buy-and-hold is the best strategy here, as the market is a little behind Newark. You can expect about $40k less ARV from something comparable. Rent, however, is pretty close, so if it will cost slightly less to pick up a property that you can hold for only $100-$150 less per unit a month (rent wise) on a multi-family, the draw back of holding it longer may actually result in more net profit when selling at the market high because of the lower purchase price.
Holly's Advice for New Jersey House Flippers
My advice would be to know your area. Quite honestly, networking has been the key in not only getting started, but with almost every connection I have to a deal, funding, contractors, lawyers, accountants, and even JV partners. This goes for any area, as local professionals are the most knowledgeable. I cannot stress enough how important it is to network and go to your local meetup and real estate events. Talk to everyone. Be a sponge. There will always be someone holding an opportunity, but only those who come in with an open mind will be able to recognize that. Investing is a learning process and a lot of it has to do with what you absorb during your experience. There are deals everywhere, you just have to be willing to put in the work and find them. Most importantly, just never stop. Find the drive to have that hustle mindset, and remember that winners fail until they succeed.
Holly Fagan, Jersey City, New Jersey
I'm a Jersey girl at heart, born and raised in Jersey City. I've always had a persistent drive of wanting more and was fortunate enough to purchase my own place at the age of 26 as an investment. Shortly after becoming bored of letting equity sit, I decided to explore passive income with purchasing another as a rental in the Jersey City Heights area. From there, I attended a real estate workshop from a flyer that caught my interest, which introduced me to the world of hard money lending, networking, creative financing and fix and flips. Today I am the owner of Peace of Mind Property, a real estate business that not only partakes in fix and flip and/or buy and hold projects, but works to help those facing distressed situations, where we educate home owners on options they may not be aware of and partner together working towards solutions that are best for them.
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