Home Buying in 07302>Question Details

Neil, Home Buyer in Jersey City, NJ

Appreciation rate of condo@Trump(exchange place) 5 years down the line?

Asked by Neil, Jersey City, NJ Thu May 9, 2013

Does it make sense to buy a condo in low 500s (520s) with partial view of manhattan and hudson river at trump exchange place? What is the appreciation % that i should look for 5 years - 10 years down the line?

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Answers

8
If you are only planning to keep the place for 5 years, I STRONGLY recommend not buying, and here is why.

When buying the place, you will end up paying the following:

- title insurance (in NJ, this is a percentage of the purchase price, and VERY high, e.g., on $500K, it will be close to $2.5K),
- all kinds of fees (appraisal, inspection, deed recording, etc, close to $1.5K)

When selling, you will pay 5% real estate commish, and some other stuff, bringing your total to 6%.

So all in all, I think you will pay 8% on the round-trip.

You will tie up 20-25% of your capital in real estate. The only thing you will get is cheap mortgage, and mortgage interest deduction. However, in Trump specifically, you will pay very dearly for maintenance (common charges).

So do you think you can re-coup a $40K (8%) transaction charges and the higher-than-usual maintenance charges (and Jersey City property taxes) in 5 years?

Also, Trump building, and with views, is what I would call a risk (as an investment). It is high risk, high reward, but everything has to line up in your favor. E.g., agent suggestion that views might be lost. You could be looking at a 10% depreciation in one shot.

As a side note, the suggestion to look at the appreciation rates in the past 5 years is invalid. There are two reasons: (1) past is rarely indicative of future in asset prices, and (2) if you go back 5 years, you end up in 2008. Prices have definitely fallen since 2008.
1 vote Thank Flag Link Fri May 24, 2013
Hi Neil,difficult to predict future appreciation but downtown JC is trending in a positive direction. however, Be careful not to bank too much weight on views at Trump. There are several buildings soon to be constructed near it and the view may be lost.

Hope this helps!
1 vote Thank Flag Link Thu May 9, 2013
Thanks for your reply Karina.. Can you tell me what other buildings that are planned to be developed around it? I studied so far and did not heard about any thing that could block the view until 15th floor.?
Flag Thu May 9, 2013
Neil, the real answer depends on your reason for buying in the first place. Is this for investment or is it where you plan to live? If the former, then we must do a cap rate analysis to determine the rate of return on this particular unit. But if it is a place where you will reside, then we must weigh it against other potential homes, and add many other factors, not the least of which is the lifestyle that a buildig like Trump Plaza affords. When you are ready, find a realtor who knows the Downtown inventory well, and listen to the questions they ask. You will be able to tell from their questions whether they will be in a position to help you find the right home. --Art
0 votes Thank Flag Link Sun Jun 2, 2013
Hi Neil,

This is very hard to predict Neil, although downtown Jersey City has been on the rise since roughly the beginning of 2013 and we all hope that climb continues. We are seeing bidding wars!
Feel free to email me & I can show you where these Condos were selling 5 years ago & where they are selling today to give you some history on the building. KathleenC.Realtor@gmail.com
Good Luck!
0 votes Thank Flag Link Thu May 23, 2013
Neil,
No one can truly tell you this information. That's crystal ball talk... If you'd like to meet me in my office (not too far from Trump Plaza) I'd be happy to share with you customized spreadsheets delineating market trends in Trump and other buildings/neighborhoods so you can come up with informed decisions. I'm happy to help.
Best regards,

Mark
0 votes Thank Flag Link Thu May 9, 2013
Good morning Neil,

I applaud you for your process in researching potential appreciation for this area. My recommendation would be to estimate an ROI for such a purchase. The Downtown Jersey City area as with Hoboken are, although not completely, insulated from extreme sustained market downturns, due to their location, in that they are the last to be affected and the first to come back.

With that said, depending upon the current comparables for this, or any other, unit that you would be purchasing you need to look at it from several perspectives. If it is an investment, what net rental income will you achieve and what is your ROI, or more so ROIC, compared to the ROI on your other investment strategies. If you are looking to owner occupy, then where are you currently living and if everything was flat what would be thebest decision for you and your family.

If you would like my help to guide you in this process, please feel free to reach out to me at 973.868.4034 or via e-mail at EmilVeltre@aol.com.

Have a GREAT day and STAY DRY!

Best regards,
Emil

Emil Veltre, R.Ph, MS, CDPE
Realtor Associate
Liberty Realty

mobile: 973.868.4034
e-mail: EmilVeltre@aol.com

website: http://www.EmilVeltre.com
0 votes Thank Flag Link Thu May 9, 2013
I agree with Diane that nobody can predict with certainty what the appreciation rate will look like 5 years from now, let alone for any particular property. We may have another bubble by then, which I suspect we will.

However, it is possible to look as the existing stats and notice trends, particularly that of the building's appreciation of median price as compared with that of the neighborhood at large. In the past ever since October of 2010, the building has performed increasingly better than its surrounding.

Please contact me so I can share the a report with you. At this time this forum does not allow posting of graphs and visual content.

Sincerely,

Amos Elroy
CDPE (Certified Distressed Property Expert)
SFR (Short-Sale Specialist Certified)
CHBA (Certified Home Buyer Adviser from NAEA)
CSBA (Certified Home Seller Adviser from NAEA)
NAEA Member (National Association of Expert Advisers)

Residential Real Estate Expert Adviser

Lic. Realtor Associate
EXIT On The Hudson Realty
(888) 462-6573 / (888) HOB-NJRE
FAX (888) 462-6573
Office 201-437-0411
http://www.HobNJRE.com
0 votes Thank Flag Link Thu May 9, 2013
It is very hard to calculate the appreciation rate on any piece of property, since so much depends on the rest of the economy and no one can predict that.

Are you looking to purchase a one bedroom? Is it an investment or a home? There are many factors you should consider and that should affect your decision to purchase.

In a nutshell - there is no way to know exactly what will happen with your property over the next few years. The Trump is a very attractive building with a great location and good amenities. My estimation is that the whole waterfront area will continue to be very attractive to buyers, but an actual rate of appreciation rate is impossible to calculate for you.
0 votes Thank Flag Link Thu May 9, 2013
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