Home Buying in Jersey City>Question Details

Eric, Other/Just Looking in New York, NY

Investment Property for $200k or less

Asked by Eric, New York, NY Sun Jan 11, 2009

I want to take advantage of the economic downturn and purchase a residential investment property for $200k or less. Is it financially worth it in the NYC/NJ area given how much real estate prices are (even though they have gone down a little) and what I could get for a market rent? Especially considering closing costs?

Further, what areas would anyone recommend are best to buy in? I have been browsing through listings for Jersey City and Newark. Should I be looking for a cheap multi-family in a questionable area or a small condo to rent out? Thanks!

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Eric,

When looking for an investment property MAKE SURE YOU ACCOUNT FOR ALL EXPENSES. Expenses are much more than just the taxes, (maintenance if a condo) and insurance. There is also vacancy expenses, eviction expenses, hiring ur CPA and attorney, and a lot of other expenses.
I saw someone show you a deal where you'd have around $200 after paying ur mortgage, that is just about a guaranteed loser if u want to make money on it.

I'd suggest finding some real estate forums and reading a lot about RE investing if you are serious about this.
0 votes Thank Flag Link Fri Jan 16, 2009
Hi Eric.

The golf resort I work in is may be a great alternative for you. We have several properties that are coming in under $200k. The resort has a condo hotel that would allow you to own a condo that you can put it in the rental pool. The hotel mostly gets corporate clients, weddings, and weekend golfers. You can also use it as your own vacation home when you want to stay. So you get the best of both worlds. There's one that is selling resale for $189,000 (and you could probably get it for less) and one that just received an offer at $175k. Our standing inventory is currently selling for $249,000. There's also a two bedroom condo in another section of the resort, not in the hotel, with basement on short sale that is currently receiving offers. It's listed at $194,900 and comparable units are selling from $250,000+. You would have to jump on it immediately, however, because I don't know how long they will keep taking offers on it. If you like, I can send you a list of our properties under $200,000. We even have our sister resort with properties starting 60-70k.

You can reach me at 973-418-3427 pr email at dwhite@crystalspringsbuilders.com and check out our website at http://www.mrphomes.com, http://www.crystalspringsbuilders.com, and http://www.crystalgoldresort.com

Best Wishes,
Darlene White
0 votes Thank Flag Link Sun Jan 11, 2009
Eric,

There are many factors to consider when making an investment property purchase. Jersey City and Newark are huge investment property markets. Most of the residents in those cities rent. I am very familiar with Jersey City and work with several investors in that market. If you have never been to Jersey City, I suggest you drive through it and become familiar with the neighborhoods. Like any investment, I recommend investigating the City and the various neighborhoods. See what development is going on in the area and what the future holds for the section and City. There are many foreclosures and pre-foreclosure/short-sales in Jersey City now. Most of the properties that are going to be in your price range are in the Greenville, Bergen-Lafayette, West Bergen, and Jersey City Heights sections. You can get a 2-4 family there for around $150,000 to $200,000.

I am not familiar with the Newark market. There may be an agent in that market who can respond to your question on this site and guide you there.

There are pros and cons to buying a multifamily and a condo. On a multi-family, there is much more maintenance involved. You as the owner are responsible for everything; yard maintenance, snow removal, interior and exterior repair, etc. On a condo, you are just responsible for the interior of your unit and usually a management company oversees the common areas. This is paid through the monthly maintenance fee.

Something else to consider is are you going to collect the rents personally and do repairs, or hire a management company to do this for you? Having someone do this for you can be a great benefit especially if you do not live in the area, however this is an extra expense that can eat into your profits.

From my experience, the rates of return are usually better on a multifamily, but this all depends on how much you put down as a down payment and how much you finance.

I'll be happy to speak with you further about investment properties. There is much more than what I just went over, but I hope this answers some of your questions.

If I can be of any assistance to you, please let me know.

Sincerely,

Walter J. Burns
Realtor-Associate
Weichert Realtors
1 Newark St.
Hoboken, NJ 07030
201-653-8488 Ext: 230
201-694-8946 Mobile
201-653-4154 Fax
wburns@weichert.com
0 votes Thank Flag Link Sun Jan 11, 2009
In my opinion, focusing on condos in well-maintened buildings is the best choice for an investment in the $200K range. Multi-families are likely to be in a very poor condition and might prove to be more of a liability then a solid investment. Currently, there are some two bedroom condos availble in the Journal Square area of Jersey City. This neighborhood includes the beautiful historic Lincoln Park and the Journal Square Path stop (3 short stops to NYC.) Check out http://www.thenewjournalsquare.com for the upcoming developments and neighborhood information. I currently have a listing at 75 Fairview, which is a two-bedroom garden level condo priced at $110K. With 20% down and a 6% mortgage interest rate, your total monthly expenses would be $823 (including taxes and maintenance.) You can rent this condo out for about $1000 to $1100. Take advantage of positive cash flow while paying down the principal as the neighborhood gentrifies and evolves. There are certainly many opportunities that the current market presents. It is a good time to start previewing properties and crunching some numbers.
0 votes Thank Flag Link Sun Jan 11, 2009
As Ken said, look at areas that have rental potential. There is a growing demand for rental units, but you also want your investment to be in an area where, down the road, you'll be albe to re sell. If this is your first investment, I'd recommend a condo or small house in a decent area.

This will allow you to get your feet wet in the whole landlord business. As Ken said, make sure you get info on the area and rental potential.

Good Luck!
0 votes Thank Flag Link Sun Jan 11, 2009
Suggest you look at the best area you can afford, have your REaltor do an analysis showing you the rental potential.Balance that vs the cost. In my market multifamily homes are usually a better bargain. Few cover their costs of purchase yet they are approaching. If you will be keeping to rent busy roads etc are less of an issue than say flipping because most tenants look at their occupancy as temporary and are often just happy to be in the best areas. (I own 2 multi family homes and a SFD with a seperate garage that can be rented covering most costs alone) If you end up in central Jersey I am happy to assist.
0 votes Thank Flag Link Sun Jan 11, 2009
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