Real estate professionals rarely reach a genuine consensus on anything in the industry. One of the few things they do agree on is location is one of the most significant considerations when it comes to the success of fix-and-flip projects.
Today we’re looking at New Jersey – one of the leading areas for real estate investors in the US.
Why is Location So Important?
Location impacts not just the supply and demand from a buyer’s perspective, but also the resale value and renovation expenses all of which come into play when determining the overall return on investment.
Therefore, prior to acquiring a fix-and-flip property, real estate investors should carefully analyze the market and ensure they are selecting the most ideal location to mitigate risk and optimize income.
What Makes New Jersey Special in the Fix and Flip Market?
New Jersey is one of the leading areas for real estate investors due to its strategic positioning near New York City and Philadelphia.
To top it off, the state features pristine beaches and other world-class attractions. These draw a significant number of transplants year after year seeking flexible housing options like newly renovated houses.
With the average home purchase price well below $300,000, the barrier to entry is relatively low for budget-conscious investors, or those who are new to the industry.
Recent Trends in Prices for Residential Properties
Recent trends in the prices of residential properties in New Jersey have been on an upward trajectory, with prices increasing from a median price of $264,500 in January 2017 to a median price of $288,000 in June 2018.
This trend is largely driven by the fact that more and more people are choosing to relocate to New Jersey due to its abundance of job opportunities and proximity to major cities like New York City and Philadelphia.
Price Growth Potential of Investment Properties
Investing in real estate is a popular choice for many investors, and New Jersey offers great opportunities for price growth potential with fix and flip investments. Fix and flip projects are attractive to investors because they can generate a quick return on investment.
The price of homes in New Jersey has been steadily increasing since the recession, meaning that investors who purchase fix and flips can benefit from high appreciation rates.
The state also offers a variety of tax incentives that make it an attractive choice for investors. For instance, New Jersey has some of the lowest property taxes in the country, which can help you save money on your fix-and-flip investments. Additionally, the state offers a wide range of tax credits that can help cover expenses associated with rehabbing and restoring properties.
New Jersey has a great deal of potential for fix and flips, offering the perfect combination of low entry prices, high appreciation rates, and attractive tax incentives.
Average Home Prices in New Jersey
New Jersey is one of the most popular states in the US for fix and flip investments. It has a wide variety of properties available at a relatively affordable price point, making it attractive to investors who are looking to maximize their returns.
When considering potential locations for fix and flip investments in New Jersey, it’s important to understand the average home prices in each county and city.
Bergen County, located in the northern part of New Jersey, is one of the most popular areas for fix and flip projects. The average home price in this county is around $515,000, slightly higher than the state average. However, investors can find buildings that are priced lower than this depending on location and condition.
The largest city in Bergen County is Hackensack, where the average home price is slightly lower than Bergen County at around $500,000. Jersey City and Hoboken are also popular areas for fix and flip investments, with the average home prices in these cities being around $450,000 and $400,000 respectively.
The 3 Best Locations for Fix & Flip Investments in New Jersey
Express Capital Financing specializes in providing flexible, short-term loans to fix-and-flip investors, getting them the money they need to acquire and rehab a property when they need it, an invaluable advantage in what has become an extremely competitive industry.
To help you get started, we have compiled some of the best cities across New Jersey when it comes to investing in fix-and-flip properties.
Alloway
Cap rate is an extremely important metric for investors when attempting to analyze the viability of a potential fix and flip project. It is calculated by dividing the net operating income (NOI) of the investment property by its current market value (CMV).
The general rule of thumb has historically been that an ideal cap rate is over 8%, but with the market becoming ultra-competitive anything above 3-4%, especially in urban markets, is considered a great return.
Alloway has a cap rate of 6.82%, well above the threshold. With an average household income is well above the national median at $74,415, there are plenty of eligible buyers in the market to market renovated properties to.
Newark
Newark plays host to one of the country’s busiest airports and experiencing an economic boom drawing sought-after retailers like Whole Foods and Nike that homebuyers will find incentivizing when choosing a property. There are scores of real estate investors attempting to get their foot in the door early in Newark’s growth phase, making it a competitive real estate market. Fix and flip investors are realizing amazing average return on investment in the region, netting 182% ROI. Fix and flip transactions accounted for approximately 15% of market activity in 2020 in Newark, with the average investor pocketing a gross profit of $166,500. These metrics are certainly promising, making Newark a great option for investors looking for a city to acquire their next project.
Merchantville
Real estate investors are finding it easy to quickly resell their renovated properties in the Merchantville local market, with the average days to flip a property coming in at only 179 days from start to finish. Merchantville is situated in Camden County, and despite only having a population of 3,821, the market is very active when it comes to fix and flip sales with this type of transaction accounting for nearly 19% of all sales activities. Smaller communities like Merchantville are the perfect fit for newer investors that do not have the personal funds to pay for their own projects, as the average home value is only $162,000 and could be considerably lower for distressed properties.
Working with Real Estate Agent Professionals & Private Money Lenders
When it comes to investing in fix and flip properties, working with real estate professionals and private money lenders is key. Real estate professionals have the knowledge and experience to help you get the best deals on properties in the ideal locations for your flip.
They can also provide invaluable advice on local market conditions, legal requirements, and more. Private money lenders provide the financing required to close deals faster and create a more efficient investment process.
If you’re looking to invest in fix and flips in New Jersey, it’s important to do your research on the local market and consult with real estate agents and private money lenders. With the right team of experts, you can take advantage of all that New Jersey has to offer investors for a successful fix and flip project.
If you are in need of a hard money loan in New Jersey for your next fix and flip deal, reach out to Express Capital Financing today. We are experts in the New Jersey market and would love to be your go to lender.
FAQs
Can you flip houses in NJ?
Yes, you can flip houses in New Jersey. House flipping is a popular real estate investment strategy in the Garden State due to its close proximity to New York City and its desirable coastal towns.
The most lucrative fix-and-flip locations lie in the northeastern part of the state, where median home prices are higher than the statewide average. This includes counties such as Essex, Union, and Hudson.
What is the best place to buy a fixer-upper in NJ?
The best places to buy a fixer-upper in New Jersey are Alloway, Newark and Merchantville.
How much can you make from a fix and flip
Fix and flip real estate investments in New Jersey can be extremely lucrative. Investors looking to make a quick profit can buy properties at a low price, fix them up, and then sell them for a much higher price.
The profit margin an investor can make from a fix and flip depends on the current market conditions, the size of the property, how much work needs to be done to repair it , and the investor’s experience.
However, on average, fix and flip investors in New Jersey can make anywhere from $50,000 – $200,000 in profits.
Is fix and flip worth it?
Fix and flip investing is a popular strategy among real estate investors, but the question of whether or not it’s worth it can depend on the location. However, in New Jersey, fix and flip can be a profitable business venture as long as investors understand the local market and have access to resources like accurate data and good financing options.
In order to determine if fix and flip is worth it, investors should consider the potential profit they can make and the risks associated with such an investment strategy. With the right resources and knowledge, fix and flip investing in New Jersey can be a lucrative business opportunity.
Want to know how to tell if a potential fix and flip will be profitable? Read our article, ‘How to Evaluate a Fix and Flip Property: 8 Tips to Know if it’s Worth It‘.
