Real estate investors who are keen on looking for the best place to buy rental property in NJ are in for a wonderful surprise going into 2023.
New Jersey State is an ideal place to buy an investment property and start a rental property business, especially those markets that are near the border of NJ and New York. A lot of people who work in NY near the border prefer to live in New Jersey because of its friendlier housing rates and cost of living.
Table of Contents
- 4 Reasons NJ Is the Best Place to Buy Rental Property in 2023
- 5 Best Places to Buy Long Term Rental Property in NJ
- 5 Best Places to Buy Short Term Rental Property in NJ
Real estate investing requires plenty of research and analysis. This is what is commonly known as due diligence. Acquiring the necessary information and data on a market that you’re considering will give you greater leverage on your investment. It will allow you to make well-informed decisions, leaving no room for buyer’s remorse.
When it comes to researching the best place to buy rental property in The Garden State, you need to put in the work and do your due diligence, too. Fortunately, we have made it a bit easier for you as we combed through Mashvisor’s massive database to bring you the top locations for rental property investing in NJ.
So if you want to know the best places to buy rental properties in New Jersey, among other things, keep reading.
4 Reasons NJ Is the Best Place to Buy Rental Property in 2023
When buying an investment property, it is of the utmost importance for a real estate investor to pick the best location possible. Among the most obvious and desired features of the best place to invest in real estate are profitability and affordability. However, investing in New Jersey, specifically, also has other benefits in tow. Here are a few of them:
Return on Investment
Investing in real estate requires you to take a closer look at what the return on your investment will be like considering your investment strategy. Your ROI will largely depend on the type of strategy you employ as an investor.
For instance, the ROI for a fix-and-flip will be a lot different from a rental property. Similarly, the ROI for a long term rental property is different compared to a short term rental property.
That being said, the main focus of this blog is rental property investment, so we will take a look at what the return on investment is on a New Jersey property.
New Jersey by the Numbers
We went over the database of the real estate website Mashvisor to get the numbers for NJ based on its December 19, 2022, location report:
- Median Property Price: $569,220
- Average Price per Square Foot: $627
- Days on Market: 97
- Number of Long Term Rental Listings: 20,058
- Monthly Long Term Rental Income: $3,065
- Long Term Rental Cash on Cash Return: 3.74%
- Long Term Rental Cap Rate: 3.80%
- Price to Rent Ratio: 15
- Number of Short Term Rental Listings: 9,135
- Monthly Short Term Rental Income: $3,530
- Short Term Rental Cash on Cash Return: 3.38%
- Short Term Rental Cap Rate: 3.44%
- Short Term Rental Daily Rate: $230
- Short Term Rental Occupancy Rate: 51%
- Walk Score: 49
You will notice that the numbers for New Jersey are quite decent for rental property investing. Both rental strategies get you an average monthly rental income of above-$3,000. Even though the cash on cash returns are around 3.00%, you can still find a lot of properties that could generate at least 10.00% returns. The next section will show you where to look.
Good Appreciation Rate
It’s no news to real estate professionals and investors that property prices have skyrocketed this past year. COVID-19 may have temporarily made homes affordable for the first few months of the pandemic as sellers were forced to drop their prices due to a severe lack of demand.
However, things started picking up just a few months into the pandemic as people started to look for larger and more outdoor spaces. Now that we’re easing into the post-pandemic season, property prices have increased significantly. Industry experts and analysts foresee this trend going well into 2023 and beyond.
In New Jersey alone, property prices already went up 15.8% year-over-year, according to a May 2022 report from Zillow. RedFin, on the other hand, said that NJ state prices are up 11.1% year-over-year in May 2022.
The housing supply also plays a huge factor in New Jersey’s appreciation rate, as single-family listings went down to 8.8% during the same period. According to the law of supply and demand, this lack of inventory will drive up New Jersey home prices.
As an investor, knowing the rate of appreciation for NJ homes could be a deciding factor in buying investment properties in 2023. Even if the US housing market is cooling down, it doesn’t mean that the increase in property prices has stopped. It just means that the rate at which prices are going up has slowed down compared to the previous months.
High Livability Rating
According to a report released in August 2022 by the personal finance website WalletHub, New Jersey is one of the best states to live in the country. WalletHub’s annual Best States to Live In report for 2022 places NJ at the second-highest spot on the list.
The website took into consideration factors such as cost of living, economy, job market, quality of education, and safety, among others. Given all of these factors, WalletHub found NJ as the second-best state to live in the US, besting 46 others in the lower 48.
Ideal Location for Rental Properties
Lastly, because New Jersey is a small state, almost every NJ market is in close proximity to each other as well as neighboring states, especially New York in the northeast.
A lot of people who work in New York state cannot afford the more expensive housing, so most of them decide to settle in New Jersey, especially in a city like Jersey City and Newark. This makes investing in long term rentals in those areas a good move on your part if you have all the numbers figured out.
As a vacation rental location, New Jersey also has plenty to offer tourists by way of attractions and destinations. It also helps that NJ has a decent state-level cash on cash return average of 3.38% and an average cap rate of 3.44% for short term rentals.
5 Best Places to Buy Long Term Rental Property in NJ
If you’re looking for investment properties to convert into long term rentals, you might want to check out the following places. We went over Mashvisor’s December 2022 data to come up with this list. The list below is ranked from highest to lowest cash on cash return and is filtered using the following criteria:
- Each place should have a median property price of less than $1,000,000
- Each place should have at least 100 active long term rentals
- Each place should have an average monthly rental income of at least $2,000
- Each place should have cash on cash return of 2.00% and higher
- Each place should have a price to rent ratio that does not go lower than 19
That said, here are five of the best places to buy rental property in NJ for a long term rental strategy:
1. Red Bank
- Median Property Price: $804,264
- Average Price per Square Foot: $699
- Days on Market: 102
- Number of Long Term Rental Listings: 128
- Monthly Long Term Rental Income: $3,120
- Long Term Rental Cash on Cash Return: 2.84%
- Long Term Rental Cap Rate: 2.88%
- Price to Rent Ratio: 21
- Walk Score: 89
Start searching for profitable long term rental properties in Red Bank, NJ.
2. Union City
- Median Property Price: $626,630
- Average Price per Square Foot: $389
- Days on Market: 124
- Number of Long Term Rental Listings: 374
- Monthly Long Term Rental Income: $2,532
- Long Term Rental Cash on Cash Return: 2.50%
- Long Term Rental Cap Rate: 2.54
- Price to Rent Ratio: 21
- Walk Score: 97
Union City is one of the best places to buy long term rental properties in NJ.
3. West New York
- Median Property Price: $615,860
- Average Price per Square Foot: $466
- Days on Market: 150
- Number of Long Term Rental Listings: 227
- Monthly Long Term Rental Income: $2,298
- Long Term Rental Cash on Cash Return: 2.49%
- Long Term Rental Cap Rate: 2.54%
- Price to Rent Ratio: 22
- Walk Score: 97
4. Newark
- Median Property Price: $452,743
- Average Price per Square Foot: $2,352
- Days on Market: 115
- Number of Long Term Rental Listings: 531
- Monthly Long Term Rental Income: $1,971
- Long Term Rental Cash on Cash Return: 2.34%
- Long Term Rental Cap Rate: 2.38%
- Price to Rent Ratio: 19
- Walk Score: 94
5. Manalapan
- Median Property Price: $676,986
- Average Price per Square Foot: $304
- Days on Market: 81
- Number of Long Term Rental Listings: 195
- Monthly Long Term Rental Income: $2,970
- Long Term Rental Cash on Cash Return: 2.30%
- Long Term Rental Cap Rate: 2.33%
- Price to Rent Ratio: 19
- Walk Score: 7
Start looking for the most profitable long term rental properties in New Jersey with Mashvisor today.
5 Best Places to Buy Short Term Rental Property in NJ
Moving on to vacation rentals, we also used the same Mashvisor location report to give you this list of five of the best places to buy short term rentals in NJ. This list was filtered using the following criteria:
- Each place should have a median property price of no more than $1,000,000
- Each place should have a minimum of 100 active Airbnb listings
- Each place should have an average monthly rental income of $2,000 and above
- Each place should have a 2.00% cash on cash return minimum
- Each place should have a short term rental occupancy rate of no less than 50%
Aside from Mashvisor’s vacation rental data, we also took into account the short term rental regulations in NJ and only included places where there is minimal resistance and regulation on vacation rental properties.
And just like the list for long term rental locations, this list is also sorted from markets in NJ with the highest cash on cash return down to the lowest.
1. Maywood
- Median Property Price: $497,732
- Average Price per Square Foot: $388
- Days on Market: 57
- Number of Short Term Rental Listings: 183
- Monthly Short Term Rental Income: $5,463
- Short Term Rental Cash on Cash Return: 6.26%
- Short Term Rental Cap Rate: 6.32%
- Short Term Rental Daily Rate: $159
- Short Term Rental Occupancy Rate: 59%
- Walk Score: 80
Start searching for profitable short term rental properties in Maywood, NJ.
2. Villas
- Median Property Price: $387,316
- Average Price per Square Foot: $348
- Days on Market: 92
- Number of Short Term Rental Listings: 101
- Monthly Short Term Rental Income: $3,624
- Short Term Rental Cash on Cash Return: 6.06%
- Short Term Rental Cap Rate: 6.15%
- Short Term Rental Daily Rate: $277
- Short Term Rental Occupancy Rate: 51%
- Walk Score: 54
3. Newport
- Median Property Price: $316,960
- Average Price per Square Foot: $257
- Days on Market: 61
- Number of Short Term Rental Listings: 459
- Monthly Short Term Rental Income: $3,154
- Short Term Rental Cash on Cash Return: 5.67%
- Short Term Rental Cap Rate: 5.77%
- Short Term Rental Daily Rate: $172
- Short Term Rental Occupancy Rate: 59%
- Walk Score: 88
4. Bergenfield
- Median Property Price: $512,772
- Average Price per Square Foot: $240
- Days on Market: 85
- Number of Short Term Rental Listings: 139
- Monthly Short Term Rental Income: $4,874
- Short Term Rental Cash on Cash Return: 5.63%
- Short Term Rental Cap Rate: 5.69%
- Short Term Rental Daily Rate: $165
- Short Term Rental Occupancy Rate: 59%
- Walk Score: 94
5. Rochelle Park
- Median Property Price: $505,662
- Average Price per Square Foot: $293
- Days on Market: 62
- Number of Short Term Rental Listings: 161
- Monthly Short Term Rental Income: $4,571
- Short Term Rental Cash on Cash Return: 5.00%
- Short Term Rental Cap Rate: 5.05%
- Short Term Rental Daily Rate: $160
- Short Term Rental Occupancy Rate: 61%
- Walk Score: 84
Go to Mashvisor now to start looking for and analyzing the most profitable short term rental properties in any location of your choice in New Jersey State.
Wrapping It Up
As a rental investment location, New Jersey has a lot to offer investors like you. But before you settle for what you think is the best place to buy rental property in NJ, you need to put in the work first and gather as much information and data as possible. These are needed in making a proper rental analysis, so you have a better idea of the potential ROI or loss.
This is where Mashvisor can come in to help you. Mashvisor is an online platform that specializes in helping investors like you find the ideal properties in the most profitable neighborhoods in any state. Subscribing to it will give you access to high-quality data and the necessary tools to get an accurate and realistic ROI projection on any listed property.
Investing in rental properties is a big move. It is quite expensive. The slightest miscalculation or negligence will cost you. As an investor, you would want to be prepared for all possible contingencies by having a well-prepared investment property analysis as well as the right rental strategies to get the most out of your investment.
Learn more about how Mashvisor can help you find the best deals in the most profitable markets by scheduling a demo now.