Is Now the Time to Buy a Jersey City Investment Property?

With the beginning of the new year, you are probably looking for a new real estate investment opportunity in 2017. Have you thought about investing in Jersey City real estate?

Here are the reasons why you should seriously consider this option.

What’s Up with the Jersey City Real Estate Market?

The Jersey City real estate scene is changing quickly, and the main catalyst is influx of people escaping from the highly overpriced New York, benefiting from the short train commute between the two cities. As a result of this demographic push, prices are going up, and inventories – down. Generally, the Jersey City real estate market is turning into a seller’s one, so you should hurry with the buying of your Jersey City investment property.

Let’s look at the numbers. Currently there are around 97,000 housing units in total in Jersey City, and nearly half of them are large apartment complexes. The other half comprise of duplexes, small apartment buildings, and some single-family homes (8% of the total). As a real estate investor, you will be happy to hear that 70% of all residents are renters, so the demand for any Jersey City investment property is high. At the moment, there are about 7,000 housing units under construction, and another 19,000 have been approved. So, if you are looking for opportunities to diversify your real estate investment portfolio, possibly with an out-of-state investment, all these new housing units are potential Jersey City real estate investments.

Regardless of whether as a real estate investor you go for short-term profit (rental income) or long-term gains (real estate appreciation), you will be happy to know that appreciation has been significant in Jersey City. An average Jersey City investment property has increased in value by 141% since 1990, by 18.7% in the past 10 years, and by 5.9% in the last year.

Related: Is It OK to Invest in Real Estate Just for Appreciation?

How Profitable Is a Jersey City Investment Property?

Before deciding whether investing in Jersey City real estate is the right choice for you, you should familiarize yourself with the figures for Jersey City real estate investments. But no worries, you don’t need to conduct a real market analysis in order to obtain all the crucial comps. Mashvisor’s investment property calculator saves you lots of time and efforts by computing all the essential numbers based on actual and predictive analytics, which makes the results highly reliable. So, below are the numbers for an average Jersey City investment property, on the city level.

  • Median Property Price: $437,000
  • Traditional Rental Income: $2,190
  • Airbnb Rental Income: $2,100
  • Traditional CoC Return: 1.8%
  • Airbnb CoC Return: 2.0%
  • Traditional Cap Rate: 6.1%
  • Airbnb Cap Rate: 6.3%
  • Airbnb Occupancy Rate: 31.2%

Affordability is starting to turn into an issue in the city as the median property price exceeds the prices in many hot markets like Philadelphia ($344,000), Las Vegas ($225,000), and Memphis ($189,000) and is comparable to other even hotter markets: Miami ($494,000) and New York ($494,000). Of course, the prices of Jersey City real estate investments remain below those in such markets as San Francisco ($1,330,000), Boston ($1,020,000), Los Angeles ($939,000), and San Diego ($828,000), but these are some extreme cases even in the US real estate scene. The excepted monthly rental income is quite good, especially taking into consideration the property price level. When investing in Jersey City real estate, it is hard to say which one is the better strategy – traditional or Airbnb – it all depends on the neighborhood and the specific property.

Is an Airbnb Jersey City Investment Property Legal?

Before thinking about short-term rentals of Jersey City real estate investments any further, one should search about the existing Airbnb legislation in the city. Good news: Airbnb Jersey City is fully legal. In an attempt to legalize and regulate this growing form of renting, in April 2015 the city passed an ordinance that the standard hotel tax of 6% will be collected on any Airbnb Jersey City investment property, while in October the same year it clarified that the responsibility for charging and collecting this tax will lie with the Airbnb platform, limiting the burden on local hosts. So, if you are thinking about investing in Jersey City real estate, Airbnb is a fully viable option.

Related: The Ultimate Guide To The Airbnb Investment Property

Top 3 Neighborhoods for a Jersey City Investment Property

Now’s the time to take a look at the most profitable neighborhoods for investing in Jersey City real estate, according to computations from Mashvisor’s investment property calculator.

1. Bergen-Lafayette

  • Median Property Price: $265,000
  • Traditional Rental Income: $1,410
  • Airbnb Rental Income: $2,70
  • Traditional CoC Return: 2.1%
  • Airbnb CoC Return: 5.2%
  • Traditional Cap Rate: 6.7%
  • Airbnb Cap Rate: 10.0%
  • Airbnb Occupancy Rate: 49.2%

Bergen-Lafayette is the top neighborhood for an Airbnb Jersey City investment property as it will yield quite good CoC return and cap rate. An old neighborhood, this residential area is not among the liveliest in the city. A restaurant overlay zone has been proposed in order to help revive this neighborhood, which – if completed – will definitely have a positive effect on demand for Airbnb.

Related: 10 Most Profitable Airbnb Locations for Cash on Cash Return

2. The Heights

  • Median Property Price: $269,000
  • Traditional Rental Income: $1,820
  • Airbnb Rental Income: $2,200
  • Traditional CoC Return: 2.7%
  • Airbnb CoC Return: 4.3%
  • Traditional Cap Rate: 7.2%
  • Airbnb Cap Rate: 8.8%
  • Airbnb Occupancy Rate: 54.9%

The Heights or Jersey City Heights is a neighborhood in the north end of Jersey City, which is mostly composed of two- and three-family houses and low-rise apartment buildings. It is a mixture of commercial and residential areas, with a park in the center of the neighborhood. The most profitable rental strategy for Jersey City real estate investments here is Airbnb.

3. Downtown

  • Median Property Price: $489,000
  • Traditional Rental Income: $2,790
  • Airbnb Rental Income: $2,700
  • Traditional CoC Return: 2.4%
  • Airbnb CoC Return: 2.3%
  • Traditional Cap Rate: 6.4%
  • Airbnb Cap Rate: 6.3%
  • Airbnb Occupancy Rate: 63.2%

Downtown is another top neighborhood for investing in Jersey City real estate, including Historic Downtown and the Waterfront. Both areas used to be dominated by low-rise buildings, but this is quickly changing as they are subject to rapid new developments. Traditional and Airbnb renting are equally recommended in Downtown.

Choosing the right location is key in the purchase of any income property. If you are looking for the right location in 2017, check out options for investing in Jersey City real estate. Mashvisor will provide you with all crucial data on numerous actual Jersey City investment properties.

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