There are several factors to consider when looking for the best spots to invest in New Jersey real estate. Household incomes, population growth, and of course the current prices of homes are some of the most important stats to follow. Successful investors know the benefits of proper planning and research when it comes to securing a profitable deal, and we wanted to provide a resource for New Jersey real estate investors to help with their business. We did the research using recent public data including Redfin, New Jersey Realtors, Rent Cafe, official state records, and other reputable sources to determine the seven best places to invest in New Jersey real estate.
New Jersey Overview
New Jersey has always been known as a hot real estate market with its high population per square foot and proximity to major metro areas such as New York City, Philadelphia, and many popular beach towns. With so many people leaving crowded city spaces over the last year and moving to residential neighborhoods, New Jersey received an extra boost to its real estate market. This uptick in demand has led to an inventory shortage that has driven prices up to record-breaking highs for the state, a price increase being referred to as the “COVID Premium”. To give an idea of this premium, most single-family homes in New Jersey are worth approximately $100,000 more than they were worth in 2020, adjusting for which part of the state they’re in.
As of July 2021, the average home price for NJ reached $420,000 which is a 24% increase from the previous year. The number of homes sold throughout the month reached 12,942, marking a 44% increase from the number of homes sold in July of last year. These stats represent five-year-highs for the state, highlighting how large of a boost the New Jersey real estate market received. Many homeowners have been cashing in on these trends, especially with 60% of homes being sold above asking price with big cash offers and last-minute buyers driving up final sale price. Homes are spending an average of 42 days on the market, which is seven days less than the year before. Available inventory has taken a significant hit with nearly 14% fewer homes for sale compared to last year, contributing to the higher home prices.
Job recovery and growth is booming in New Jersey, with many of these new positions belonging to high-paying fields and requiring educated or skilled labor forces. Financial and information sectors are seeing the biggest growth, with a combined 7% increase in available jobs since the previous year. The biggest recovery sector is the leisure and hospitality sector, with a 75% increase in available jobs year over year. 17 of the biggest Fortune 500 companies are stationed in New Jersey, boding well for the high-paid job sectors continuing to thrive in the state. With more than 9 million people making it the 11th biggest state, a large population with disposable income is a real estate investor’s dream. These economic factors matter to real estate investors because you want to invest in areas that are going to continue growing while already boasting healthy job markets, allowing your investment to appreciate and raise your potential ROI.
While real estate investors have more competition than ever before, there are still plenty of profitable deals to be found throughout the Garden State. Even though investors are operating with slimmer profit margins and more competition for securing property, there’s still a healthy investor market in highly desirable NJ cities for fix and flips, new construction, and long-term rental property.
Let’s start to dive into the best towns for real estate investors in NJ.
Jersey City has been one of the best cities for real estate investors for quite some time since it has direct access into the heart of New York City without the inflated NYC prices. The Jersey City market is hotter than ever with vaccination rates bringing people back into urban environments and people returning to work in the office. The city boasts the second biggest population in the state with nearly 300,000 people and an average household income over $80,000, with many of the city’s jobs being focused on financial and information services. Currently the city has an unemployment rate of 8% which is slightly higher than the national average and highlights the massive recovery the city has made since last year when unemployment was 15%. Business Insider labeled the city as one of the best real estate markets to look out for the 2020s due to the city’s commitment to constantly improving infrastructure as well as the excellent value for its proximity to NYC.
The average home sale price for the city is currently $672,000, which is a 24% increase year over year. These homes are spending an average of 42 days on market, seven days less than the previous year’s average. To highlight how active the market currently is, 207 properties sold during the month of July marking a 44% increase from the previous year. This is one of the most consistently active real estate markets in the entire state of New Jersey, with these upward trends projected to continue for the next ten years minimum.
Jersey City is an excellent market for real estate investors based on the variety of investment opportunities. Many investors are performing profitable fix and flips throughout neighborhoods like The Heights and McGinley Square, where distressed condos and duplexes can be rehabbed and flipped for a premium price. With so many popular neighborhoods being located close to public transportation and New York City directly across the river, a recently renovated property in Jersey City can produce incredible ROI for savvy fix and flip investors.
New construction has become more popular in Jersey City over the last two years, especially since the inventory shortage can be most easily filled by residential new construction. Multi-family properties are the most popular as the units can be individually sold while only building on one lot, which are more restricted and rarer in cramped city spaces like Jersey City. Experienced builders who can source their materials directly can keep costs down while benefiting from the current real estate boom in the city.
Rental property is also hot in Jersey City with rental prices returning to nearly pre-COVID numbers, with average rent prices currently at $1,675 for the city. 71% of the population rents instead of owns, making it a steady market for BRRRR investors that want to reduce their potential risk by investing in an area with a high rental population. Areas like Hamilton Park and The Waterfront are premium rental districts that are consistently filling vacancy spots are higher prices that nearby neighborhoods, making them ideal for investors looking for rental property.
Newark, New Jersey has a bad reputation due to previous decades of high crime rates and undesirable neighborhoods filled with numerous distressed properties. That stigma used to be well deserved, but the city has gone through a significant overhaul over the last ten years that has seen crime rates drop drastically and many neighborhoods receiving makeovers, in part thanks to fix and flip investors improving local real estate. Its downtown district is now known for incredible restaurants and the city is home to the most popular international airport on the east coast, as well as arenas like the Prudential Center where top musical acts and sports teams regularly play. Like Jersey City, a lot of the value of Newark comes from its proximity to New York City, featuring direct trains that can get you into the center of NYC in less than 15 minutes.
The city is the most populated in New Jersey with over 300,000 residents and boasts an unemployment rate of 8%, which is comparable to Jersey City and only slightly higher than the national average. The average household income takes a hit in Newark, sitting far below the national average at only $35,199. With the city’s planned job growth in more middle-class sectors like retail and manufacturing, the fix and flips or new construction projects will see lower average prices compared to somewhere like Jersey City. However, that level of affordability is the competitive advantage that real estate investors can use to make their project stand out and maintain a successful investment.
The average home prices in Newark reached $315,000, which is a 29% increase year over year. 224 properties sold during July 2021, which is a 15% increase from the previous year. Homes are spending an average of 27 days on market, which is 10 days less than last year’s average. These more affordable prices and increase in market activity highlight that Newark is going to continue going through a growth phase, meaning homes are going to continue appreciating at an increased rate and provide reliable ROI for real estate investors.
Much like Jersey City, the most successful investments are coming from fix and flips on duplex or multi-family housing, as well as residential new construction to fill the inventory gaps. While new construction may be prohibitive because of the current cost of materials and the lower potential sale price in Newark, fix and flips are an extremely popular investment for the area. Given the fact that there are many distressed properties that need mostly cosmetic work and could be given low-cost value-adds like new appliances or a bathroom overhaul, fix and flip investors could potentially spend minimal money on renovations to still walk away with a healthy profit.
Rental property remains a stable investment in Newark, with 40% of the population renting versus owning their home. The average rent price for the city is $1,276 which is less than the national average and a 5% year over year increase for the city. This lower average rent price but strong price growth makes multi-family rental property more lucrative than single-family or single-unit property. By investing in a Newark multifamily and having multiple rent sources paying off the property’s mortgage, especially with consistent year over year growth, an investor could quickly make back their money and continue to hold the property as an income-producing asset in New Jersey’s most populated city.
The first place on our list not to sit on the outskirts of New York City, the town of Tom’s River derives its value from another New Jersey landmark: the beach. While not situated directly on the beach, Tom’s River is only a short drive away and is close to popular New Jersey vacation destinations like Seaside Heights and Point Pleasant. This town combines a working-class population with a wealthier vacation home population, resulting in an impressive average household income of $101,000, far above the national average and the largest on the list so far. With a population of over 95,000 and an above average population growth rate of 5%, its one of the top ten most populated places in New Jersey and therefore a reliable spot for real estate investors. Tom’s River was also one of the big winners of the population shift that occurred in 2020, with many wealthy New Yorkers purchasing a suburban residence in New Jersey for more living space and reduced cost of living.
The average home prices in Tom’s River reached $330,000 which is a 22% increase year over year. 271 homes sold during July which marks a 18% decrease from the previous year, the only time on this list that saw less homes being sold this year than the previous year, largely in part due to the massive population shift from last year. The average home is spending 19 days on market, which is an impressive 32 days less than last year and highlights how active the current market is.
Fix and flips or new construction are your best bet in Tom’s River as 68% of the population owns their home rather than rents. While distressed properties are hard to come by in an area like Tom’s River, new construction especially can fill the current inventory gaps and take advantage of the hot seller’s market the area is experiencing. With the average home price continuing to rise every month and so many homes selling above listing price, new construction in Tom’s River can be an excellent opportunity for real estate investors in New Jersey.
Recent years have seen the rental market in Tom’s River improve tremendously. The average rent for the area is $1,478 which is nearly identical with the national average and marks a 6% year over year increase. While the rental population is smaller in Tom’s River, the price growth indicates enough demand to ensure real estate investors can fill any vacancies and bring in a fair market price for their property. As demand for living in the Tom’s River area continues to rise and rent prices trend upwards, this town looks to be an unsung hero of New Jersey rental property for the next few years.
Edison is another of the top ten most populated areas in New Jersey, boasting a population of 107,000 and being neighbors with New Brunswick, home of the state’s biggest college in Rutgers. With its focus on suburban living, Edison primarily consists of single-family and multi-family homes with Middlesex County, where Edison is located, also ranked as one of the top ten places for fix and flip profits in New Jersey as of 2019, which should entice real estate investors in this even hotter market. Luckily the local economy didn’t take too much of a hit and has recovered quickly, with the unemployment rate of 6.9% being only slightly higher than the national average. The average household income for the town is $103,076, which is far above the national average and represents the upper middle-class population that lives in Edison.
The average home prices in Edison reached $470,000 which is a 27% increase year over year. 109 homes sold during the month of June, marking a 33% increase from the previous year. Homes are spending an average of 21 days on market, which is a remarkable 44 days less than the previous year. With a stable local economy and high average household income, it makes sense why prices in this town continue to rise while homes stay on market for less and less time. This kind of desirable market is perfect for real estate investors that can meet the demand and walk away with a sizable ROI.
Fix and flips plus residential new construction are real estate investments that people should consider in Edison, with three-bedroom and four-bedroom homes dominating the market as condos and townhomes trail closely behind. Approximately 3% of the available housing inventory fall under the distressed category, meaning fix and flip investors could potentially snag a deal and turn a large profit with this current seller’s market. Residential new construction is the most efficient way to fill inventory gaps, especially as Edison home prices continue to rise, so experienced builders and contractors could take advantage by financing their new construction projects.
Given its proximity to Rutgers of New Brunswick, the rental market in Edison will always be a consistent source of investment opportunities. The average rent price reached $1,605 which marks a 10% increase year over year, benefiting from some of the population shift away from cities to suburban markets. Since many of the potential renters will be college age students that are receiving money through their parents or as part of a scholarship, investors will have to decide if they want to potentially work with such a young group of renters. If you’re up for the task and want a stable rental investment, then practicing the BRRRR strategy in Edison could be very lucrative.
Asbury Park is the only true beach town on the list, and the smallest town to make the list. With a population of less than 16,000, this compact beach community is home to an eclectic mix of wealthy aristocrats and young artists that makes the local real estate market cater to a wide range of people. With a boardwalk made famous from The Sopranos and historic music venues like The Stone Pony, this beach town has become a hot spot for visitors and real estate investors alike. The town’s average household income is $80,589 which is slightly above the national average and highlights the upscale nature of Asbury Park, even with real estate that spans from low-income housing to luxurious beach property.
The average home prices in Asbury Park reached $515,625 which marks a 21% increase year over year. 24 homes sold during the month of July, which represents a 71% increase from the previous year. Homes are spending 20 days on market, a major drop of 45 fewer days than last year’s average. The heavily increased sale activity is atypical of the late summer markets, especially in a beach town like Asbury Park, but highlights how much of a seller’s market it currently is combined with how much demand exists for the area.
Fix and flips and new construction will always be popular investment strategies in Asbury Park thanks to the wealthier population that likes to purchase beach properties. While that niche is limiting, there are also underdeveloped neighborhoods in Asbury Park that feature a few distressed properties that could be flipped. New construction, specifically luxury new construction, will be the major investment opportunity for builders and contractors in the area. These types of builds sell quickly and at a premium price if you can secure a lot to begin building on.
Asbury Park’s rental market has grown consistently year over year for the last two decades as the town continued investing into its downtown areas and overall infrastructure. Most of the population rents instead of owns, with 56% of the residents choosing to rent. Currently the average rent price for the area is $1,413, which is slightly below the national average and marks a 10% year over year increase. Due to the nature of the town and its location on the beach, rental property will always be popular and therefore make an excellent investment opportunity for BRRRR investors in NJ.
Tucked below Jersey City is the more affordable and lesser-known town of Bayonne. While the access to NYC is less direct and simple than its Jersey City counterpart, its still an easy trip into the city and a popular living situation for anyone looking to save money by avoiding NYC prices. Bayonne features a down-the-middle population demographic as far as New Jersey goes, with a population of 65,000 people and an average household income of $66,679, slightly below the national average. Most of Bayonne are working in middle-class sectors such as education, transportation, and sales jobs but have pockets of upper middle-class working in financial and healthcare industries.
The average home prices in Bayonne reached $484,000 which is an 11% increase year over year. 48 homes sold during the month of July, marking a staggering 140% increase from the previous year. Homes are spending an average of 15 days on market, which is only 5 days less than last year. The increase in home sale activity as well as the quickness in which homes are being sold are key indicators of a strong seller’s market, which benefits all types of real estate investors.
Bayonne is a great market for fix and flips, as its barrier to entry costs are lower than Jersey City but cater to a very similar population. By understanding your target market demographic, including their average household income, you can predict the type of buyer that will purchase your flip and cater to their needs- as well as their budget. As part of Hudson County, just like Jersey City, this area ranks in the top ten in New Jersey for profitable fix and flips. Approximately 7% of the available housing inventory is considered distressed, featuring a mix of single-family and multi-family properties, giving options to different fix and flip investors.
Given its proximity to the city, the rental market in Bayonne will always be relevant to real estate investors. The average rent is currently $1,950, well above the national average and representing a 4% increase year over year. While only 35% of the population rents, it’s a rental market that performs consistently well and features a low rental vacancy rate of 5.2%. For rental investors that want stable monthly income over time, Bayonne rental property is a smart investment.
Summit is the most residential and luxurious town to make the list, as well as one of the smallest. With a population of just 22,000 it also ranks as one of the wealthiest towns in the state, boasting an average household income of $255,160. This level of income helps shape Summit as a spot for luxury builds and top tier house flips, the type that could be featured on the front page of any real estate magazine. Like many of the top spots to invest in New Jersey, Summit has direct access to New York City with a train that requires no transfers to reach Manhattan, driving up prices based on its public transportation and NYC proximity. On top of being one of the safest and cleanest towns in the entire state, its also located centrally to many other popular NJ cities, making it a convenient spot for young families or retirees.
The average home prices in Summit reached $1.2 Million, which is a 36% increase year over year. 50 homes sold during the month of July which marks a 14% increase from the previous year. Homes are spending an average of 17 days on the market, which is only six less days than last year. Due to the luxury market that Summit is known for, sale activity will always look lower when compared to areas like Jersey City or Edison. However, homes are still selling quickly and reliably, making it strong potential market for real estate investors.
Most people own instead of rent, making fix and flips and residential new construction both lucrative investment options for the area. Since inventory is scarce and distressed property is nearly nonexistent in Summit, the best possible real estate investment is luxury new construction. With the available income in the area and consistently rising demand, luxury builds can be pre-sold with relative ease and secure experienced investors a sizable ROI. These builds are only growing in popularity and continue to grow in average sale price as well, making them smart investments for the next few years.
Summit’s rental market is similar in luxury, thanks in part to many wealthy New Yorkers choosing to live in this suburban area and commute via train rather than living in the more expensive city. The demand mixed with the income level means high rent, with the average rent price in Summit being $1,950 and representing an 8% increase year over year. While only 24% of the population rents, it’s a consistent population considering the clientele and their need for suburban rentals with direct NYC access, allowing real estate investors to confidently practice the BRRRR method in Summit. BRRRR investors who need additional capital to acquire one of these luxury rental properties can utilize term rental loans to help fund their purchase and renovation to grow their portfolio even faster.
The New Jersey real estate market will always be a top market for real estate investors by virtue of its desirable location and variety of living environments. Based on the large population with consistent growth, high average household incomes that are trending upward, and planned job growth, each of the seven cities are excellent choices for investors looking to fix and flip, build new residential homes, or acquire long-term rental property. Now is the ideal time for investors to secure an opportunity as the end of summer briefly cools the market, slightly reducing the competition while prices remain sky-high. If you’re a real estate investor looking to scale your business utilizing hard money loans in New Jersey, then Asset Based Lending is ready to help. Contact us today to be approved for the best hard money loans New Jersey has to offer.