8 Ways to Successfully Invest in NJ Real Estate

Investment opportunities in real estate abound. As an investment vehicle, NJ real estate allows you to flexibility to control the involvement and time invested. From passive investments in Real Estate Investment Trusts, to buying NJ homes and positioning them for rent, there are may ways to profit from real estate investment. As your agent, I know all the ways, as well as the advantages and drawbacks of each. Let me explain further…

1. Real Estate Stocks and Mortgage Instruments: The passive investor would most likely want to place investment funds into the stock market in the form of equities of major national home builders. On the other hand, they might want to invest in Real Estate Investment Trusts (REIT). This is a fund set up and managed to invest in stocks, bonds and mortgage investments in the real estate area. Discounted notes are another investment strategy. Sellers many times accept a mortgage from a buyer, and after payments have been made for a while, they want to convert to cash. They sell the note to an investor at a discount and the investor then gets payments from the buyer.

2. Appreciation of the Market Value on Properties: This is the most widely known way of profiting in real estate. A property is purchased and held. Over time, the value of the property appreciates, sometimes even faster than the overall market. Certain areas of the country have experienced significant appreciation in home values over the last ten years.

3. General Price Inflation in the Economy: Even if home values aren’t appreciation in a given area due to demand, their value can still increase significantly due to economic inflation. If the cost of labor and materials to build a home are rising, then the construction of an identical property would be more costly. Thus the property value is high just because of recreation costs.

4. Cash Flows Below Mortgage Payoff: Purchasing NJ rental properties and keeping tenants in them results in cash flow in the form of rent payments. This can generally provide better returns than most bank interest or stock appreciation. Even if the rent on your property are only making the mortgage payments and no more, you are increasing your equity along the way. At some point the rents will totally satisfy the mortgage balance, and you’ll own the property free and clear.

5. Buying Below Market Value: For a variety of reasons, there are always property sellers who have an immediate need to get their equity out of the property. This need can be pressing enough that they’ll let the property go for significantly below its true market value. Some properties are in foreclosure and the lenders will take less than the market value in order to avoid further marketing efforts and clear it off the books. When you can purchase one of these properties, you immediately enter an equity position that is your profit in the transaction.

6. You Can Increase the Value of the Site and/or the Property: An example of both site and property value increases might be a home in an area with a great ocean front view. However, this home is older and has small windows facing the views. In addition, some large trees are directly in the site lines of the view, also taking away from the outdoor enjoyment of the views. You purchase the property and do 3 things:

• Site Value: you remove one tree and trim the others to open up the view
• Site/Property Value: You add a patio and deck on the side of the home facing the views
• Property Value: You add larger windows to the side of the home facing the view

7. Convert the Use of the Property: A classic example of this would be the purchase of apartments with low rent yields, remodeling the structure and converting the apartments to condominiums for sale.

8. Create New Value in the Neighborhood: Getting into an are early before it begins to appreciate can be quite profitable. All around the country, urban neighborhoods are experiencing renewal and revitalization projects are taking root. Older properties are being refurbished and significantly jumping in value.

For more information about investment properties in New Jersey, contact Dan Kurland at dkurland@weichert.com or (732) 233-6969 any time!