Although it is a rare occurrence when real estate professionals reach a genuine consensus on anything in the industry, there is widespread agreement among virtually all that location is one of the most significant considerations when it comes to the success of fix-and-flip projects. 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.
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 that draws a significant number of transplants year after year seeking flexible housing options like newly renovated houses. With the average home price well below $300,000, the barrier to entry is relatively low for budget conscious investors or those that are new to the industry. 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.
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 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.
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.
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.