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Best Places to Invest in Real Estate in New Jersey

Saad Dar

Writer and Editor at Baselane 22 April 2022 5 Min Read
Best Places to Invest in Real Estate in New Jersey

Welcome to New Jersey, home to 9-million Americans. The garden state is known for its rich history, big personalities, and its abundance of rentals for New York commuters.

If you’re thinking about investing in a rental property in New Jersey, here are our top picks for where to look.

TIP: If you’re thinking about expanding your rental business, find out how Baselane’s rental property analytics can help you determine whether expanding into a new state is right for you.

1. Newark

  • Median listed home price: $329,000
  • Median Price per square foot: $194
  • Rental Vacancy rate: 9.5%
  • Schools in the area: 9 schools with above-average ratings
  • Median Rental Income: $1,350/month
  • Household Median Income: $37,476/year

In the heart of New Jersey’s Gateway Region is Newark, a bustling hub within driving distance of downtown Manhattan.

Newark isn’t dependent on New York for its economy, however. It has a thriving information economy of its own. Newark is home to a number of colleges and universities that some 50,000 students attend. According to the American Association of Port Authorities it’s also the busiest shipment hub on the east coast.

As a major economic center, there is a strong demand for housing in Newark. According to NJ.com, 1 in 5 Newark commuters drive over 2 hours to get to work, making renting an attractive alternative. House prices are reasonable despite the demand, with half of the listings asking under $329,000. Newark has plenty of options available if you’re looking for a multi-unit property.

Some rental properties in Newark are subject to rent controls, depending on their age, size, and use. If you invest in a rent-controlled property in Newark, annual rent increases are limited to the city’s change in the consumer price index, and the allowed increase has rarely been over 2%.

2. Jersey City

  • Median listed home price: $630,000
  • Median Price per square foot: $577
  • Rental Vacancy rate: 5.8%
  • Schools in the area: 12 schools with above-average ratings
  • Median Rental Income: $2,670/month
  • Household Median Income: $76,444/year

Many of New York’s famous “bridge and tunnel” commuters, who cross the Hudson River at the end of the day, spend their nights and weekends in Jersey City.

Jersey City residents bring lots of money home with them from New York, and they spend most of it on housing. The median home price is a whopping $630,000, and the median rent for a 1-bedroom is $2,670. While house prices are up 10.5% since last year, rents have gone up 56% in the same timeframe. Landlords can set any price at the start of a lease, but local rent control laws limit increases to once per year at a rate tied to the consumer price index.

If you have the capital to invest, Jersey City has great prospects. As long as the demand for housing close to New York remains strong, Jersey City will have a strong demand for rental housing and a healthy property market.

3. Elizabeth

  • Median listed home price: $370,000
  • Median Price per square foot: $247
  • Rental Vacancy rate: 4.0%
  • Schools in the area: 3 schools with above-average ratings
  • Median Rental Income: $1,929/month
  • Household Median Income: $50,647/year

Follow the New Jersey Turnpike 5 miles south of Newark/Jersey City, and you’ll arrive in Elizabeth, a city of 137,000 directly across the bridge from Staten Island.

Eighty-nine percent of Elizabeth residents rent their homes, making the city a prime location to invest in a rental property. Elizabeth also has a particularly low rental vacancy rate, which is keeping rents high. A one-bedroom goes for $1,929 per month on average.

Elizabeth has strict rent control laws limiting increases to 3% or $20 per month, whichever is higher, which makes traditional rentals less appealing. However, Elizabeth is an interesting location to invest in short-term rentals due to its location immediately south of Newark Liberty International Airport, one of the busiest in the country.

4. Lakewood

  • Median listed home price: $359,900
  • Median Price per square foot: $204
  • Rental Vacancy rate: 1.6%
  • Schools in the area: 28 elementary schools and 14 high schools
  • Median Rental Income: $1,300/month
  • Household Median Income: $50,139/year

Head south from the Gateway Region on Garden State Parkway, and you’ll pass through Lakewood, a city of 135,000 in Ocean County.

Lakewood has a majority population of Orthodox Jews and is very family-oriented. According to the US Census Bureau, one-half of Lakewood residents are age 19 and under, and roughly 46% of households have four or more residents. Educational services employ more people in Lakewood than any other sector.

Becoming a landlord in Lakewood means investing in single-family real estate. Multi-unit dwellings are few and far between, and most real estate listings are for townhomes and detached houses. House prices are rising, however, and an ultra-low rental vacancy rate spells higher rents in the near future.

Lakewood does have a rent control bylaw but allows more generous increases than other cities on this list. Rent increases are capped at 6.5% per year for landlords who include heat with the rent and 5% when tenants are responsible for their own heating costs.

5. Trenton

  • Median listed home price: $169,700
  • Median Price per square foot: $129
  • Rental Vacancy rate: 3.50%
  • Schools in the area: 20 elementary schools and eight high schools
  • Median Rental Income: $1,255/month
  • Household Median Income: $37,002/year

Trenton has a population of 85,000 and a steady economy propped up by its position as the capital of New Jersey.

The city has endured a long stretch of stagnation and has the embarrassment of having the highest crime rate of cities on this list. That could be about to change, however, as the “Trenton250” master plan seeks to revitalize the area over the next 20 years. The city’s goal is to become “a premier economic and cultural center built on arts, industry, and education.”

Trenton also has the right location to become a hotspot for young people fleeing urban centers for smaller cities. The city is within a 90-minute drive of Philadelphia and the Gateway Region, which helps its chances.

The shift towards gentrification in Trenton is still in its infancy, providing an opportunity for early investors. House prices are still low, and there are plenty of deals to be had. Should the city succeed in its goals, those who invest in Trenton today could enjoy big rewards.

Like most cities in New Jersey, Trenton has a rent control bylaw. The maximum increase is set by the Rent Stabilization Board according to the consumer price index. The current allowable increase is 2.2%.

6. Vineland

  • Median listed home price: $244,500
  • Median Price per square foot: $155
  • Rental Vacancy rate: 3.63%
  • Schools in the area: 22 elementary schools and four high schools
  • Median Rental Income: $950/month
  • Household Median Income: $55,740/year

In southern New Jersey, the city of Vineland offers small-town living within driving distance of Philadelphia, Wilmington, DE, and Atlantic City. Vineland enjoys a relatively high household income, paired with moderate house prices, which are steadily rising – the median listing price in Vineland is up 28.8% since this time last year.

There are still great deals to be had in Vineland, however. Townhomes and detached houses can easily be found for under $200,000, and there is a small number of affordable multi-unit properties available.

Vineland has the distinction of being the only city on this list without a rent control bylaw. Landlords are free to set the rent and raise it as they please.

FAQs
Is New Jersey a good state for property investment?

New Jersey is a good state for property investment, but you should proceed with caution. Over 100 municipalities in the state have enacted rent controls that limit the amount landlords can increase the rent. Furthermore, house prices in New Jersey haven’t been increasing at the same rate as in other states. While some areas have high crime rates, the state overall has some of the lowest incidences of violent crime and property crime in the country.

Is there a large rental market in New Jersey?

There is an enormous rental market in New Jersey, especially in urban centers close to New York. Statewide, the US Census Bureau says 36% of households are renter-occupied. In some cities, that rate is much higher. For example, 89% of residents of Elizabeth, NJ, rent their homes.

How do house prices in New Jersey compare to other areas in the US?

The typical home price in New Jersey is just over $400,000, which is higher than in neighboring New York, Pennsylvania, and Delaware. New Jersey also has above average rents, with the 6th-highest cost of rent out of the 50 states and the District of Columbia.

Saad Dar

Writer and Editor at Baselane

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