There are many reasons why groups and individuals look for real estate as their main investment vehicle. Investors have many different goals and concepts. Some look to have a healthy balance of stocks and real estate as part of their portfolio. The ratio between the two changes from person to person. Some investors simply invest in stocks, however, these investors are typically employed on Wall Street where they have their finger on the trigger at all times. Real Estate investing dominates, though, when it comes to “creating wealth.”
I won’t spend a lot of time talking about the past, but in today’s economic times, real estate is not only bought to offset inflation, but it is used for cash flow, upside, and most of all, it is a tangible asset that you have control of, unlike stock options.
Investing in real estate provides a tax shelter. Stocks, somewhat, however you can only deduct your losses on stocks. In real estate, you have endless tax deduction capabilities.
Whether you are looking to invest in a single unit, such as a condo, single family home, land, etc or whether you are looking at commercial / multi-family, you are building a portfolio in which today’s market provides much more upside potential than in years past. Low and distressed prices, low financing rates, a shortage in rental stock created by massive demand, and improving rental rates. Rental rates have already stabilized in Northern NJ. In many sub-markets in the NY Metro area, we are seeing 2010-2011 year over year increases of up to 13%. Hoboken is one of the strongest rental markets around where rental rates have improved 11.2% since January 2010. We do not see this slowing down. The ratio to rent versus buy is keeping a balanced market of homeowners and renters, something investors should keep their eye on.
Prior to investing in real estate, investors will look at the property’s current Cash Flow numbers, Cash flow on a pro forma basis, and/or Capitalization Rates (Cap Rate). In short and as simple as I can put it, a Cap Rate is your first year yield on your asset. The market trades differently market to market. Before looking into property, consult with one of our team members to analyze what your preferred market is trading at. This will give you a good indication what to expect and why you should expect it.
Higher Cap Rates typically mean more risk. Lower cap rates typically have less risk, based on potential upside, historic tenancies, and quality of the area / building.
In today’s New Jersey real estate market, there are many areas and opportunities that make a ton of sense. Think “Metro”. Access into the city is important these days and that makes counties such as Hudson, Bergen, Essex, and Passaic attractive. We have looked into quite a few opportunities this year and have brokered many great deals that will provide our clients a great deal.
So whether you are looking at a single unit or larger scale, we are here to help. Give us a call and give us an opportunity to show you our market awareness and knowledge of the analytical side of things. Indicated from many of our articles published on this website blog as well as local media that has printed some of our material, we are one of NJ’s premier leaders in real estate consulting. Our group of elite agents coined “New Jersey Real Estate Guys” under Weichert Realtors will assist in helping you find a great deal as well.
We look forward to hearing from you. Call Scott Allan direct at 877-688-7582 or e-mail me at Scott@NewJerseyRealEstateGuys.com