Does it make sense to buy NOW and rent it out in NJ? (Elizabeth: apartments, renters)

[njplay]

I have extended family that is looking to move into our area (Springfield, NJ) in about 3 years (almost retired). Was thinking that since housing prices are so low, they could buy now and rent it out. The house would be very close to ours and we would be up for managing the property. Does this make sense to do? or should they just wait until they are ready to move. With housing prices so low it seems tempting, but I have no clue what the rental market is these days... Thanks in advance!

[BobKovacs]

I don't think you've seen the bottom of the market yet, so if you don't have to buy now, I wouldn't. With regard to the rental market, unless you're planning on putting down a pretty hefty amount on the house, it's doubtful that the rent would cover the mortgage, taxes, and insurance costs, and it's also doubtful that you'd get financing unless you've been a successful landlord before (or have a huge income that would cover both mortgages and any other debt you have while staying within the required debt ratios).

[njplay]

Originally Posted by BobKovacs

I don't think you've seen the bottom of the market yet, so if you don't have to buy now, I wouldn't. With regard to the rental market, unless you're planning on putting down a pretty hefty amount on the house, it's doubtful that the rent would cover the mortgage, taxes, and insurance costs, and it's also doubtful that you'd get financing unless you've been a successful landlord before (or have a huge income that would cover both mortgages and any other debt you have while staying within the required debt ratios).

Thanks Bob!!! some good advice there, must do my homework to see if extended family has the funds for a good sized amount, my instinct is that rent would not be sufficient enough to cover those costs you mentioned..

so what's your prediction on when the bottom of the market coming?

[BobKovacs]

Originally Posted by njplay

so what's your prediction on when the bottom of the market coming?

If I had a crystal ball to know that, I'd be looking into the winning lottery numbers for tonight instead of hanging around here.

It's impossible to say, but if the economy continues to do what it's been doing, I'd say we've got another 6-12 months minimum before things start to pick up. Prices may not drop further, but they probably won't start climbing any time soon, so at least you've got time to figure out what you want to do.

[midagegirl]

Property tax alone would be at least 7,000 then u add on utilities and mortgage it really adds up.

[CuCullin]

Originally Posted by midagegirl

Property tax alone would be at least 7,000 then u add on utilities and mortgage it really adds up.

Good homes in area towns (not specifically springfield, and I'm not talking about Elizabeth or Plainfield here) have taxes with less dollars associated - some significantly less. So you have to go look on a home by home and town by town basis, saying $7k and up isn't accurate.

[bluemask]

I wouldn't recommend buying and renting at this point. Housing price is still way high IMHO. Which towns do you feel that the price is "so low"?

[theoakman]

Originally Posted by njplay

I have extended family that is looking to move into our area (Springfield, NJ) in about 3 years (almost retired). Was thinking that since housing prices are so low, they could buy now and rent it out. The house would be very close to ours and we would be up for managing the property. Does this make sense to do? or should they just wait until they are ready to move. With housing prices so low it seems tempting, but I have no clue what the rental market is these days... Thanks in advance!

Housing prices aren't low. I would tell your family to wait to buy until they get here. Furthermore, I live in an subdivided house. My landlord owns about 4 properties. I've watched renters habitually destroy the apartments he owns over the past 5 years.

[HalfFull]

Don't do it !! Not worth the landlord headaches and speculative risk.

[seaofchicken]

Taxes in New Jersey are out of control, dont buy.. run away from this TAX HAVEN asap and do your investments outside.. or until we get a governor who has balls to remove the unions and the remove the waste on the nj government payroll!!