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If you were going to invest in a rental property in any NJ beach town, where would you recommend to get the best bang for your buck?
We own a rental property and are looking to sell it and reinvest in a different rental property - preferably in a NJ beach town. The real estate market is so competitive right now and the towns in which we’re looking seem to be unattainable.
Our budget is $400K-$600K and we’re looking for a move-in-ready 2 bedroom+ condo or house. We would buy in any beach town anywhere in NJ where we could guarantee a solid income stream.
If you were going to invest in a rental property in any NJ beach town, where would you recommend to get the best bang for your buck?
We own a rental property and are looking to sell it and reinvest in a different rental property - preferably in a NJ beach town. The real estate market is so competitive right now and the towns in which we’re looking seem to be unattainable.
Our budget is $400K-$600K and we’re looking for a move-in-ready 2 bedroom+ condo or house. We would buy in any beach town anywhere in NJ where we could guarantee a solid income stream.
Just my input on Jersey Shore rental properties is that you are limiting yourself to 3 months income. The Jersey Shore was a boon the last two years due to covid, I dont see that happening this summer.
If you were going to invest in a rental property in any NJ beach town, where would you recommend to get the best bang for your buck?
We own a rental property and are looking to sell it and reinvest in a different rental property - preferably in a NJ beach town. The real estate market is so competitive right now and the towns in which we’re looking seem to be unattainable.
Our budget is $400K-$600K and we’re looking for a move-in-ready 2 bedroom+ condo or house. We would buy in any beach town anywhere in NJ where we could guarantee a solid income stream.
Asbury Park.. lot of music events/live events so you might have visitors all throughout the year may be. But the ultra modern ocean front condos are priced well above 900k.
Honestly, in this market I probably wouldn't. Prices are like 50-80% higher than they were in 2019. Will they stay there? Who knows, but could be top of market right now. We had considered buying a place further down the shore (Margate/Ventnor area) back in 2019 (to use for our family, not to rent out), and by the time we got serious about it in fall of 2020 it was too late. Your budget would have worked in 2019, but would be tougher now.
As someone mentioned above, you get 3, maybe 4 months of income from it. If you want rental income, I'd look to the Catskills first - the nightly rate in a modern, renovated one on some land is probably 75-85% of the rate of a shore house (I know this as someone who vacations in both spots) but the cost of ownership is probably 50% lower. And you can get income year round, assuming it has things like a fireplace / fire pit and is close to ski locations. Plus, you don't need to worry about a hurricane or rising ocean ruining your investment.
Honestly, in this market I probably wouldn't. Prices are like 50-80% higher than they were in 2019. Will they stay there? Who knows, but could be top of market right now. We had considered buying a place further down the shore (Margate/Ventnor area) back in 2019 (to use for our family, not to rent out), and by the time we got serious about it in fall of 2020 it was too late. Your budget would have worked in 2019, but would be tougher now.
As someone mentioned above, you get 3, maybe 4 months of income from it. If you want rental income, I'd look to the Catskills first - the nightly rate in a modern, renovated one on some land is probably 75-85% of the rate of a shore house (I know this as someone who vacations in both spots) but the cost of ownership is probably 50% lower. And you can get income year round, assuming it has things like a fireplace / fire pit and is close to ski locations. Plus, you don't need to worry about a hurricane or rising ocean ruining your investment.
Mortgage interest rates have gone up to ~5% and there is an expected rate hike from the Fed of .5-.75% this afternoon from where its sitting at of 2% now. The market is going to have to adjust for these, so I believe there will be a cool off period.
As I stated in a prior post, the real estate market down the shore is hot. My opinion only from anecdotal view, but the Jersey Shore is a local tourist market. People who would traditionally spent money for vacations in Europe, Hawaii, etc. were spending it with rentals down the shore the past 2 years. The demand went through the roof and the prices followed. As the world opens back and move to a post-covid era, there will be a dip in the local markets, including rental rates later this summer and next year.
I do believe the more traditional markets, were probably near peak but prices aren't coming down anytime. There might be some adjusting for more inflation, and rising interest rates but were leveling out.
I also went down to the Seaside Heights last summer, and witnessed the massive developments of luxury condos down the main boulevard there. They're even taking out all the nightclubs to put in more luxury condos in its place. This was part of my stomping grounds in my 20s, but my question is who is buying and paying this much for luxury condos in Seaside Heights? It was always always nicknamed sleezeside for a reason.
Last edited by DannyHobkins; 05-04-2022 at 09:10 AM..
Mortgage interest rates have gone up to ~5% and there is an expected rate hike from the Fed of .5-.75% this afternoon from where its sitting at of 2% now. The market is going to have to adjust for these, so I believe there will be a cool off period.
As I stated in a prior post, the real estate market down the shore is hot. My opinion only from anecdotal view, but the Jersey Shore is a local tourist market. People who would traditionally spent money for vacations in Europe, Hawaii, etc. were spending it with rentals down the shore the past 2 years. The demand went through the roof and the prices followed. As the world opens back and move to a post-covid era, there will be a dip in the local markets, including rental rates later this summer and next year.
I do believe the more traditional markets, were probably near peak but prices aren't coming down anytime. There might be some adjusting for more inflation, and rising interest rates but were leveling out.
I also went down to the Seaside Heights last summer, and witnessed the massive developments of luxury condos down the main boulevard there. They're even taking out all the nightclubs to put in more luxury condos in its place. This was part of my stomping grounds in my 20s, but my question is who is buying and paying this much for luxury condos in Seaside Heights? It was always always nicknamed sleezeside for a reason.
Yeah, agree with this, though I do wonder if there's a higher % of cash buyers (guessing 2nd home sales penetrate higher on cash transactions) on the shore so the market would be more immune to rate hikes. Surely there will be some impact though.
I'm still unclear on the lasting pandemic / WFH impacts to this specific market. For my family's personal calculus, we were waffling back and forth pre-pandemic on whether we could spend enough time to justify it - get home from work late Friday afternoon (if we're lucky), pack up the car, hit the road by 5-6p, sit in awful traffic, get to your beach house by 8-9p, and have basically all day Saturday, and Sunday morning to enjoy it.
Now, post-pandemic, we both have a hybrid work arrangement where we could leave Thursday night (after 7p, say, to avoid the traffic), work remotely on Friday while kids do whatever, and then "be there" before we would have even left the city during our old lives. That one extra day makes a huge difference, and can't help but think that was also driving the prices up. Alas, prices got too crazy for us mere mortals so we backed off of our plan.
I would check out the as-yet ungentrified parts of Long Branch, because it will all catch up eventually. Kushner and Extell are building high-rise condos like mad on the waterfront, but a few blocks in are some older houses that are still walkable to the beach, plus there are condos converted from old garden apartments.
I also went down to the Seaside Heights last summer, and witnessed the massive developments of luxury condos down the main boulevard there. They're even taking out all the nightclubs to put in more luxury condos in its place. This was part of my stomping grounds in my 20s, but my question is who is buying and paying this much for luxury condos in Seaside Heights? It was always always nicknamed sleezeside for a reason.
Funny. You see this happening in Wildwood too. It even seems to be happening in Atlantic City to an extent. Hey, they all have to start modestly somewhere. It’s gentrification. Long Branch, Asbury Park, Belmar, Point Pleasant have all been going through this. These towns are next on the list. They are the cheap options with the best possible chance of an upside on your ROI. Here’s my thought.
Existing shore properties are mostly owned and kept within the family for generations to pass down to children. It’s generational wealth. They can use it for their leisure our rent it out to generate income, whatever they prefer. People don’t want to sell them. Even if they move away to somewhere else for their primary residence and never intend on coming back, they can hang onto this for rental income. At the same time, you constantly have a new stream of people who move into the area, some of whom will eventually want a piece of the shore for themselves. Current owners aren’t selling, so builders and developers see the chance to create new housing for the people who come from Ohio, Minnesota, wherever (and overseas) to settle long term in the area and can afford a vacation home. It’s much easier and economical for them to do business in Seaside Heights than it is in Spring Lake.
So, they get the cheap lots, build them up, and flip them. Are they going to make a sale in Seaside Heights to the billionaire hedge fund executive who moved here from Illinois? No, but they might get that couple who are a mechanical engineer and a data scientist who moved here from England.
Funny. You see this happening in Wildwood too. It even seems to be happening in Atlantic City to an extent. Hey, they all have to start modestly somewhere. It’s gentrification. Long Branch, Asbury Park, Belmar, Point Pleasant have all been going through this. These towns are next on the list. They are the cheap options with the best possible chance of an upside on your ROI. Here’s my thought.
Existing shore properties are mostly owned and kept within the family for generations to pass down to children. It’s generational wealth. They can use it for their leisure our rent it out to generate income, whatever they prefer. People don’t want to sell them. Even if they move away to somewhere else for their primary residence and never intend on coming back, they can hang onto this for rental income. At the same time, you constantly have a new stream of people who move into the area, some of whom will eventually want a piece of the shore for themselves. Current owners aren’t selling, so builders and developers see the chance to create new housing for the people who come from Ohio, Minnesota, wherever (and overseas) to settle long term in the area and can afford a vacation home. It’s much easier and economical for them to do business in Seaside Heights than it is in Spring Lake.
Are Long Branch, Asbury Park, and Belmar shore properties likely to crash in a few decades due to rising seas? From a cursory look at FMEA, it doesn't seem like Long Branch or AP will be affected too significantly within the next century years at least. I'm not sure if they've been a source of generational wealth in those areas so far, but I can see that being the case going forward.
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