Buy-Hold…Not Flip…Confirmed as Most Common Strategy for Newark Real Estate Investors

As a former real estate investor and rehab developer, a good share of my real estate practice focusses on current investors in Newark, NJ. Most of my clients buy and hold properties for rental, but a few buck the trend by flipping rehabbed properties. So, as we entered 2014 I sought to confirm what at least a segment of the current investment market looks like by adding some hard data.

The segment I chose to look at (which is also a prime target for several of my clients) was 2-family houses having 5 or 6 bedrooms (best for rental income), which sold for in 2012 for $100,000 or less. There were 55 such sales as reported by the Garden State MLS. Of the 55 purchases, 39 (71%) were still in the hands of the same buyers as of 12/31/2013 (although the names of the owning entities may have changed), while 16 (29%) had been flipped. The average sale time for the flipped houses, as measured by days on market, was 305…a long time to wait for a sale which explains the preponderance of buy-hold investors. Here are the details of the flips:

  • Average buy price           $65,443
  • Average flip price             $212,431 (per public records)
  • Average gross margin    $146,987

Assuming an average rehab cost of $80,000, the net profit would be around $67,000.

Feel free to contact me at 973-865-1863 if you have any questions about investing in Newark or anywhere else in NJ.



Categories: All Posts, real estate investing

Tags: , , , , , ,

1 reply

Trackbacks

  1. How to profit from real estate by rehabbing and retailingSelling Your Home | Selling Your Home

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: