While New York and New Jersey are neighboring communities with much in common, real estate investing in the two locations can be very different. When choosing a location to invest in, you must evaluate the economy, population growth, property taxes, home prices, and lending options to start with. At first glance, New York and New Jersey may appear to be equally attractive, but some stark differences can make the decision difficult.
Property taxes are an important factor to consider when choosing where to invest. These tax rates can be quite high, eating into your return on investment (ROI). While New York’s property tax rates are lower overall, investors need to consider location-specific variations. New Jersey’s higher taxes can majorly discourage many investors from the state unless you can guarantee higher rental profits.
New York’s average property tax rate is approximately 1.4%, though it varies significantly from county to county. For example, Westchester County has some of the highest rates in the entire country. At the same time, New York City benefits from fairly low property tax rates due to its tax structure. Unfortunately, buying property in New York City directly can be very expensive and difficult unless investor-friendly loan options like DSCR (debt service coverage ratio) are utilized.
Unfortunately, New Jersey homeowners pay the highest property taxes in the U.S., with an average rate of around 2.26%, nearly double the national average of 0.99% as of late 2024. These higher rates can significantly affect ROI, especially in cities or locations with higher property values.
Both states are notorious for their higher-than-average housing prices, and for good reason—these locations offer access to some of the best job opportunities in the world. Despite the high prices, investment returns are generally very likely in both states. Surprisingly, New York has slightly more variety in terms of price.
The median home price in New York is around $450,000. However, if you’re looking to get closer to New York City, especially near Manhattan, expect to pay millions. Upstate New York and suburban regions offer more affordable options for investors, but you may not have the appeal and draw of New York City.
The median home price in New Jersey has jumped to around $530,000 recently. However, coastal and commuter-friendly towns tend to be even more expensive. Combined with high property tax rates, you’re looking at a high price tag. Thankfully, the proximity to New York City and its impressive healthcare quality still make it a very popular place for tenants.
A location’s economy measures the general population’s income and job growth. Evaluating a state or city’s economy can help investors determine whether they’ll see many tenants and rental profits. Both states have strong economic features, but New York offers the potential of higher rent in major cities, especially New York City. However, New Jersey may provide a steadier, family-oriented range of tenants. Neither choice is a bad one.
New York has the benefit of containing one of the world’s most impressive economies, particularly in the tourism, finance, and cultural sectors in New York City. Beyond NYC, there is a strong job market with opportunities for residents of all backgrounds. New York City and its surrounding areas are among the world's most prized rental markets.
New Jersey, being next door, also benefits from New York City’s popularity and appeal. However, the state has a booming healthcare and pharmaceutical industry and is considered the fourth-best healthcare system in the country. Finance and manufacturing are also popular industries in New Jersey, solidifying its economy and rental market. The state's lower unemployment rates and proximity to major economic hubs also contribute to rental market stability.
Both New York and New Jersey investors have access to a wide variety of high-quality lenders with attractive rate offers, including credit unions with exclusive member rates. There are some differences in lending regulations. New Jersey has an advantage in affordability and support for middle-income renters, while New York is better suited for seasoned investors looking to find luxury or high-value tenants.
While mortgage rates are attractive and competitive, some stricter lending regulations may prove tricky for investors, especially regarding traditional mortgages. Depending on the city, DSCR loans may be easier to secure in New York due to its steady, continuous population and economic growth.
Mortgage rates are similarly competitive in New Jersey. The state features a large network of lenders, particularly local sources, which may be more attractive to investors looking for flexible and friendly lending options for suburban or family-friendly properties, including multi-family units. Additionally, state-specific programs like the NJHMFA Smart Start Plus can offer up to $22,000 in down payment assistance for eligible buyers. Not all investors may qualify, but this can be great for new investors or homebuyers.
There is no solid answer on which state will provide the better ROI, as investor goals, strategies, and properties are all different. In New York, you may find areas with higher rental income, especially in urban or tourist-heavy areas like NYC. New Jersey may be a great choice for stable, long-term investments in commuter-friendly and suburban family-friendly neighborhoods.
From (https://ocnjdaily.com/news/2024/sep/16/the-intersection-of-real-estate-and-sustainable-urban-growth/) with the anchor investing in New Jersey or New York
From (https://ocnjdaily.com/news/2024/sep/06/the-benefits-of-hiring-a-real-estate-investor-marketing-agency-for-your-portfolio/) with the anchor New Jersey or New York investments
