What’s it like growing up in Jersey City? It involves being closer to the Statue of Liberty than Manhattan but everyone believing Lady Liberty is a New Yorker. It’s having a chip on your shoulder and a ton of pride. It’s why I’ve been investing in real estate here for a long time—I want to give back to my community.
The best way that I can give back through my business is to find leads. A lot of people who are new to real estate investing think the always-happening foreclosure auction in Jersey City is the way to go about doing it. And while there are a lot of houses there, there can also be a lot of problems associated with using it as your sole or primary source for leads.
The whole point of leads in real estate investing is to get the best ones for the lowest cost in both time and money. To me, there are much better ways than participating in the foreclosure auction in Jersey City.
The Jersey City Foreclosure Market
The New Jersey real estate market has a few extremes. You have very rich areas and very underdeveloped ones. The point for the sharp investor isn’t to find the unicorn in the rich area. That might happen, but you also might spend a ton on a property and eke out a small profit. Or you could spend a smaller amount on a different property and make a bigger profit in less amount of time—where you actually win.
The foreclosure market creates this opportunity. These are houses which are less expensive and suddenly available. And, it’s a big market.
New Jersey is leading the country in foreclosure rates. Last year, mortgage relief as a result of the pandemic made accurate numbers less available. By the end of the year, though, New Jersey had a foreclosure rate of one in every 11,096 residential properties. There were 160,000 houses that were facing foreclosure as relief and forgiveness programs came to an end. Because of this, many houses are about to enter into foreclosure.
More foreclosures could mean good news for investors but that’s not always the case, for the reasons you’ll see below.
Navigating the Foreclosure Auction in Jersey City: Pros and Cons
Why do people like the auction? Simple—it’s exciting, it’s accessible, and it’s just there.
Pro: Frequency of Auction
In normal times, the Hudson County Sheriff’s auction takes place every two weeks. That means there are constantly houses coming onto the market. If you are out of town, or in a non-buying cycle, you aren’t really missing anything. And you don’t have to force yourself to buy this week, knowing that another chance is but a fortnight away.
(Note: Currently, the foreclosures up for auction don’t include all of the available properties—just commercial and abandoned/vacant properties.)
Pro: Low Starting Price
New Jersey isn’t cheap. The median home price is more than $400,000 in North Jersey. In the Hudson County Sheriff’s Auction, houses start much lower. In fact, you are only required to have a $80,000 cashier’s check to show up. And with a lot of houses starting within that range, or maybe close to $100,000, that is potentially a steep discount.
Pro: Volume of Houses
Currently, there are around 200 houses facing foreclosure in Jersey City alone. That’s a pretty decent number when thinking about volume. You have options; you don’t have to bank on trying to win a specific bid. You aren’t desperate and hopping on the first foreclosure you think is a good option.
Sure, there are many pros to buying a foreclosure at the auction in Jersey City but there are also cons to consider.
Con: There Can Be a Lot of Competition
Even though there are a lot of foreclosures, there are a lot of buyers. This region is one of the epicenters of the fix and flip market. Not only are there a bunch of us Jersey people looking into the auction, but there are also many New Yorkers and big financial institutions getting interested. Competition can make it harder to get a good deal at foreclosure auctions.
Con: Competition Drives Up the Prices
Speaking of competition… not only do they make it harder to bid, but they can also drive up the prices. You should be prepared to spend more than the starting bid. Even though you are starting low, it can quickly go up. And the thrill of competition usually juices you (and if you’re like me, it’s exciting to win against big shots). That means you might end up drastically overpaying.
Con: You Don’t Know The House
When you purchase a house from an auction, you don’t know everything there is to know before it’s yours. Sure, the listing gives you some information, including liens, but not much. Unless you’ve researched every place, you won’t know everything about a property. That means you could be on the hook for costly repairs, back taxes, and liens. These expenses can eat into your potential profit if you’re not prepared.
Con: You Need a Lot of Money Right Now
To participate in the Hudson County Sheriff’s Auction, you need a $80,000 cashier’s check. Typically, it’s $25,000. Either way, it’s still a lot, especially in a business where liquidity isn’t always easy to come by. It doesn’t end there, though. That’s table stakes. According to the bylaws, you have to pay 20% on the day of the sale. No cash, credit card, or personal check. If the house gets up to $200,000, for example, you’re paying $40,000, right then and there. Maybe you could get a loan beforehand, but that just amps up the pressure to buy something.
Overall, foreclosure auctions tend to be weighted toward those who already have the cash to buy a house. If you don’t have access to cash because it’s tied up in other investments, for example, then the chances of you coming out on top are slim.
The key is to get a house before it is foreclosed. And I know how to do that.
The Best Way To Find Distressed Property in Jersey City
The list of foreclosures in Jersey City, and around the country, is growing now that mortgage forbearance is ending. No one wants to go through foreclosure. It’s hard and it messes up your credit for years to come. So a lot of people in Jersey want to sell fast for cash. You want those motivated seller leads before other people get them. I’ve been able to get those distressed homeowner leads after investing in an independently owned and operated HomeVestors® franchise.
Everyone in Jersey City knows their national marketing campaign: “We Buy Ugly Houses®”. So when a distressed homeowner is ready to sell, they call HomeVestors®, and then I can get the lead. This reduces (or even eliminates) competition, gets rid of a lot of irritating regulations, and allows me to help a person who needs fast cash and wants to unload a burdensome home. I can inspect the place and make a fair offer.
I also have the time to apply for a loan through HomeVestors®’ proprietary hard money lending portal. It’s fast, and I can find the best rate after entering my information into the portal. I can weigh the merits of a deal before taking out a loan. It works. And the best part is, it’s all on my terms. I get to make my own decisions. Isn’t that the Jersey way?
If you’re considering investing in property in Jersey City and avoiding the auction, request information about becoming a franchisee today.
Each franchise office is independently owned and operated.