South Orange real estate is so hot that investors are clamoring for undervalued properties and properties in poor condition which they can renovate and flip for a substantial profit. While this has been going on in many nearby communities (like Millburn, Short Hills and Livingston) until recently it was not happening in our town.
The challenges preventing investors from scooping up homes to flip in South Orange were twofold. The biggest issue was that housing prices in town were depreciated and demand was low. This makes the margin of potential profit too small in relation to the risk. Investors use a formula to assess weather a property is a good investment and on average are looking for a 25% return.
The second reason investors weren’t charged up about investing in South Orange was the cost to carry the property in light of the property taxes. We all know that property taxes in South Orange are a bit steep which makes it more expensive for the investor to carry it while it is being renovated and thereby cutting into his potential profit.
But these conditions are no longer an issue. Inventory is low in South Orange, demand is high, prices are going up and investors are seizing the moment. Here is a great example:
This house went on the market on October 26, 2014 for a list price of $399,000 – located very close to town and the train, vacant and in need of repair. Five competing offer were made, all of them by investors paying all cash and the seller accepted one of the offers on October 30, 2014. To view more pictures and other details for 19 Briar Court click here.
It will most likely be back on the market at the height of the spring market for a list price of $600,000 – $640,000. Time will tell. If you or someone you know would like to preview properties for possible investment contact me at [email protected]