How to find deals for investment (NJ)

[chrismoneymaker]

Hello all -

I'm new to real estate and am looking to add an investment property to the mix. This would be my first purchase, as I'm currently renting and would likely remain renting, using this property solely as an investment.

I have two concerns:

1- Being in NJ, taxes are high and deals are apparently hard to find. I was told once that if it's listed on the MLS, it will most likely not be a free cash flow property in the long run (at least in NJ).  If this is true, I'm assuming the only other way to do this is to look into foreclosures? Is there any way to view foreclosure listings without paying? 

2- I'm currently working/living in a place I don't necessarily see myself staying. Would purchasing real estate be a foolish move since I'm not 'settled' and don't know where I'll end up? Part of me says yes, the other half says as long as I'm making money and can manage the property, it shouldn't matter where it is.

Any thoughts or advice on where to start would be appreciated.  Thanks!

[tooqk4u22]

NJ is very difficult to make rentals work, well for me anyway.  I have been looking and as you indicate taxes are the primary issue - most parts of NJ experience similar rental rates as other parts of the country but the taxes are 3-4x higher - everything I have looked at pencils out to a 4-5% cash on cash return - just not worht the time/risk for me - that said it is a stable dense state for the most part so unlike the 10% minimum return others typically state but I would buy if I could pencil a 6-7% cash on cash return especially given where mortgage rates are. I'll keep looking but not hopefull.  Best case is to find a property that is trashed and needs to be completely redone, that way you can get in low enough to make it work, but remember this would not pure rental return.   

Don't have an opion on your second question.

[chrismoneymaker]

Aside from the lower ROI, I also read NJ law is more lenient toward tenants than other states. I've heard of people buying out of state, but as a beginner I don't think I'd want to start the learning process that way. I was serious about one place about five blocks from the beach, but would only earn a measly 2% return. I guess anything less than 6-8% and my money would be better off in the stock market.

[Another Reader]

Foreclosures are listed on the MLS like any other property.  Banks and the GSE's want fair market value like anyone else does.  In fact, in the Phoenix market, Fannie Mae has consistently listed their properties above market over the last several years, dangling the easier to qualify for, low down payment Homepath mortgage as a carrot to attract buyers.

Writing a low offer on a short sale used to work occasionally, but lenders know they are operating in a seller's market today, and are more insistent on getting market value.

I can't imagine owning rentals in a fee heavy, high tax, tenant friendly state such as New Jersey.  I'm not a masochist and I prefer positive cash flow.