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    PART 2: What’s My Real Estate Investment Worth?

    Jersey City real estate development has recently drawn attention on the national stage as well as shed some light on the controversial EB5 investment program commonly known as the “Golden Visa”. While healthcare, tax reform and job creation have taken back stage to recent controversies surrounding the Trump administration, a lesser known executive order signed on May 5, shed some light on how real estate development is in part being funded in Jersey City.

    EB5

    The EB5 program, enacted by congress in 1990 to stimulate the economy and job creation through foreign investment, is a fast track to receiving conditional permanent residential status in the United States. By investing at least $500,000 in a U.S. commercial enterprise that creates 10 permanent full-time jobs, a wealthy foreign investor can have their permanent resident status fast tracked.   While the program otherwise known as “The Golden Visa” has been under scrutiny for some time, the Consolidated Appropriations Act 2017 signed by Donald Trump on May 5, just extended the program until September 30, 2017.

    How is the EB5 program tied to Real Estate Development in Jersey City?

    In general, real estate development is heavily backed in combination by bank loans and private equity investment.  A major source of private investment comes directly from the EB5 program and we see evidence of it right in our own back yard.  Recently, Kushner Companies took part in an EB5 investment event in Beijing, China looking to raise $150,000,000 for their Journal Square development project. In fact, a recent AP report showed that over the past decade the United States has taken in over $7.7 Billion and issued more than 40,000 visas to Chinese Investors. We are not immune to this financial influence.

    How is Real Estate Development effecting my Real Estate Investment?

    Developers are taking advantage of the booming real estate market by investing heavily in downtown Jersey City and Journal Square.  There are 9,000 new units that are currently under development and a total of 37,000 approved units coming down the pike. With developers offering one or more months of free rent and no broker fee to fill a vacancy, the individual investor is starting to feel the pinch when trying to rent their condo; defined in detail in Part 1: What’s My Real Estate Investment Worth?

    What does this mean for my Investment Property

    We still see continued growth in property values in the Hoboken and Jersey City Market.  When priced appropriately, the sale of your condo can be had quickly and with multiple offers.  We are however keeping a close eye on the rental market and informing our clients if any major shift occurs.  As rental developments continue to grow in Jersey City, it may become more challenging to bring in a tenant when your investment is not occupied.

    Keep in touch with your agent and have regular conversations about their active renter and buyer database. Weigh your options on how your long-term investment strategy will work in a growing yet competitive market. Finally, work with your agent and develop a solid exit plan when you feel its time is right.

    If you have any questions or want to discuss strategies, do not hesitate to reach out to me.

    Rich Cronin – rich@primereg.com (201) 566-6049

     

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