New Jersey Realtor®—Sept/Oct

NEW JERSEY

REALTOR

®

September/October 2019: VOLUME 5 ISSUE 5

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NEW JERSEY REALTOR® A publication of New Jersey Realtors®

10 Hamilton Avenue Trenton, NJ 08611 Phone: 609-341-7100 njrealtor.com

20

Jarrod C. Grasso, RCE Chief Executive Officer

CONTENTS

PUBLIC RELATIONS AND MARKETING DEPARTMENT Colleen King Oliver Director of Public Relations &

September/October 2019

Marketing | editor@njrealtor.com

Erin McFeeters

Dana Fiori

Communications Coordinator

Content Coordinator

President's View: Keep it Real Keep it Local

4

From the CEO's Desk: The Many Opportunities the Garden State has to Offer

5

Important Dates & Deadlines

16

Commercial Real Estate in NJ

6

Legislative Update: Government Affairs’ Efforts with Commercial Real Estate

20

New Jersey Evolving Towns

23

Committee Selection

24

Commercial Real Estate Market: Mom & Pop Competing with Big Investors

28

Local Board/Association News

2019 OFFICERS Ilene Horowitz

President

Angela Sicoli

President-Elect

Jeffrey Jones

First Vice President

Nick Manis

Treasurer

14

3

What's New in the Smart Home Tech Industry

ADVERTISING SALES Laura Lemos | 973-822-9274 laura@boja.com DESIGN Rebecca McQuigg | Encompass Media Group rebecca@encompasspubs.com

New Jersey Realtors® provides legal and legislative updates as well as information on a variety of real estate related topics solely for the use of its members.

Due to the wide range of issues affecting its members, NJ Realtors® publishes information concerning those

8

issues that NJ Realtors , in its sole discretion, deems ®

Style Guide: The Future is Bright for Coworking Spaces

the most important for its members.

The content and accuracy of all articles and/or advertisements by persons not employed by or agents of NJ Realtor® are the sole responsibility of their author. NJ Realtors disclaims any liability or ®

responsibility for their content or accuracy. Where such articles and/or advertisements contain legal

Sudoku puzzle solution:

advice or standards, NJ Realtors® recommends that NJ Realtors® seek legal counsel with regard to any specific situation to which they may seek to apply the article.

New

Jersey

Realtor ® ,

publication

10

Town Spotlight: Paramus

12

Realtor® Safety Month

13

Update on First Floor Construction

number

13260. Published bi-monthly each year. Member subscriptions allocated annually from annual dues: $3. Non-member annual subscription: $10. Known office of publication: 10 Hamilton Avenue, Trenton, NJ 08611. Periodicals postage paid at Trenton, NJ 08611 and at additional mailing offices.

POSTMASTER: Send address change to Editor, 10 Hamilton Avenue, Trenton, NJ 08611.

NJRealtors

2 | NEW JERSEY REALTOR® | September/October 2019

@NJ_Realtors

NJRealtors

editor@njrealtor.com

PRESIDENT'S VIEW

Keep it Real Keep it Local

BY ILENE HOROWITZ

H

ave you ever noticed how much technology impacts your day to day life? We wake up each morning to the sound of our phone, use technology to travel from place to place, and even shop online. I truly noticed technology’s predominance when I realized last minute that I needed a gift. So, of course out of convenience I quickly turned to the internet. As I was submitting my order with careful deliberation, I realized online shopping lacks the luster shopping downtown has!

I receive such joy walking downtown, popping in and out of different shops, and building relationships with shop owners, but the internet’s prevalence changed society’s shopping habits.

Just like the internet changed society’s shopping habits, the internet changed how people search for homes.

According to the National Association of Realtors®, 50 percent of buyers found the homes they purchased on the internet compared to 28 percent who used a real estate agent.

How can we expect home buyers and sellers to use an agent when we don’t support our local businesses, and instead shop out of convenience online?

We want people to use us instead of internet-based companies, and it’s the same for local business owners. Owning and running a business is the same as owning a home—it’s the cornerstone of the American Dream.

There are 565 municipalities in our great Garden State, meaning there are

hundreds of thousands of opportunities to keep it local and put money back into our economy.

Life can be busy between family, friends, and work; however, it should never be busy enough that we forget to support our communities. What does community mean to me? There are more definitions than you can imagine, but most suiting for me and Realtors® is one I found on Dictionary.com, a social group of any size whose members reside in a specific locality, share government, and often have a common cultural and historical heritage.

Involvement in the community is bringing awareness to what we do as Realtors®. We do this by our involvement and interaction with local businesses, in addition to our own volunteering efforts. Some ways you can get involved in the coming months are Realtors® Care Day on Sept. 25 and the Miller Keystone Blood Drive hosted

by NJ Realtors® on Oct. 7. I, myself, run a blood drive twice a year with New Jersey Blood Services.

Building connections and establishing relationships are things you can’t do through a screen. By taking the time to hear the stories of local businesses and making purchases through them instead of hitting add to cart on our devices, we’re enhancing our towns and making them more desirable for our clients.

Owners of these brick and mortar shops and restaurants are the heart of the entrepreneurial spirit, let’s partner

with them to make our towns more enticing for buyers. Keeping businesses open positively impacts the economy, allowing for more money to go towards infrastructure and schools, which drives buyers to choose your town.

Better your business and get to know your local business owners—keep it real and keep it local.

TOP 10 OF KEEPING IT REAL AND KEEPING IT LOCAL

1 6 2 7 38 49 5 10 Hearing Local Business’s

DRIVING

Stories

JOB GROWTH

Supporting your Local

Local Businesses Add Character

Economy

Local Business Owners Invest in COMMUNITIES

ENHANCES

Democracy

CUSTOMER

Increases Competition

Keeping the Entrepreneurial Spirit Alive

Putting Your

SERVICE

TAXES

to Good Use

NEW JERSEY REALTOR® | September/October 2019 | 3

FROM THE CEO'S DESK

The Many Opportunities the Garden State has to Offer

I

n August, Realtors® Property Resource (RPR®) announced

Any capital gains invested in Opportunity Funds are eligible

the addition of Qualified Opportunity Zones to its

for tax deferment and can potentially reduce tax liability by

platform. Realtors now have the opportunity to search

15 percent depending on how many years the investment

for properties through the 8,700 opportunity zones

is held. If the investment is held for at least 10 years any

nationwide. The new platform allows you to search specific

appreciation is tax-free.

®

geographic locations, analyze all the properties that lie in that opportunity zone, look at demographics and economic

This new platform from RPR® provides us with another tool

statistics, and create reports for investors regarding buying

for our toolbelt. New Jersey’s opportunity zones are located

potential.

in 75 municipalities which represent every county in the state. Now, with RPR®’s platform, we can better analyze

This will also be a tremendously helpful tool when it comes

the properties available in New Jersey specifically and spark

to the association’s relationship with local legislators and

economic growth in our state.

economic development groups. When and if a bill arises that impacts the industry, we can use RPR®’s platform to

In conjunction with RPR®’s opportunity zone feature,

run economic and demographic reports to help our case and

Realtors® will have the ability to reach out to residents

protect private property rights.

and business owners in the area about selling advantages using RPR®’s mailing labels feature, which was launched

In 2017, the federal government enacted the federal Tax

in July. Users will be able to create ready-to-print labels for

Cuts and Jobs Act, authored by New Jersey Senator Cory

farming, prospecting, or direct mail marketing within custom

Booker and South Carolina Senator Tim Scott. The act was

geographies such as opportunity zones.

designed to spark economic development and job creation in the designated opportunity zones. Opportunity zones are low-income areas that were nominated by governors and approved by the U.S. Department of the Treasury.

Any area deemed an opportunity zone comes with federal capital gains tax advantages for investors to help encourage growth in these areas if all of the necessary requirements are met. Investments must be processed through an Opportunity Fund which are private sector investment vehicles that invest at least 90 percent of their capital in Opportunity Zones, according to Choose: New Jersey.

4 | NEW JERSEY REALTOR® | September/October 2019

For more information visit www.narpr.com.

I M P O R TA N T D AT E S & D E A D L I N E S

SEPTEMBER Realtors Office 2 NJ Closed — Labor Day Century 6 Quarter Club Applications ®

OCTOBER Jersey 2 New Women­—That’s

Due to Boards

Who We R® Conference Galloping Hills Country Club

njrealtor.com/ membership/awards

njrealtor.com/njwomen-2019

Committee Keystone 10 Executive 7 Miller Meeting: 11 a.m.

Blood Drive of Directors 10 Board Meeting: 1 p.m.

10 Realtors Leadership New Jersey Program 20 Realtors Good Neighbor Award 31 Halloween Applications Due

NOVEMBER Realtors 7 2019 Conference & Expo ®

conference.realtor

Realtors 28 NJ Office Closed— ®

Thanksgiving

29

NJ Realtors® Office Closed

DECEMBER Play Realtor 9 Triple Convention &

®

Trade Expo

realtorstripleplay.com

NJ Realtors 25 25 Office Closed—

®

Christmas Day

®

®

njrealtor.com/ membership/awards

25 Realtors Care Day 27 Realtor -Palooza Unit Circle of 27 RPAC Excellence Deadline ®

®

coe.njrealtor.com/login

Get MORe with NJMLS

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Join the 12,000 Members and 1,200 Offices that enjoy the privileges of NJMLS Membership.

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201-387-1150 membership@njmls.com newjerseymls.com NEW JERSEY REALTOR® | September/October 2019 | 5

L E G I S L AT I V E U P D AT E

Government Affairs’ Efforts with Commercial Real Estate T

hrough our role in Trenton advocating on behalf of Realtors® every day, the Government Affairs team engages on issues not just affecting the Garden State’s residential real estate market, but also its commercial market.

There are close to 10,000 pieces of legislation introduced in every two-year session of the State Legislature and hundreds of new regulations introduced every year. New Jersey Realtors® reviews all proposals and acts to ensure there are no adverse impacts to New Jersey’s commercial or residential real estate markets.

Monitoring the State Budget On both the residential and commercial front, one of the main areas New Jersey Realtors® closely monitors and acts on every year is the state budget. We monitor the proceedings to ensure no new taxes or fees are adopted affecting real estate.

Last year, in the final days of the state budget negotiations, a bill was introduced that would have increased the realty transfer fee on $1 million plus properties from one percent to two percent. The increase would have had a drastic impact on New Jersey’s commercial real estate market, which is already one of the most expensive states to live and do business in.

In less than two days, with the help of thousands of Realtors® across the state, the governor came out against the proposed realty transfer fee increase and the State Legislature ultimately did not consider it.

Fast forward to this year’s state budget negotiations in Trenton. New Jersey Realtors® was ready to engage if

RPAC OF NEW JERSEY

the proposed legislation was considered again, as it is still introduced and could have been considered at any time. Thankfully, the State Legislature did not consider this proposal this year however, New Jersey Realtors® will remain vigilant should this proposal be considered in the future.

The 2019 Energy Master Plan Draft Earlier this year, Gov. Murphy announced the release of the 2019 Energy Master Plan draft. We closely reviewed it and have attended several meetings after identifying an area of concern. The concern lies within the draft’s discussion of the possibility of requiring energy audits during commercial real estate sales and lease transactions. This is concerning because of how it could delay or make commercial real estate transactions more expensive.

While this is not the first time a proposed energy audit requirement that has been put forward in a draft Energy Master Plan, New Jersey Realtors® remains concerned with this proposal and will be making that clear to ensure there are no adverse impacts to New Jersey’s commercial real estate market. Ultimately this plan would have to go before the New Jersey Board of Public Utilities and possibly the State Legislature, where New Jersey Realtors® stands ready to oppose any proposal that could mandate energy audits in commercial real estate sales or lease transactions.

Moving forward, New Jersey Realtors® will continue to advocate for a strong commercial real estate market in the Garden State while at the same time opposing any proposals that would have a detrimental impact to this segment of the market.

$920,000

6 | NEW JERSEY REALTOR® | September/October 2019

[$463,344.86] raised as of Aug. 14.

N E W J E R S E Y L E G I S L AT I V E B I L L S

A4425 – Murphy (D7)/S3640 – Cryan (D20) This bill establishes a five-year housing advisory plan.

New Jersey Realtors® Position:

SUPPORT

A4961 –Freiman (D16), Zwicker D16)/S3555 – Lagana (D38), Gopal (D11)

A4814 – Downey (D11), McKeon (D27) This bill makes transient accommodation taxes and fees only applicable if it is obtained through a marketplace or if it is a professionally managed unit.

This bill provides temporary gross income tax credit to first-time home buyers and seniors.

New Jersey Realtors® Position:

MONITOR

We support this bill so the State will have a proper long-term plan to meet and plan for the longterm housing needs of New Jersey residents.

Bill History: 9/17/2018 – Introduced in Assembly and referred to Assembly Housing and Community Development Committee 5/13/2019 – Introduced in Senate and referred to Senate Community and Urban Affairs Committee

New Jersey Realtors® Position:

We monitored this bill which amends the existing transient accommodation tax to ensure there were no changes made to the seasonal rental exemption, where keys to the property are picked up at a real estate office.

Bill History: 12/10/2018 – Introduced in Assembly and referred to Assembly Tourism and Gaming Committee 5/20/2019 – Transferred to Assembly Appropriations Committee and reported out of committee as substitute, second reading in Assembly 5/23/2019 – Passed by the Assembly 77-0 5/24/2019 – Received in Senate and referred to Senate Budget and Appropriations Committee 6/17/2019 – Reported out of committee with amendments, second reading in Senate 6/20/2019 – Passed by the Senate 33-0 and referred back to Assembly 6/27/2019 – Passed by the Assembly 74-0-1 and sent to the governor 8/9/2019-Signed by the governor

SUPPORT WITH AN AMENDMENT We support this bill because it will bring new homebuyers into the market, but with an amendment ensuring the bill will only apply to first-time buyers and senior citizens.

Bill History: 1/28/2019– Introduced in Assembly and referred to Assembly Housing and Community Development Committee 3/7/2019 – Introduced in Senate and referred to Senate Budget and Appropriations Committee

If not you, then who?

Blood Drive hosted by:

Monday, Oct. 7, 2019 9 a.m. - 12 p.m.

10 Hamilton Ave, Trenton, NJ 08611 Blood-Mobile in parking lot

Sign up online at http://tinyurl.com/NJRealtorsMorningDrive2019 or call Daria from Miller-Keystone at 609-273-4217 to make your appointment.

Blood transfusions save more than four million Americans each year.

40 percent of the population is eligible to donate blood.

Blood shortages occur in the summer and during winter holidays.

43,000 units of blood are used every day in the United States.

NEW JERSEY REALTOR® | September/October 2019 | 7

STYLE GUIDE

The Future is Bright for Coworking Spaces

BY LINDSEY GETZ

W

hen it comes to commercial offices, the trend is rapidly moving in the direction of coworking spaces. There are an estimated 35,000 flexible work areas in the world today and the global market value of these spaces is estimated at an approximate $26 billion. In New Jersey, there’s no doubt that coworking space has taken a strong foothold and isn’t going anywhere.

Jeanne “Lisa” Wolschina, a Realtor® with Keller Williams Realty based in Haddonfield, said the increasing interest in coworking spaces is undoubtedly linked to the fact that more employees are working remotely than ever before.

• Are you looking to network and connect with other people in your specific industry?

• Do you make a lot of phone calls and need a private area where your calls are not disruptive to others?

“Realtors® can help guide people in finding these spots because the thing we focus on most is our client—not the building itself,” Wolschina said. “We learn what people need and want—and we go find it for them.”

“When employees find it too difficult to concentrate at home, they decide they’d like to work in a separate space,” Wolschina said. “Of course, the local coffee shop isn’t always the best option. Sometimes people need more space to spread out their materials and concentrate. Since commercial rental spaces are expensive, splitting the cost of an office space is a no-brainer.”

Wolschina’s social media manager, Rebecca Elmuccio, owner of social media marketing firm Yellow Pear Media, also based in Haddonfield, has worked out of a coworking space herself.

Elmuccio said it has created networking opportunities for her that wouldn’t exist when working from home.

“Those networking connections have led to a lot of referrals and work over the years for my freelance business,” Elmuccio adds.

Elmuccio suggests Realtors® who are helping clients find the ideal coworking space should really help narrow the list of what features are most important. Coworking spaces can differ dramatically. She suggests asking questions such as: • Do you need to look at spaces that offer private offices or are you comfortable working in an open workspace?

8 | NEW JERSEY REALTOR® | September/October 2019

Setting the Bar Among the locations in New Jersey that have served as inspirational models, Bell Works in Holmdel tops the list. The Bell Labs complex functioned for 44 years as a research and development facility before being reimagined as a one-of-akind destination for both business and culture. Currently, 49 different companies call Bell Works home and there are 60 coworking tenants using office space within the building. There are also 154,000 square feet of retail space and 110,000 square feet of public space—demonstrating its truly multi-purpose functionality.

Sean Donohue oversees the strategic expansion and growth of coworking operations at Bell Works. He said that no matter who comes through the door, the narrative is almost always the same.

STYLE GUIDE “It’s almost always a similar story—someone tried to work out of their home and it’s just not working for them,” Donohue said. “I did four tours yesterday and though they were coming from different careers, they all had that same common thread.”

“It’s keeping companies closer to home and keeping opportunities in our market,” he said. “I think as this industry continues to mature and evolve, coworking will only become more in sync with established real estate.”

By signing up for a coworking space, Donohue said clients are essentially taking on a “membership” to use office space.

Going forward, Donohue said he believes there will be more specialization within coworking spaces with different areas catering to different clients. He foresees more boutique pop-up locations and maybe some mergers.“I think you’ll also see more spaces creating ‘passport programs’ where they might not only have space in South Jersey but maybe North Jersey, too, and there will be be some collaboration between those spaces.”

“The benefits include things like a shared conference room, shared printer, and reliable internet with faster bandwidth. It’s also the help that is available. If you are having trouble with the computer, we can help you. You’re suddenly not on your own.”

Coworking can really work for anyone who needs an office and isn’t required to work in a specific location, adds Wolschina.

Korinis said this model of sharing spaces and being in collective settings is growing in all facets of real estate—beyond just an office. Even on the medical side, there’s going to be a growing trend of shared space for multiple physicians and practices operating under one roof. On the retail side, Korinis said you will see retailers “curating brands within a shared space.”

“The overall trend is about usership over ownership,” he adds.

“The connecting link is all about desired flexibility. People are willing to pay a premium in order to gain that benefit.”

“It seems to be especially helpful for salespeople who travel a lot but need a part-time ‘home base,’” she said. “They can make appointments with clients and go on the road to visit them but still return to a coworking office to do their paperwork, make phone calls, or just have a space to work when they’re not on the road.”

Justin Korinis, principal of Sabre Real Estate Advisors, a full-service boutique real estate and advisory firm which has a Hasbrouck Heights location, agrees when businesses have folks on the road a lot, the coworking model can be particularly attractive.

“If you’re a 15-person business but you have half of those employees on the road most of the time, you’ve suddenly only got seven or eight people that need physical working space,” he said. “In a coworking model, those people can still have access to a kitchen or a conference room as well as other shared spaces where there is not only the feel, but also the benefits, of working for a larger company.”

VISIT OUR WEBSITE TO SIGN UP AND RECEIVE

A Growing Trend In general, Donohue said he sees coworking as a great trend for New Jersey as it’s an important way to keep talent here in our state.

NEW JERSEY REALTOR® | September/October 2019 | 9

TOWN SPOTLIGHT Photo Courtesy of Bergen County Community College

PARAMUS BOROUGH Continues as Retail Mecca

BY LEE NELSON

T

his borough is touted as the Retail Capital of the Region with over $6 billion in retail sales annually—more than any other zip code in the country. The crazy thing is only 28,000 residents live in Paramus, N.J., and most stores are closed on Sundays.

“We haven’t had to raise taxes the last eight years,” said Mayor Richard LaBarbiera. He is in his third term serving as the leader of the borough.

Their tax base remains unique compared to other towns and cities. The $8 billion tax base splits 50/50 between commercial to residential—a rarity with most areas. Most New Jersey towns laud only 20 percent commercial and 80 percent residential. With all the plans and approvals for new developments, LaBarbiera remains hopeful the tax base will grow by 25 percent in the next four to five years.

Having New York City only 17 miles away helps with foot traffic at all of Paramus’ malls, including Paramus Park and the Outlets at Bergen Town Center. Plus, New Jersey does not charge sales tax on unprepared food and clothing,

10 | NEW JERSEY REALTOR® | September/October 2019

which makes it attractive to Big Apple folks who can pay up to 8.875 percent sales tax on purchases.

Westfield Garden State Plaza, the largest shopping center in the region, could undergo a large transformation soon. Plans are in development for a residential complex and three acres of greenspace just a short walk away from all the restaurants, entertainment, and stores Paramus has to offer.

All this is happening because borough officials adopted new zoning laws to allow for mix-use residential development within the commercial corridors.

“They’ve embraced my mantra—be better. They are trying to provide a better experience,” said LaBarbiera. “It’s an ambitious plan with mixed-use including an outdoor skating rink and residential housing. Its offerings will provide what the consumer is demanding.”

Paramus continues to adhere to the most stringent Blue Laws in the area—meaning no worldly or retail sales except food and recreation are allowed on Sundays.

TOWN SPOTLIGHT “We are a testimony that it works. Some people think blue laws are based on religion. But what it has assured to our residents is a better quality of life,” said LaBarbiera.

To help offer a great quality of life for everyone, the borough became the second town in the United States to adopt a Stigma Free Zone to break down the walls in society about mental illness. They offer education programs; train police, teachers and others about how to help those in need; and create awareness that it’s OK to seek help.

For entertainment, residents and guests can enjoy a public golf course and swimming pool, miniature golf, a zoo, parks, Gennarelli Sports Complex, Fritz Behnke Historical Museum, and the unique iFly Indoor Skydiving.

“We are tight-knit community with a tremendous pride in where we live,” said the mayor.

Paramus can brag about being home to the first new hospital in years in the area. Valley Hospital is investing nearly $1 billion and will become the second-largest employer. The city also offers care at the nonprofit Bergen New Bridge Medical Center.

The area boasts attractive education choices with more than 30,000 kids and adults attending public and private schools along with Bergen Community College.

Courtesy of Guy Picone

Courtesy of Bergen County Community College

Courtesy of Bergen County Community College Courtesy of Brookfield Properties Retail

NEW JERSEY REALTOR® | September/October 2019 | 11

September is

Realtor® Safety Month S

eptember is deemed Realtor® Safety Month by the National Association of Realtors® to remind members of the dangers faced every day, to stay aware of surroundings, and to help with preparations and precautions to stay safe.

Here are 8 safety tips from NAR. For more safety tips visit www.NAR.realtor/safety

1

Regularly check privacy settings on your social media accounts, and make sure only approved contacts can see your posts and information. Keep separate personal and business accounts.

2

Make sure your phone is fully charged before arriving to an open house, showing, or meeting a client. Carry a portable charger or power bank to charge on the go.

3

If you feel like you are being followed, don’t step on the gas. Instead, stay calm and drive to a public place or police station. Do not drive home until you are completely sure you are alone.

4

Be cautious of showing too many pictures of expensive items, such as artwork and other home décor on your property listings as this could attract thieves.

5

If you are in an unfamiliar area, make mental notes of landmarks, points of interest, and intersections. Always know the exact address of where you are going.

6

Computer viruses can be distributed via e-mail. Never open an attachment from someone you don’t know, and, if you receive a strange or impersonal-sounding message from a familiar address, check with that person to make sure that they really sent it.

7

Avoid posting personal information on your social media profiles, such as where you were born, birth year, or mother’s maiden name. This information could be used to answer potential security questions.

8

Encourage sellers to remove valuable items such as jewelry, firearms and prescription medications before an open house or property showing.

12 | NEW JERSEY REALTOR® | September/October 2019

A

t the 2019 Realtors® Triple Play Convention & Trade Expo, December 9-11, attendees will have the opportunity to attend various safety and security sessions.

December 9 Avoid the Hack presented by Jason Jackson explores cybersecurity risks, mobile hacking, and email hacking.

December 10 Avoiding Data Security Roadkill with Terry Watson is an eye-opening session that gives you the tools to ensure you are protecting the public’s data.

December 11 Defending Against the Data Breach: Protection from Spyware, Malware, Ransomware and Keyloggers presented by Robert Siciliano outlines identity theft and how to protect your data and your client’s data.

The Story of Beverly Carter told by her son Carl Carter, Jr. he illustrates the dangers of being a real estate professional, teaches how to avoid the dangers of the profession, and how to protect themselves as they conduct business.

Learn how to protect yourself mentally and physically with Jennifer Cassetta’s The Art of Personal Safety. Then, attend her Art of Badassery session which demonstrates that life doesn’t have to be defined by a tragic moment but by the courage to keep moving forward.

We’re Always Trying to Improve T

he carpet has been chosen and construction workers have been hard at work. Did you know we’re building a conference center on the first-floor of our Trenton headquarters?

The new space is designed with a separate entrance so that it can rented out independently from the second and third floors of the building.

We plan to have furniture that can moved around so the mini conference center will be able to be used for a variety of purposes.

Whether it’s a meeting with tables and chairs or set up classroom style for continuing education sessions—the space will be versatile

and available for use. The room will hold 65 people classroom style and over 100 people reception style.

Since moving to Trenton, we have found that conference space is lacking throughout the city. With the train station just a few blocks away, and the Trenton airport a few miles away our location is prime for those coming in and out of the city. Ample on-site parking is available as well.

The best part? The space will be done in time for Realtor®-palooza!

That’s right this year there will be more space to hold our festivities.

Be sure to check out the space on your next visit to our headquarters in the fall.

SAVE THE DATE December 9 – 12, 2019 Atlantic City Convention Center Grow Your Business Panel

100+ sessions to choose from

Leading industry experts

KICK-START YOUR PROFESSIONAL AND PERSONAL GROWTH

250+ vendors with the latest products and services

• • • • • • • •

Terry Watson – opening keynote Kick-off party – Monday night A.M. and P.M. coffee breaks in the trade expo 17 hours of CE credit New health/wellness track Ice breaker reception – Tuesday night Free shuttle to convention center (from official hotels) Add-on designation courses available

Play Along! #TP19

GROW ABOVE AND BEYOND Register online by October 15 for just $89!

VISIT REALTORSTriplePlay.com

Hosted by the New Jersey, New York State and Pennsylvania associations of REALTORS®

NEW JERSEY REALTOR® | September/October 2019 | 13

What’s New in the Smart Home Tech Industry

BY ERIN MCFEETERS

T

he versatility and ease of many new smart home tech products rolling out makes them the perfect addition to any home, and because of this, millennials are not the only ones adding these items to their carts. Here’s your guide to the latest and greatest smart home tech products.

Furbo

ChefSteps Joule Sous Vide Become a better cook with the ChefSteps Joule Sous Vide, available on Amazon for $179. Rather than cooking with an oven and stovetop, the Joule Sous Vide cooks your food using water. Your pan and oven are often much hotter than you want your food to be which is why food is often over or underdone, but never perfect. Cooking with the Joule Sous Vide allows you to do other things and it will notify you once your food is completed cooking through their smartphone application.

14 | NEW JERSEY REALTOR® | September/October 2019

Furbo is an interactive camera that allows you to see and talk to your dog when you’re out and about.

The best feature this camera has is that it can toss treats to your furry friend with the touch of a button.

Unlike other pet cams, the Furbo is designed specifically for dogs and can help lessen dog’s separation anxiety.

It’s the best-selling dog camera on Amazon and is priced at $199.

Behmor Brewer Ever wish your coffee pot could presoak the beans before it started brewing? Well, you’re in luck because the Behmor Brewer does all that and more. Integrate the brewer with your Amazon Alexa, so all you need is your voice to start brewing your morning cup of coffee.

Plus, it’s the first Specialty Coffee Association certified smart brewer, so you know it’ll brew an excellent cup. Through their easy to use smartphone application, create custom brewing profiles and control the temperature for your perfect cup o’ joe. Purchase the brewer for just under $300.

Wyze Cam Created by former Amazon employees, the Wyze Cam is a high-quality surveillance camera priced at $20, making it affordable for everyone. The camera features motion and sound detection which is included with every run of the mill surveillance camera, but goes a step further than traditional surveillance cameras with its artificial intelligence person detection. The device’s advanced algorithm also recognizes the sound patterns from CO2 and smoke alarms and will notify you so you can act quickly.

Ranchio 3 The Ranchio 3 is your personal watering assistant. It helps you manage watering your garden and lawn from anywhere through your smartphone. You can even schedule exactly when you want certain parts of your lawn watered, and adjust the schedule with help from its hyperlocal weather intelligence. The newest version was streamlined in order to make installation a breeze and is now equipped to work with Amazon Alexa, Apple HomeKit, and Google Assistant, buy yours for $229.

evaSMART The first-ever smart personal air conditioner. The evaSMART creates your own personal climate using evaporative technology. It can drop the temperature to 59.3 degrees, humidify the air to create a better environment, and filter dust for healthier breathing.

The device is controllable through their smartphone application or through Amazon Alexa. Bonus feature: you can change the color of the light! Purchase the personal air conditioner for $229.

NEW JERSEY REALTOR® | September/October 2019 | 15

Commercial Real Estate In NJ

BY JAMIE BIESIADA

C

ommercial real estate in New Jersey and its various subsets—including the office, industrial, retail and multifamily residential markets—is an ever-changing landscape responding to everything from coworking spaces to retail’s response to online shopping.

In what the U.S. Census Bureau believes is one of the most densely populated states in the nation with 8.9 million residents there will likely always be a demand for commercial sites, even if their exact nature shifts and changes over the years.

Coworking Brings Changes

Properties are typically described as A, B or C depending on their desirability. Today, some offices are moving from C locations to A locations for less money, because of the amount of space available.

As a result, there is an overabundance of less-desirable locations, like B-minus and C properties.

“We are seeing a lot of people repositioning buildings of that nature for residential use or other types of uses of that nature,” Smith said.

Retail Still Alive

One sector of commercial real estate that has taken a “substantial turn” is the office market, according to Ray Smith, a commercial, industrial and investment broker and Realtor® with Stafford Smith Realty in Shrewsbury.

It’s not uncommon today to see headline after headline in the mainstream media about the woebegone brick-and-mortar retail sector, suffering at the hands of online retail. But in New Jersey, it’s changing, but still active.

In recent years, coworking spaces like WeWork have become more prominent. The facilities enable people to rent shared workspace, often included amenities like kitchens, coffees and private meeting rooms.

“Certainly, we know there’s a major repositioning there and we’re going to see a lot more of it,” Smith said. “However, the convenience for neighborhood shopping and retail spaces, they remain robust.”

As an increasing portion of the workforce is able to work remotely, the spaces have appeal to those who want to get out of the house to work; they also offer smaller teams more flexible office options, often at a lower cost than traditional office space.

Michael Testa, a leasing and sales broker with Jeffery Realty in North Plainfield, believes most of the stories about retail presented in consumer press aren’t very representative.

“They’re certainly not looking for the amount of office space they have enjoyed in the past,” Smith said.

Currently, he sees a “pretty good glut of office space available.”

16 | NEW JERSEY REALTOR® | September/October 2019

“I don’t think the internet is hurting retail, I think it’s changing it,” Testa said. “Retail in New Jersey is thriving, certainly thriving when it comes to better assets.”

Among the better—A-plus, A, B-plus and even B—there isn’t much vacancy today, Testa said.

Retail spaces that are vacant have usually found themselves in that position for one of two reasons, according to Testa: overbuilding in the past three decades, or retailers with systematic issues with their businesses.

Peter Sideris, a Realtor with Century-21 Rauh & Johns in Sewell, said his commercial business is mixed right now.

Some towns—like Washington Township and Blackwood — are particularly hot, while others, like Vineland and Millville, are not. In some cases, potential buyers are underbidding properties by quite a bit (his example was a restaurant listed around $275,000 with offers of only $150,000). ®

He thinks the slowdown has been caused by risk-averse buyers.

“People are afraid to go into business because of the competition,” Sideris said. “Years ago, a person would want to go into business, would take that chance to go out there.

Today, they don’t want to take that chance. They want a guarantee that they’re going to make money. There’s no guarantee in business.”

He does see some bright spots with certain towns looking to be increasingly business-friendly, which he predicts will bring more businesses, jobs and revenue into their borders.

But many retail spaces are thriving, something Testa attributes at least in part to the state’s large population base and many affluent residents.

American Dream Opening One of the state’s highest-profile commercial projects recently announced its opening date: American Dream in East Rutherford, which will include entertainment, retail and dining options, will officially open its doors on Oct. 25.

The project, long-stalled after developers ran out of funding, is now being developed by Triple Five Group.

“We know that the community has been eagerly awaiting the launch of this incredible global destination,” American Dream president Don Ghermezian said in a statement.

American Dream goes beyond the typical mall experience. It will house a Nickelodeon Theme Park, DreamWorks Water Park, Big Snow Ski and Snowboard Park, an aquarium and a movie theater, among numerous other entertainments, retail, food and beverage options. It will have a 55-45 percent mix of entertainment and experiential retail, housed in approximately 3 million square feet.

Ken Downing, chief creative officer for Triple Five Group, called it “a new retail and entertainment revolution, where everything is possible.”

American Dream is part of a larger trend Smith has identified: traditional malls focused on retail are evolving to “lifestyle malls.”

“They’re going to put more in the way of hospitality and entertainment uses, in addition to the retail, to make it more attractive,” he said.

Malls built 50-plus years ago now need to be repositioned and reconfigured. No longer will they have four big-box anchor stores with a number of smaller retailers inside, Smith said.

Even inside might be going away: in New Jersey, at least, more open-air malls are becoming a popular choice. So are properties with flexible site plans, so they can change with the economy and buying habits.

Those changes won’t be overnight. Smith estimated they’ll occur over the next 10 to 20 years.

Testa agreed that change and evolution are on the horizon for retail concepts in New Jersey.

Photo courtesy of American Dream NEW JERSEY REALTOR® | September/October 2019 | 17

“But this idea that you’re going to see vacant shopping center after vacant shopping center because the internet exists just doesn’t seem very likely to me,” he said.

Instead, even online retailers are looking to integrate online sales and foot traffic into brick-and-mortar stores.

“You have a ton of digitally native brands that are going brick-and-mortar,” Testa said. “Warby Parker, UNTUCKit— those guys will do a very specific type of real estate, but who knows where they go? Who knows what type of success they see by having that?”

Also on the rise, Testa said, are non-retail uses like medical and entertainment taking over what were traditionally retail sites.

Multifamily Rents High, Industrial in Demand Generally, Smith said, home and condominium sales have been declining, while rentals at multi-family properties are on the rise.

“The younger generation doesn’t want mortgages. They don’t want commitment,” he said. “They want short-term, and they’re willing to pay for top quality.”

As a result, very high rents are not uncommon in quality residential spaces in New Jersey today.

Assisted living facilities are also on the rise in New Jersey as Baby Boomers age.

However, the retail market is largely well-established in New Jersey. When most retailers choose to expand outside of their local region or country, or create a new concept, New Jersey is one of their first stops, Testa said. As an example, he pointed to TJX Companies: when it created its Homesense concept, it opened two stores in Massachusetts, its home state, and another two in New Jersey.

A lot of the increased need for warehouse space stems from online purchasing, according to Smith. Consumers increasingly buy items online that they hope to receive as soon as the next day. As a result, retailers have to deliver quickly, which calls for warehouses in proximity to the population they are serving. Automation within warehouses (think robots fulfilling orders) is also calling for warehouse space that is larger in scale.

Further automation in delivery might be around the corner too, as Amazon has been a proponent of delivery via drones.

But as Smith pointed out, drones can only fly limited distances, still necessitating local warehouses to fulfill requests.

“You’re in the most densely populated state in the union, New Jersey,” Smith said. “The people are here. They’re going to buy. They’re going to want the goods delivered to them, like, overnight. It’s kind of the only way we have to do it.”

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“Assisted living is the new darling of multifamily expansion,” said Smith, who in the past year has worked with three different assisted living sites. “We’re seeing substantial amounts of it all over the area.”

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Smith said demand for manufacturing or fabrication spaces has decreased, but the desire for warehouse space continues to increase. Industrial land value has, in some cases, tripled or quadrupled over the past two years because industrial space is both in demand and in short supply.

“Towns have only so much to allow with their zoning, and there’s going to be an increased pressure and need for warehouse distribution,” Smith said.

Some of that increasing need comes from new retailers entering the state for the first time, according to Testa. For instance, if a large grocer were to open a location in the state, they would need warehouse space to support that location.

18 | NEW JERSEY REALTOR® | September/October 2019

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NEW JERSEY REALTOR® | September/October 2019 | 19

New Jersey Evolving Towns

BY PAMELA BABCOCK

W

ith a combination of quality schools, luxury apartments at transit hubs and a growing number of diverse restaurants, breweries, shops and more, some New Jersey communities are winning hearts as “up-and-coming towns” and garnering accolades on best-of lists. You may want to add one of these boroughs to your buyers’ must-see lists.

Somerville Smack in the middle of Somerset County, Somerville is becoming hot, thanks to a Main Street revival that offers a variety of dining options, a growing retail roster, and an increasingly happening arts and culture scene. The walkable community has more than 40 eateries serving cuisine from around the globe, including Korean, Japanese, Thai/French fusion, Greek, Filipino, Indian, South American, Italian, Cuban and Mexican. Verve Restaurant and Bar, which opened 23 years ago, was recently crowned best bar in the state by NJ.com.

“Call Verve the town’s nerve center,” NJ.com wrote.

“Lawyers and judges love the place—the county courthouse is right across the street—and so do blue-collar types. Dress is casual; you’ll feel at home no matter who you are.” Verve holds special events throughout the year and many are for local causes, including a recent drag pageant promoted in celebration of Pride Month.

Main Street is lined with national chains and independent businesses catering to a variety of interests and hobbies.

Somerville 20 | NEW JERSEY REALTOR® | September/October 2019

The downtown has earned a number of awards and recognitions, including being named one of New Jersey’s Great Places by the New Jersey Chapter of the American Planning Association in 2016. The group says the designation represents “the gold standard” for downtowns by demonstrating “a true sense of place, cultural and historical interest, community involvement and a vision for tomorrow.”

Downtown Somerville is the result of “balanced and progressive economic development and the product of an ‘experience’ economy that continues to bring a new and diverse population,” says Natalie Pineiro, executive director of the Downtown Somerville Alliance.

In recent years, several luxury rental apartments have sprung up near the Somerville train station, including The Edge at Main, The Cobalt Apartments, and SOMA. The Davenport apartments and DGM Station House, an urban renewal apartment project on Veteran's Memorial Dr., are currently in the works. Somerset Station, a 40-acre transit-oriented project, will have apartments, townhouses, retail and a community center, plus a new road linking Route 206 to the station when completed in 2023.

Somerville Borough was settled in 1683 and incorporated in 1909. Robert Wood Johnson University Hospital Somerset and Ethicon, a subsidiary of Johnson & Johnson, call Somerville home. The community is close to major highways, including Interstates 287 and 78 and routes 202 and 206.

Photos courtesy of Downtown Somerville Alliance

According to New Jersey Realtors® June Monthly Housing Statistics, the median sales price for a single-family home in Somerville Borough is $308,000 year-to-date, compared to the statewide median sales price year-to-date of $319,000.

Somerville residents take pride in events such as The Tour of Somerville, a three-day series of Memorial Day weekend bike races. The community is home to the annual Central Jersey Jazz Festival, as well as an annual Girls’ Night Out, Oktoberfest celebration, outdoor movies, and concerts. For 30 years, downtown Somerville has hosted Friday night “cruise” nights during the summer where classic, custom and new cars make their way up and down Main Street in an event that features live music, shopping, food and more.

Haddonfield Nestled in the heart of South Jersey and popular among Philadelphia commuters, Haddonfield was established in 1713 and is home to more than 200 businesses and shops.

In 2018, downtown Haddonfield was named the “Most Charming Small Town” in New Jersey by Reader’s Digest, and last year, for the second straight year, it was named one of the 10 Best Historic Small Towns in New Jersey by USA Today.

Residents and visitors to the Camden County community enjoy strolling, shopping, and dining on Kings Highway.

Annual events include the Haddonfield Night Market food truck festival, Girls Night Out, and candlelight shopping during the winter holidays. A highlight of the town is “Haddy,” an eight-foot-high statue of a Hadrosaurus Foulkii dinosaur that commemorates the 1858 discovery of the world's first complete dinosaur skeleton near the spot where it was found.

Jeanne “Lisa” Wolschina, a Realtor® and broker salesperson with Keller Williams Haddonfield, grew up in Haddonfield,

Haddonfield

taught history at Haddonfield Memorial High School and has three children enrolled in the school system. She’s consistently the town’s top-producing Realtor®. Over the years, Wolschina says she has seen Haddonfield become more open-minded about the programs it offers, events it supports, and fundraising many participate in, as part of the nationwide movement “to be more understanding and inclusive of all people and ideas.”

“The town and schools seem to try more and more every year to honor citizens such as veterans, citizens who volunteer and residents who have made a positive impact on our town,” Wolschina says.

Haddonfield has many unique contemporary outdoor sculptures, thanks to The Haddonfield Outdoor Sculpture Trust (HOST). Local Realtor®, broker, developer, and HOST Chair Stuart Harting says the goal is to transform the borough “into a significant center for juried outdoor sculpture.”

Wolschina helped sponsor The Heart of Haddonfield, a threedimensional welded diamond laser-cut aluminum sculpture of a heart that’s a popular spot for selfies, engagement and wedding photographs.

The downtown, which once had mostly traditional stores and restaurants, now provides restaurants with cultural flair and stores that offer unique clothing alongside those that sell business attire. At King's Road Brewing Co., patrons can enjoy pints or grab a growler before heading to one of the borough’s many BYOB restaurants. The PATCO high-speed train line stops in Haddonfield.

“So many people choose to move to Haddonfield for the great downtown, safe community, beautiful tree-lined streets, easy access to Philadelphia and maybe most of all, the excellent education,” Wolschina says. The community’s schools are consistently ranked among the top in New Jersey.

Photos courtesy of Partnership for Haddonfield

NEW JERSEY REALTOR® | September/October 2019 | 21

According to New Jersey Realtors® June Monthly Housing Statistics, the median sales price for a single-family home in Haddonfield Borough is $455,125 year-to-date, in comparison to the statewide median sales price year-to-date of $319,000.

Homes in the town cover a variety of styles. “The beauty of Haddonfield is that the houses are all unique from one another,” Wolschina says. “This is not a cookie-cutter community with properties, nor people.”

Metuchen The Borough of Metuchen is a quaint and friendly community surrounded by Edison in the heart of northern Middlesex County. Founded in 1900, the community was dubbed the Brainy Borough in the early 20th century because of the number of writers, artists and painters who called it home.

More than $100 million has been invested in Metuchen’s downtown since 2016, and nearly 400 new apartment homes were added in the past year, according to Isaac D. Kremer, executive director of the Metuchen Downtown Alliance.

One of the most substantial investments is Woodmont Metro at Metuchen Station, a 273-unit transit-oriented luxury apartment community Woodmont Properties completed in 2017. It’s just steps from the train station and downtown that offers an array of options for dining, shopping and entertainment.

Steve Santola, Woodmont Properties’ executive vice president and general counsel, says renters include “a lot of younger folks and younger couples, and we’re also seeing a fair amount of empty nesters who have sold their homes and are looking for something different.”

Santola says Metuchen is on the move because the borough’s leadership and elected and appointed officials “are on the same page for growing the downtown, making it more vital

Metuchen 22 | NEW JERSEY REALTOR® | September/October 2019

and more diverse over a period of years” by bringing in additional residential development, “which obviously helps all the business in town.”

Popular amenities include the Middlesex Greenway, a picturesque 3.5 mile rails-to-trails project. Centennial Park, a 13-acre tract, is the largest natural open space in Metuchen and includes Metuchen’s highest point, at 169 feet. The Sportsplex of Metuchen provides indoor space for organized sports teams, camps and special events.

According to New Jersey Realtors® June Monthly Housing Statistics, the median sales price for a single-family home in Metuchen Borough year-to-date is $465,000, in comparison to the statewide median sales price of $319,000 year-to-date.

The borough has an array of businesses, including specialty shops, restaurants with a range of global cuisine, a Whole Foods, clothing boutiques, an artisanal chocolatier and a business aptly called Brainy Kids Yoga.

There’s an annual Downtown Pre-Prom Party in May, at which prom-goers can take a walk on the red carpet and enjoy the milestone with their friends, family and neighbors.

A farmers market runs each Saturday from June through October, and there’s a Kids Takeover on the last day of school in June each year, with local businesses providing games and activities on sidewalks and at the Town Plaza. In September, Metuchen holds Downtown Rumble Pro Wrestling, with professional wrestlers taking over town plaza.

In 2019, Metuchen paid $1.35 million to buy the iconic Forum Theatre, a local landmark since it opened in 1928.

The borough plans to make it the centerpiece of its planned Metuchen Arts District, which is expected to lead to redevelopment and revitalization of an underutilized block of Main Street.

Photos courtesy of Mark Harris Photography

Find the committee for you.

2020 COMMITTEE SELECTION

Applications due by Oct. 25 Apply now at njrealtor.com/committee-selection NEW JERSEY REALTOR® | September/October 2019 | 23

Commercial Real Estate Market: Mom & Pop Competing with Big Investors

BY MICHELE LERNER

T

he commercial real estate landscape in New Jersey is a tale of two magnets: New York and Philadelphia, which pull in institutional investors looking for returns in all property sectors. However, those high-cost markets still leave plenty of room in the rest of the state for “Mom & Pop” investors hoping to find a property to enhance their portfolio and perhaps fund their retirement. Some local pockets in those urban markets also offer prospects for individual investors.

While the big players in the investment world may dominate when it comes to large acquisitions, 3.7 percent of commercial property investments in New Jersey were made by institutional investors in 2018, according to ATTOM Data Solutions, which defines institutional investors as companies that purchased at least 10 properties in a

24 | NEW JERSEY REALTOR® | September/October 2019

calendar year. In other words, small and medium investors dominate the commercial property market.

“New Jersey offers a diverse market with a full spectrum of properties for small investors starting in the $150,000 to $200,000 range for land, to properties priced in the millions that attract institutional investors,” said Anthony Gomez, broker/owner of RE/MAX Commercial Investment Associates in North Bergen. “There are plenty of opportunities for small investors for properties that medium and big investors aren’t interested in.”

The entry point for many first-time investors is a duplex, sometimes with the buyer living in one unit and sometimes as a pure investment option, said Joe Ridolfi, a commercial real estate broker and owner of Ridolfi Associates in Hamilton.

“After the investors get some experience with tenants and property management, they’re ready to graduate to a larger property,” said Ridolfi.

“Institutional buyers are much more likely to buy apartments with at least 20 or 30 or more units,” said Drukarov.

Suburban New Jersey hasn’t seen quite as big an economic boom as the cities since this has been more of an urbanfocused recovery, said Barbara Denham, a senior economist with Moody’s Analytics Reis in New York.

The market for small two-to-four-unit buildings is less favorable than it was four or five years ago, with rising prices and bidding wars, because they have become more popular for owner-occupants, according to Drukarov.

“Job growth is especially healthy in Mercer County and other northern counties, but job growth in the rest of the state is a little below the rest of the country,” said Denham.

“The apartment market is especially strong, with low vacancies and not a lot of supply, so rent growth is healthy all over the state and nationwide.”

Additional competition is starting to come from some larger investors, said Washington.

Competition, particularly for small two-to-four or fiveto-eight-unit apartment buildings, can be steep, said Paul Washington, a broker associate with Coldwell Banker Commercial NRT in Livingston.

“Investors are competing against other investors and sometimes against first-time buyers who want to live in a small building and rent out the other units for affordability,” said Washington.

Multifamily Investments are Most Attractive to Small Investors Small apartments are considered less risky than other commercial investments because even if you have one tenant leave, you usually have others to offset the short-term loss, said Roman Drukarov, a sales associate with Berkshire Hathaway Home Services in Livingston.

“Bigger investors are seeing the value in small to mediumsize multifamily buildings and want to buy them in bulk,” said Washington. “These investors want to buy five to 10 small buildings at a time, compared to an individual investor who wants to buy one building at a time.”

Property Sectors and Small Investors While apartments are the most sought-after investments for small investors, some opportunities can be found in other property sectors, too.

Office The office property sector is the weakest, with high vacancy rates, said Ridolfi, as it is in much of the country. Very few small investors are looking at office property.

“Sometimes a doctor or dentist will buy a small suburban office to use for the practice and to rent part of it to other tenants as an investment,” said Gomez. “But it’s rare to see an individual buy an office for purely investment purposes.”

Industrial “If you have some experience and have a staff to help you, it’s better to have more units,” said Drukarov. “But if you have just a couple of small properties, it’s easier and more profitable to manage on your own.”

The most robust commercial sector is industrial warehouse space, said Denham. But few individual investors choose warehouses because they sell at a higher price point and have “lots of moving parts, such as tiered leases,” said Washington.

The most desirable multifamily properties for investors are those with access to transit and amenities, said Denham.

Retail

“Institutional investors are primarily looking at gateway cities, so there are opportunities for niche investors who know their local market well,” she said.

The retail sector is strong in some areas, but some parts of the state have suffered from store closings, said Denham.

However, New Jersey’s retail sector is stronger than retail in some other parts of the country because of the state’s high population density.

Most of the sales of apartment buildings in New Jersey were for buildings that sold for under $10 million, which means they more than likely sold to small or medium local investors rather than institutional investors, said Denham.

“There are lots of entrepreneurs out there who want to pick up a franchise and control their destiny,” said Ridolfi. “That means an investment in a small retail space can be a good option as long as you know the market.”

NEW JERSEY REALTOR® | September/October 2019 | 25

Individual investors with some experience managing a small multifamily building may be interested in a mixed-use building with two or three apartments and a ground floor retail space, said Washington.

“The residential component is a little safer than a pure retail investment and the combination of uses can generate great income,” Washington said.

However, Gomez warned, “If 50 percent or more of the property is retail space, it can be risky. The lender will also want a retail tenant in place before providing financing.”

Single-Family Rentals While single-family home rental properties are a popular choice for individual investors in other parts of the country, Drukarov said they are less profitable in New Jersey.

“Single-family homes are too expensive unless you can find a foreclosure or one in a distressed area, but very few of those are available,” he said.

In addition, if you own a single-family home and it’s vacant, then you have a 100 percent vacancy. A multi-unit property is less risky since you’re not likely to lose all tenants at the same time, Drukarov said.

“There are some more affordable single-family rentals in southern New Jersey, which means that it’s possible to make the numbers work for investors,” said Washington. “But generally, they’re not as appealing as multifamily properties because of the cost and the exposure to risk.”

Financing an Investment Property While many “Mom & Pop” investors prefer to invest alone, one popular way to get started with real estate investing is to join a Real Estate Investment Association (REIA) group, said Washington.

“These groups pool capital and meet monthly to network, exchange ideas and learn about real estate investing,” Washington said. “Sometimes private money lenders meet with them to work out financing plans.”

Every investor needs some “skin in the game” such as down payment money or funds to rehabilitate a property, he said.

“Buying and living in a two or three-unit building or a fourunit building is another typical way to start investing,” said 26 | NEW JERSEY REALTOR® | September/October 2019

Washington. “That can be a stepping-stone to leverage into buying another property or a larger building.”

Even a first-time homebuyer can buy a two-unit building to get started, said Ridolfi.

“But they need to be careful and make sure they’ll get good cash flow,” Ridolfi said. “Ideally, you want to see a copy of the lease and make sure you have a good solid tenant in place before you buy.”

FHA loans can be used to finance an investment property if the buyer plans to live in one of the units, which means buyers only need a down payment of 3.5 percent.

Conventional financing typically requires a down payment for an investment property of 20 to 30 percent depending on the borrowers’ credit profile.

“If you buy a two-to-four-unit building and live in one of the units, you can finance the purchase with a residential loan,” said Drukarov. “If you buy a larger building, you usually need an investment loan.”

Loan guidelines vary, but in some cases, borrowers can include rent payments to qualify for the purchase. However, projected rent from an unoccupied unit cannot be used to qualify for the loan.

“If you’re buying a building with tenants in place, lenders can use up to 75 percent of their rent payments to add to your income to help you qualify for a loan,” said Drukarov.

Buyers need to have their financing ready to compete, just as they do in the residential market.

“The important thing for potential investors to realize is that financing is available and that there are opportunities for individual investors in spite of the competition for properties,” said Washington. “But new investors must be ready to deliver a big earnest money deposit if they’re competing for a property to show they’re serious.”

For Realtors®, knowledge of the local commercial market is essential to help Mom and Pop investors identify potential investments and compete for them.

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B O A R D / A S S O C I AT I O N N E W S

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All Types of businesses considered

Types of Lenders:

Conventional Banks, SBA Lenders, CDC Lenders, Fannie Mae, FHA, Hard Money / Private Lenders

Email editor@njrealtor.com with your local board/ association news.

28 | NEW JERSEY REALTOR® | September/October 2019

Commercial Mortgage Depot Your Home for Commercial Mortgages Office: 973-742-1111 Fax: 973-742-8899 www.commercialmortgagedepot.com

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NEW JERSEY REALTOR® | January/February 2019 | 29