Real Estate: What the Investor Should Know
A Guide to Residential and Commercial Real Estate Investment in New Jersey
By: Sergio Simoes, Esq. | May 2025
Real Estate investment can be a great way to acquire and build wealth over time. It is essential however, to understand the legal landscape before making any major investment decisions. Here is an overview of some important points every investor should think about.
Types of Real Estate Investments:
Residential Rentals: Purchasing and renting out residential properties is a good way to generate income and build equity. However, be aware of state landlord-tenant laws, which are favorable to tenants.
Commercial Rentals: Great income generators but can be more complex and expensive than residential rentals. Consider the type of tenant you wish to attract and negotiate essential lease terms before entering into a lease agreement.
Fix & Flips: This type of investing involves purchasing distressed properties, renovating them, and selling them for a profit. Consider the costs of renovation, potential resale value and taxes.
Development: Real estate development can be lucrative, but it is also the most complex and risky type of investment. Understand the construction, regulatory and financial risks before starting any project.
Know the Law:
Investors should be aware of certain state laws and authorities that may apply to their particular real estate investment. These may include:
New Jersey Real Estate Commission (NJREC): This entity is responsible for regulating the real estate industry in New Jersey. Investors should work with a licensed and knowledgeable real estate agent who can help them navigate the purchase and sale process.
New Jersey Landlord-Tenant Laws: These laws outline the legal requirements for lease agreements, rent increases, security deposits, and eviction procedures.
New Jersey Fair Chance in Housing Act (Jan. 2022): Prohibits discrimination in housing, including asking about criminal history.
Key Considerations for the Investor:
Location: Location is one of the most important considerations due to its impact on value and potential rental income.
Property Type: Residential, commercial or industrial - choose the type most appropriate for your budget, risk tolerance and goals.
Condition: Inspect the condition of the property to identify any potential problems.
Financing: Select the most appropriate type of financing structure, through a mortgage or another source.
Due Diligence: Evaluate title work for any liens and possible encumbrances. Also consider zoning and land use limitations and any environmental regulations that may apply.
Management: Consider how the property will be managed once it's acquired, tenanted, and generating income. If the property is far away, a property manager may help.
Legal: Once you have identified the property you are interested in, you need to enter into a purchase agreement with the seller. After you acquire the property, lease agreements must be negotiated and prepared.
Other Considerations:
New Jersey real estate investors should also be aware of:
Tenant Rights: New Jersey has strong tenant rights laws, and potential investors and landlords must understand their obligations. For instance, landlords must give proper notice before entering a unit, and tenants may not be evicted without a valid reason.
Rent Control: In some municipalities, rent-control regulations are in place. If you purchase a property in a rent-controlled area, you must comply with all municipal requirements.
Transfer Tax: New Jersey imposes a transfer of tax on all real estate transactions, depending on the values of the property. In certain cases, there are also bulk sale taxes that must be paid.
Let Us Help!
Investing in real estate can be an exciting and lucrative endeavor. Consulting with an experienced real estate attorney can help ensure that your investment is protected. The legal team at Sanchez Law can help you understand the legal landscape and make informed real estate investment decisions from the pre-contract stage to closing. We assist clients in contract negotiation and preparation, due diligence review, resolving title issues, and essential document preparation. In addition to these services, Sanchez Law supports clients with:
Business Entity Formation;
General Business Counsel; and
Basic Will and Estates
To learn more about our services from a member of our team, please contact us today. We look forward to hearing from you.