Elizabeth, NJ Cap Rate 2.29%
Elizabeth is the fourth-largest city in New Jersey and structurally an industrial-and-logistics anchor — built around the Port Newark-Elizabeth Marine Terminal (one of the largest US container port complexes) and Newark Liberty International Airport (immediately adjacent). The 2.29% cap rate at a $705,000 median price keeps the 0.46% rent-to-price ratio closer to functional than most of inner NJ. Population growth at 0.3%/yr is modest.
Employment is anchored by the Port of New York and New Jersey's Elizabeth Marine Terminal (the major US East Coast container port — collectively with Port Newark, one of the largest US port complexes by container volume), Newark Liberty International Airport (EWR — Elizabeth borders the airport directly), Trinitas Regional Medical Center, the broader Union County government, the broader manufacturing-and-logistics economy tied to the broader Port Newark-Elizabeth-EWR logistics hub, the New Jersey Turnpike and I-78 logistics corridor employment, and a meaningful retail-and-services base supporting one of the most ethnically-diverse cities in the country (Elizabeth has one of the largest Hispanic populations in NJ, with major Portuguese, Brazilian, and Central American immigrant communities). Submarkets stratify cleanly: the historic Elmora Hills area is walkable urban-historic with strong appreciation; the broader Westminster section has older multi-family inventory; the broader Elizabeth extends with dense 2-4 unit and apartment inventory; the central / Midtown zones offer deeper-value workforce inventory.
New Jersey property tax in Elizabeth is among the highest in the country — Union County effective rates often exceed 2.5%. NJ has tax abatement programs that can run 10-30 years on certain new construction; verify the abatement schedule before underwriting. NJ state income tax is graduated with a top rate near 10.75%. NJ landlord-tenant law leans strongly tenant-protective with multi-month eviction timelines and rent stabilization in some buildings (typically pre-1987 construction with 4+ units). Verify rent-stabilization status per building before underwriting. Insurance is reasonable. The structural advantages: port-and-airport logistics employment is genuinely durable; sustained immigrant population provides predictable rental demand; cost basis is materially below Jersey City or Hoboken; PATH/NJ Transit access to NYC. The structural risks: NJ tax structure is heavy; NJ regulatory environment is operator-unfriendly; per-block variance is significant; older housing stock requires honest capex assumptions. For local operators with comfort around NJ law, Elizabeth produces some of the most defensible cash-flow math in NJ.
Market data powered by Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI) · Updated Feb 2026
Market Data
2026 Market Update: Elizabeth
Elizabeth's 0.5% rent-to-price ratio is well below the 1% rule. At median prices of $705,000, the $3,260/mo rent produces only $1,348/mo in NOI. Investors here need to target below-median properties or pursue value-add strategies to make the numbers work.
At current rates, a 20% down conventional loan ($141K at 7%) would result in approximately $-2,403/mo cash flow — negative at median prices. Larger down payments, seller financing, or buying 15–25% below median are strategies to turn the numbers positive.
Property taxes consume 39% of gross rent here — one of the highest ratios in our dataset. This significantly compresses margins and makes Elizabeth a market where tax-conscious underwriting is essential. Every deal should be stress-tested with potential assessment increases.
Deal Modeling & Scenarios for Elizabeth
All figures below are computed from Elizabeth's real market medians. Use them as a baseline; override with property-specific numbers in the calculators.
Property Tax Bill in Real Dollars
At 2.15% effective rate on the $705,000 median price, the annual tax bill is $15,158 — that's very high (top 15% of US markets) (+103% vs the national average of ~1.06%). Verify the actual assessed value before purchase; sale-triggered reassessments can push the bill higher than the seller's current statement.
5-Year Cap Rate Trajectory
If Elizabeth continues appreciating at 2.6%/yr while rents grow at a conservative 3%/yr, cap rate holds roughly steady as price growth outpaces rent. Year-by-year projection at the median:
| Year | Est. Price | Est. Rent/Mo | Cap Rate |
|---|---|---|---|
| Today | $705K | $3,260 | 2.3% |
| Year 1 | $723K | $3,358 | 2.3% |
| Year 2 | $742K | $3,459 | 2.3% |
| Year 3 | $761K | $3,562 | 2.3% |
| Year 4 | $781K | $3,669 | 2.3% |
| Year 5 | $802K | $3,779 | 2.3% |
Three Financing Scenarios
Same median-priced Elizabeth property — different capital structures. All-cash maximizes cap rate. Leverage trades cash flow for higher cash-on-cash return when the spread between cap rate and borrowing cost is positive.
| Scenario | Cash Invested | Monthly Cash Flow | Annual CF | Cash-on-Cash |
|---|---|---|---|---|
| All cash | $705K | $1,348 | $16,171 | 2.3% |
| 20% down conventional @ 7% | $162K | $-2,403 | $-28,836 | -17.8% |
| 25% down DSCR @ 8.5% | $204K | $-2,719 | $-32,622 | -16.0% |
Three Price Tiers: Below, At, and Above the Median
Properties don't always trade at the median. Lower-priced units typically offer higher cap rates but harder operations; higher-priced properties tend to compress cap rates while attracting better tenants. All-cash assumptions below:
| Tier | Price | Rent/Mo | NOI/Yr | Cap Rate | Monthly CF |
|---|---|---|---|---|---|
| Below median (~75% price) | $529K | $2,771 | $12,620 | 2.4% | $1,052 |
| At median | $705K | $3,260 | $12,732 | 1.8% | $1,061 |
| Above median (~125% price) | $881K | $3,749 | $12,844 | 1.5% | $1,070 |
Total Return Over a 5-Year Hold
Cap rate is just one piece. Real estate returns come from four sources: cash flow, appreciation, principal paydown, and tax benefits. Assuming 20% down conventional financing at 7% and a 5-year hold at Elizabeth's historical appreciation rate of 2.6%:
On a $141K down payment, that's a -3.8% total ROI over 5 years (not annualized). Tax benefits from depreciation are additional and depend on your personal tax bracket.
Risk Flags Specific to Elizabeth
Automated checks against the underlying data — surface only the risks that actually apply to Elizabeth, not generic boilerplate:
Cap Rate Calculator — Elizabeth
Pre-filled with Elizabeth medians. Adjust to match a specific property.
Cash-on-Cash Return — Elizabeth
Factor in financing to see your actual return on invested capital in Elizabeth.
Is Elizabeth a Good Place to Invest in Rental Property?
Elizabeth, NJ has a population of 137,000 and has been growing at 0.3% annually — roughly in line with national trends, meaning demand is stable but not exceptional. The median home price of $705,000 paired with median rents of $3,260/mo produces an estimated cap rate of 2.29%.
Property taxes at 2.15% are notably high and represent a significant drag on cash flow — model this expense carefully, as it can make or break a deal. The vacancy rate of 5.5% is moderate and within normal parameters for a healthy rental market.
At a price-to-income ratio of 14.5x, homes cost about 14.5 times the local median income of $48,600. This elevated ratio means homeownership is stretched, supporting rental demand but limiting buyer pools. Home values have appreciated at roughly 2.6% annually. Steady appreciation means total returns will be primarily cash flow-driven — the more sustainable model for long-term wealth building.
Bottom line: At current median prices, Elizabeth is challenging for pure cash flow investing. Consider BRRRR strategies with below-market purchases, or look at neighboring metros with stronger price-to-rent ratios.