Recently, I received an inquiry about whether to rent out a condo in Cresskill. The purchase price was around $790,000, and they heard that they could get over $6,000 in monthly rent. After calculating, the total yield was close to 9%. However, this figure did not account for property taxes and insurance. In areas like Cresskill, where property values are high, these two items can significantly alter the yield picture.

Let's break it down step by step. The total yield is the annual rental income divided by the purchase price. In simple terms, it's the most straightforward calculation without deducting any costs. According to Zillow, the average home value in Cresskill is $790,377 (as of 2026), and while rental prices can vary widely, single-family homes are reported to rent for around $6,000 per month. Just calculating the total yield with this information can make it appear attractive at around 9%.

However, the number that really matters is the cap rate. The cap rate is the annual net operating income divided by the purchase price, where net operating income is the total income minus property taxes, insurance, HOA fees, management fees, maintenance costs, and vacancy losses. The effective property tax rate in Bergen County is known to be around 1.69% (according to propertytaxrates.org), and in high-value areas like Cresskill, the tax amount itself increases. Adding landlord insurance can also lead to operating costs reaching about half of rental income, as indicated by the 50% rule. For the property mentioned earlier, the cap rate could likely drop to around 4%, which is half of the total yield.

If you are purchasing with a mortgage, you also need to consider the cash-on-cash return. This is a different concept from the cap rate. While the cap rate shows the profitability of the asset itself, cash-on-cash return is the pre-tax cash flow remaining after paying the loan principal and interest, divided by the actual cash invested, which includes the down payment and closing costs. In simpler terms, it's the ratio of the money left in hand compared to the money I actually put in.

Cresskill is often mentioned as a desirable school district. Rather than approaching it solely from the perspective of rental income, it seems prudent to first estimate property taxes and insurance to calculate net operating income more accurately. School district boundaries change frequently, so it's advisable to check the assigned school for the specific address before purchasing.

If the cap rate is low in such areas, it helps to assess total returns from a broader perspective. Total returns consider not only monthly cash flow but also capital appreciation, asset increase due to loan principal repayment, and tax benefits from depreciation. In simple terms, while the immediate cash in hand may be small, the rate at which the asset itself grows can be viewed differently. This aspect is particularly significant in areas like Cresskill, where home prices have risen in the past year.

If you are moving from another state and looking into Cresskill, it's safer not to directly apply the property tax and insurance levels from your previous residence but to get new estimates. New Jersey tends to have a higher property tax burden, so those coming from areas with lower rates may find this difference more noticeable.

When looking solely at rental income, Cresskill may not appear to be an attractive market. In simpler terms, this area is more aligned with steadily increasing asset value rather than generating immediate cash flow. It's also important to consider that there aren't many rental listings available. With a small sample size, rental prices can fluctuate significantly based on individual listings, so comparing several similar properties to find an average is likely to yield a more accurate calculation of actual returns. Developing the habit of checking property taxes and insurance first greatly enhances decision-making accuracy in such areas. Rather than hastily concluding based on total yield alone, going through the process of calculating net operating income by hand reveals the true picture of markets like Cresskill.

This article is not investment or legal advice, and consulting a professional before making any contracts is recommended.