Investment Property Loans in Paterson, NJ

Paterson Ordinance 24-023 of April 9, 2024 bans short-term rentals inside the area bounded by 11th Avenue, McLean Boulevard, 20th Avenue and Vreeland Avenue unless an owner on the deed lives there and is present.

For investors: Investors buying inside these streets should underwrite long-term leases only, since an absentee nightly rental there is barred outright. Each day of operation is a separate offense, and owners, lessees and even guests can be penalized.

Source: Paterson City Code, section 275-18, Chapter 275 Article II Short-Term Rentals (eCode360), Oct 2026

Paterson rent leveling covers two-plus unit rentals with absentee owners or three-plus when owner-occupied; exemptions include buildings renting only one unit, hotels, motels, rooming houses, subsidized developments and post-1999 construction for up to 30 years.

For investors: A two-family bought as a pure rental falls under the chapter, while an owner-occupied two-family does not. Newer buildings claiming the construction exemption must have filed a written claim with the construction official at least 30 days before their certificate of occupancy, so ask the seller for that filing.

Source: Paterson City Code, Chapter 381 Rent Leveling, sections 381-3(E) and 381-11 (eCode360), Oct 2026

Paterson caps a covered unit's yearly increase at 5%, or 3.5% for head-of-household tenants 65 or older or disabled under Social Security, and 2.5% when such a tenant earns $1,000 or less monthly.

For investors: The 2.5% tier also requires household income of $1,500 a month or less, and the tenant must show proof. Only one increase is allowed in any 12 months per apartment, so review tenant ages and lease dates on the rent roll before projecting growth.

Source: Paterson City Code, section 381-14 Rent increase restrictions (eCode360), Oct 2026

Paterson bars the yearly increase when a building is out of substantial code compliance or its landlord has not met the chapter's registration rules, and exempts substantial rehabs costing at least 25% of equalized value.

For investors: A rehab exemption needs approval from the Rent Leveling Administrator, who inspects the current condition and plans, with tenant notice and a chance to object, so file before work begins. Once granted, the owner may set new initial rents and take two more exempt increases in the next two years.

Source: Paterson City Code, sections 381-11 to 381-14 (eCode360), Oct 2026

Paterson requires a certificate of re-rental approval before each new tenant moves in, after an inspection of the vacant unit within the prior 30 days, at $50 for the first unit.

For investors: If the Division of Community Improvements has not inspected by 4 p.m. on the third business day, the landlord may treat it as a temporary approval. An owner-occupied two-family renting its other unit falls outside this requirement.

Source: Paterson City Code, Chapter 175 Certificates of Re-Rental Approval, sections 175-3 to 175-7 (eCode360), Oct 2026

Paterson's fire code requires a smoke and carbon monoxide certificate before a one- or two-family home is sold or re-rented; it lasts six months and costs $75 for re-rentals booked over 10 days out.

For investors: Rush requests cost far more, $200 at four to 10 days and $300 under four days, so order the inspection as soon as a lease is signed. Buildings of three or more units are handled through state multiple dwelling inspections instead.

Source: Paterson City Code, section 215-11 (eCode360), Oct 2026

Paterson requires owners who do not live at their property to register a home street address with the City Clerk; a first violation brings up to $500, later ones at least $1,000.

For investors: Out-of-town investors should file right after closing, and a post office box alone will not do, because the chapter asks for a street address. The Clerk may forward the record to the Passaic County Clerk, which helps official notices reach you.

Source: Paterson City Code, Chapter 371 Property Registration (eCode360), Oct 2026

Paterson's Department of Community Development will inspect a home on written request before a sale and list code and zoning violations, charging $50 for a one- or two-family, $75 for three units, $100 for four-plus.

For investors: Ordering this before closing gives a buyer the city's own list of construction, housing and zoning violations on the building. The certificate disclaims latent defects, so it supplements a private inspection, and the city allows itself three weeks to issue it.

Source: Paterson City Code, Chapter 175 Article II, Certificate of Compliance Prior to Transfer of Title (eCode360), Oct 2026

Passaic County's 2025 abstract of ratables lists Paterson's general tax rate at $5.335 per $100 of assessed value and its effective tax rate, against true market value, at $2.421.

For investors: Assessments here average 45.68% of true value, so the bill on a recent purchase price can look very different from the headline rate. Project from the parcel's actual assessment and stress test cash flow for a future revaluation that resets values to market.

Source: Passaic County Board of Taxation, 2025 Abstract of Ratables (NJ Division of Taxation), Oct 2026