NJ Investment Properties 101, Part 1: Know Your Time

The idea of owning rental real estate in NJ seems to be gaining popularity as investors tire of the swoops and swoons of the stock market. Not everyone has what it takes to be a landlord, but those who do may find that rentals are a good way to build long term wealth.

Once you have made the decision to buy NJ rental property, your real work begins. Finding a profitable rental property usually takes time, connections, plenty of research. A licensed NJ Realtor can be a valuable asset when transitioning into your new livelihood. This series of posts will help you along the way.

Know your time table. As with any other investment, you should have a good idea of how long you plan to own a rental property before you buy it. The long you plan to own the rental property, the more you’ll need to invest into maintenance, repairs, and improvements.

If you’re keeping it for 20 years, at some point your’re going to install a new roof. You’re going to to replace the major appliances and do some major repairs. If you’re only planning to own the property for 5 years, by contrast, you’ll probably want to avoid making major improvements unless you’re sure you can recoup the cost with a high sale price.

You also may face more investment risk with a shorter time fram. Although your rental will almost certainly appreciate in 20 years, it would easily lose value over the next 5, particularly if you’re buying in an inflated market. As we have seen in the last year, the balloon will pop at some point. You will need a bigger potential annual return to make up for that risk.

For many smaller investors, long term ownership makes the most sense. You’ll have plenty of time to ride out any swings in the market, and rental income can make a nice supplement to your day job. Find enough rental properties, and being a landlord may even become your day job!

To find out more about NJ Investment properties, give me a call at (732) 233-6969 or email dkurland@weichert.com!