NJ Investment Properties 101, Part 3: Financing

The less credit card and other consumer debt you have, the better your credit score will be, as will your prospects for getting a decent loan. Lenders usually require bigger down payments then in previous years due to the mortgage mess. Other factors will be the interest rates and generally stronger finances of the person purchasing the NJ investment Real Estate. Interest rates will be higher for those purchasing investments properties because studies show there is a higher likliehood defaults, compared to those covering real estate used as a primary residence.

Having a substantial cash reserve left after the purchase of an NJ investment property is highly recomended. This can help pay for unexpected repairs and vacanies. As a rule of thumb, one should set aside at least one month’s rent for each unit. that is a good start. One will also look into a line of credit secured by either the investment property or your primary home, which will cover major expences.

Looking at the long term, you should make sure you can save enough for retirement and other financial goals prior to investing in NJ real estate. While rental income can supplement your retirement nest egg, most people shouldn’t count on it to replace other investments which have performed favorably, or allow themselves to be exposed in the wind to the ebbs and flows of the local real estate market. Rents and values will always rise and fall, and those who are adequately diversified with investments in stocks, bonds, and cash will be better able to endure the bad times and capitalize on the good.

For additional advice on what you can or will be able to afford, ask Dan Kurland to hook you up with Gold Services, a one stop shopping destination for insurance, financing and title work!

To check out other articles in the NJ Investment Properties 101 series, click on any of the below links!

NJ Investment Properties 101, Part 1: Know Your Time

NJ Investment Properties 101, Part 2: You ARE Your Network