Category Archives: investment property

homes for sale in Margate NJ

What to Know When Buying Multiple Properties

With summer temperatures rising, now’s the time to invest in real estate along the Jersey Shore. By purchasing multiple properties and leasing them out as short-term vacation homes, investors can make a fortune on seasonal beach goers. Yet, before you go out and buy a collection of homes or apartments, be sure to prepare your finances and research the market.

Buying multiple properties is a wise investment, especially across the New Jersey shoreline. With any investment, though, you should be careful to do your due diligence before purchasing. This means guaranteeing that your credit is acceptable, finding secured financing, and locating the most profitable areas to invest in. Whether you’re looking for homes for sale in Margate NJ or other areas, this article will help you prepare for your investment and guide you through the process.

Understand How Credit Can Affect Your Purchases

Your credit score is one of the most important things to consider when you’re making any large purchase, especially if you’re buying multiple properties. This becomes especially relevant if you’re purchasing your fifth-through-tenth property.

At the most basic level, a high credit score will grant you access to better interest rates on your mortgages, meaning you can save more money in the long run. If your score is low, you may still qualify for a loan, but it will come with a higher interest rate which will eat into your profits.

At a deeper level, though, you could be disqualified for financing if your score isn’t high enough. According to guidelines set by Fannie Mae, investors must have a score of at least 720 to qualify for financing on fifth-through-tenth properties, along with down payments as high as 30%. If you cannot meet these requirements, you’ll be disqualified before you even set foot in the door.

Find Secured Financing

When you’re buying multiple properties, you’ll likely need to take out a loan in order to finance the purchase. There are a few different types of loans you can choose from, but the most common for investment properties is a portfolio loan. This is a type of loan that allows you to use multiple properties as collateral, which can help you get a lower interest rate.

Another option is to get a home equity line of credit (HELOC). This is a loan that uses your home as collateral and can be a good option if you have a lot of equity in your property. The downside to a HELOC is that you may end up paying more in interest over time.

homes for sale in Margate NJ

Research the Market

When you’re buying multiple properties, it’s important to choose locations that will be in high demand. This means doing your research to find out which areas are growing, have a lot of amenities nearby, and are close to tourist attractions.

The Jersey Shore is a great place to invest in real estate because it’s a popular spot for tourists. Another benefit of the Jersey Shore is that there are many towns to choose from, so you can find the perfect location to fit your needs. Some things to consider when choosing a location include:

  • The local economy
  • The crime rates
  • The quality of schools
  • The cost of living

Once you’ve chosen a location, you can start looking for properties. Be sure to work with a real estate agent who knows the area well and can help you find the best deals.

Final Thoughts

Buying multiple properties is a great way to invest in real estate, but it’s important to be prepared before you make any purchases. Be sure to check your credit score and DTI, secure financing, and do your research to find the best locations. With a little preparation, you’ll quickly attract beachgoers and turn a profit on your investment.

5 Real Estate Tax Secrets for Investment Properties

Most people have never heard of these tax strategies that involve an investment home. These tips will help you maximize your tax savings, and will give insight as to how to manage having a second home.

Tip #1: Take advantage of ‘safe harbors’

Don’t let your second home sit vacantly while you’re not there, rent it out! This will provide an extra income, and you can deduct related expenses such as repairs, insurance, real estate taxes, and a mortgage interest. The IRS also has a “safe harbor” policy for rental property expenses for $2,500.

However, if you are personally using the property for more than 14 days per year, there will be different tax implications, so consult with an accountant to determine what the specifics would be.

Tip #2: Depreciate your rental property

The IRS views a rental property as a business expense, which means they expect it to depreciate over time. The benefit of this is that you can deduct some of the cost of the home for upward of 27.5 years.

Tip #3: Depreciate is actually a ‘phantom deduction’

The IRS defines depreciation losses for rental properties as an allowance given to owners for the wear and tear and normal use of the property. While the IRS compensates landlords and owners for the depreciation of their assets, homes actually appreciate in value, so the loss the IRS allows doesn’t happen. This saves money on taxes, while still making a profit.

Tip #4: The 1031 exchange

This tax rule lets people sell an investment property for a profit, while moving the proceeds directly to another investment property, while deferring the tax liability. By paying capital gains tax, this can increase the value of your holdings without affecting your capital. Also, if the money in holding remains untouched before closing, the original sale will have no tax due.

Tip #5: Leave more money to your heirs

If using the 1031, heirs are left with real estate that has a lower tax basis than its actual value, because the tax law states that when someone passes away, the gain inherent in their investment is gone. If you’re looking to get cash out of the property, just refinance it and take out a home equity line of credit. Also, there is no tax on debt so having a home equity line of credit is simple for getting cash flowing without having an extra tax expense.

 

 

 


 

Heidenry, Margaret. “Shh! 5 Real Estate Tax Secrets the Rich Don’t Want You to Know.” Realtor.com, 14 Mar. 2017. Web. 30 Mar. 2017.