66 THE QUEENS COURIER • AT HOME • APRIL 19, 2018 FOR BREAKING NEWS VISIT WWW.QNS.COM
at home
Credit tips for buying an investment property
If you love the idea of being a landlord,
and don’t mind being on duty around
the clock, buying an investment property
may be the wealth-building option
for you.
Property values have enjoyed a steady
increase over the decades. Th at’s why real
estate has earned its reputation as a sound
investment that builds wealth and credit.
Most people, however, don’t have the
quantity of cash on hand to purchase a
house or apartment building outright.
Still, if becoming a landlord means taking
out a 30-year mortgage, the monthly payments
from the tenants should be enough
to service the loan and build equity for
you, while leaving some cash fl ow so you
can maintain the property.
If buying investment property sounds
like a step you’d like to take, here are
some credit considerations every investor
needs to know.
1. Be mindful of the
inquiry stage
Once you decide to purchase an investment
property, it’s important to do everything
you can to make sure your credit
score stays as high as possible until the
loan is approved and signed. Your goal
is to land the best possible interest rate,
because even half a percentage point can
add tens of thousands of dollars of total
interest payments to a 30-year loan (and
aff ect your wealth-building abilities).
During this time, things like continuing
to make on-time payments on your existing
loans can be helpful in maintaining
your credit score. However, sometimes
people unintentionally lower their credit
score when they’re actually trying to be
fi scally responsible. For example, when
shopping around for the best mortgage
rate, keep in mind that multiple inquiries
can have a negative eff ect on your
credit score, especially if you don’t have
a long credit history. Fortunately, many
credit bureaus recognize that you may
be comparison shopping, so make sure
you do this within a defi ned time frame
of 30-45 days.
2. Keep credit utilization low
When maintaining a property, having
access to credit can be helpful because it
lets you make repairs and keep things in
good living condition for your tenants.
One thing that can aff ect your credit score
is the amount of credit you’re using.
Unfortunately, keeping a higher balance
could result in a lower credit score.
As a rule, keep your credit utilization at
30 percent or less. For example, if your
credit card has a $5,000 limit, the balance
should not get any higher than $1,500.
Th roughout the billing cycle, keep an eye
on the balance, and pay it down when
you can.
3. Keep a cushion of cash
It happens. You get that call about a
water leak, and before you know it, you’re
spending your Saturday evening pricing
plumbers, searching for one whose overtime
rate is only in the range of mildly
outrageous.
Being a property manager means
expecting the unexpected, and one of
the best ways to be ready is to have
enough cash at the ready to take care of
these problems. Build an emergency fund
in your savings account, and keep your
credit paid down so you always have that
cushion to fall back on during any crisis.
4. Beware of low and no-interest
fi nancing deals
When it’s time to replace the oven
range or a refrigerator, one of those “no
payments, no interest for 18 months”
deals can seem like a lifesaver. It sounds
like a great deal, but these alluring promises
are designed to play a psychological
trick on you. Because you don’t have to
pay yet, it doesn’t really feel like spending
money when you’re making the purchase.
However, once the interest-free promotional
period is up, a double-digit interest
rate oft en kicks in. If you don’t have the
cash to pay off the balance or make payments,
you could end up with penalties
that can aff ect your credit score. Before
you sign on, always read the fi ne print.
Before you invest, do your research on
credit scores and know your pros and
cons. More than 8.5 billion credit scores
compiled by VantageScore Solutions were
obtained and used in the U.S. between
June 2016 and July 2017. Whatever your
stage in life, the market off ers many
options for those who wish to build their
wealth through investing in real estate.
Courtesy BPT