Credit tips for buying an investment property

American Apartment Owners Association - Mon, 04/02/2018 - 11:32am
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. That’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 flow 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 affect 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 fiscally responsible. For example, when shopping around for the best mortgage rate, keep in mind that multiple inquiries can have a negative effect 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 defined time frame of 30-45 days.

  1. 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 affect 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. Throughout the billing cycle, keep an eye on the balance, and pay it down when you can.

  1. 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.

  1. Beware of low and no-interest financing 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 often 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 affect your credit score. Before you sign on, always read the fine 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 offers many options for those who wish to build their wealth through investing in real estate.


The post Credit tips for buying an investment property appeared first on AAOA.

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South Dakota Law Alters How Landlords Handle Support Animals

American Apartment Owners Association - Mon, 04/02/2018 - 11:27am

SIOUX FALLS, S.D. (AP) — New South Dakota legislation will allow landlords to evict or fine tenants who fake a disability or provide false documentation to keep a pet in their rental unit.

Gov. Dennis Daugaard signed into law this month a bill intended to prevent tenants from lying about medical conditions and claiming they have an emotional support animal. The law takes effect July 1, the Argus Leader reported.

A loophole in current law allows tenants to keep miniature horses, snakes and chickens as support animals, said Amy Miller, president of Charisma Property Management.

“It’s a huge problem,” Miller said. “Nobody wants to get sued so nobody’s pressing it.”

The federal Americans with Disabilities Act describes trained animals but not specifically therapy or emotional support animals. The language means that landlords can’t deny tenants from living with the animals.

But state law didn’t distinguish service or therapy animals either, so landlords often choose to allow them in order to avoid lawsuits.

“It goes unquestioned because (the law is) so ambiguous that unfortunately, I think landlords get taken advantage of,” said Paul Gourley, chair of the South Dakota Multi-Housing Association. “There’s a loophole in the system that needs to be corrected.”

The new law says landlords can request that tenants whose disability or health condition isn’t “readily apparent” provide a doctor’s note affirming their need for the service or emotional support animal.

University of South Dakota student Taiya Bunde has a support cat named Snuggles that she keeps in her off-campus apartment. Bunde’s psychiatrist approved Snuggles as an emotional therapy animal. The 21-year-old said she hopes “that people don’t abuse it and ruin for those that need it.”



The post South Dakota Law Alters How Landlords Handle Support Animals appeared first on AAOA.

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Real estate daily market update: April 2, 2018

Inmannews - Mon, 04/02/2018 - 11:00am
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Cryptocurrency startup Deedcoin sees its first home sale

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Re/Max raised over $10.8M for sick children just last year

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Re/Max Leading Edge in Boston launches insurance agency

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Listen to audio of suspicious caller ‘Dwayne Bergeman,’ who’s prompted Realtor safety alerts

Inmannews - Mon, 04/02/2018 - 6:36am
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The Parker Principles: A Real Estate Manifesto

Inmannews - Mon, 04/02/2018 - 3:00am
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How would Florida’s proposed daylight savings bill impact real estate?

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4 ways to generate leads without having to hard sell

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How much transparency do you need in your real estate business?

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13 ways to maximize your next open house

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The best way to build trust with your clients

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Clean and clear: home water quality issues to address before a sale

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5 secrets to building a successful brand in real estate

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8 common tax filing mistakes agents should avoid

Inmannews - Mon, 04/02/2018 - 1:00am
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