Why Are Investment Property Loans Particularly Important to Building Wealth in New York City?

If you ask the average joe what it means to be wealthy, chances are they’ll refer to having a ton of money. But did you know wealth doesn’t solely refer to the amount of cash a person has? A person’s wealth also includes any assets they own, like vehicles and real estate. This begs the question—how do you accumulate wealth in places like New York City, where everything’s so expensive? One answer to this issue is to take out an investment property loan.

Mortgage consultants issue investment property loans to borrowers that want to earn an income by investing in real estate. The idea’s simple—the mortgage lender gives the borrower enough money to buy an investment property and asks for it to be repaid with interest. The borrower takes this money, buys an investment property, rents it out, and uses the rent to pay back the mortgage premiums and earn a profit.

In this article, we explore three reasons why this method of building wealth is particularly important in New York City. So, without further ado, let’s dive in!

1. Properties in New York City Appreciate Extremely Quickly

One of the main reasons why investment property loans are a fantastic wealth-building tool in New York City pertains to the city’s property appreciation rate. While the median sales price of residential properties in New York City is close to $750,000, house prices have increased by over 192% in the past twenty years. In other words, it costs a boat load to own a home in New York City—but if you invest in one, you’ll triple your income in a few decades!

Unfortunately, most New Yorkers don’t have three-quarters of a million dollars lying spare in their bank accounts—and that’s where investment property loans come in. Investment property loansgive borrowers the chance to immediately start accumulating wealth from property appreciation. If the property appreciates by a bigger amount than the premiums owed on the loan, the borrower makes a profit.

For instance, suppose you take out an investment property loan at 5% APR for a $750,000 house in New York City. The loan has a 10-year term, which means you’ll owe $78,750 per year (equivalent to $75,000 per year plus 5% interest), or $787,500 in total. But when you get the property appraised, you find out it has the potential to appreciate by 10% every year.

If you do the math, you’ll find that in ten years, the property will be worth almost $1.95 million. In this scenario, you’ll make a huge profit by taking out an investment property loan!

2. New York City Properties Generate Strong Rental Incomes for Homeowners

Another key reason why it’s worth taking out investment property loans in New York City is the city’s strong jobs market (particularly in the private sector). In New York City, landlords require tenants to maintain a 30% rent-to-income ratio. Considering the median household income in New York is just over $67,000 per year; theoretically, New Yorkers have $20,100 per year to spend on income.

Why is this important? The answer’s simple—the more rental income you earn, the bigger your profit margin will be despite having to pay investment property loan premiums. Let’s illustrate this with the same example used previously.

Suppose you take out a 10-year loan on a $750,000 property at 5% APR. In this scenario, you’ll owe $78,750 per year in mortgage payments. Now imagine you rent the property out to a New Yorker willing at $20,100 per year. Even after accounting for expenses like periodic maintenance and renovation, you’ll still stand to make a profit. And that doesn’t include the extra wealth you’ll accumulate from the building appreciating over time!

3. Investment Property LoansCan Help Lower Your Property Tax Bill in the Long Run

Imagine buying a property and being charged double the national average in property taxes. We wouldn’t blame you for being frustrated! Unfortunately, this is the reality New Yorkers—especially those living downtown—must live with.

A great solution to this issue is to buy a rental property using an investment property loan. If you own a rental property in the United States, you’re eligible to deduct the costs of owning, maintaining, and operating the property from your tax bill.

In simpler words, owning a rental property will leave you having to pay less property tax compared to other New Yorkers. With that said, it’s vital to ensure your property’s appreciation and rental income potential offset the premiums owed on the property. If they don’t, your overall wealth will fall.

Atlantic Home Capital Provides Investment Property Loans to Help New Yorkers Obtain Financial Freedom

Why rely on earning through work when you can obtain financial freedom by taking out an investment property loan to earn passively? If you’re looking for a licensed mortgage lender in New York that offers investment property loans at fantastic rates, look no further than Atlantic Home Capital!

At Atlantic Home Capital, we’ve earned the respect of our clients by providing mortgage loans at some of the best rates on the market. Our financing options include everything from FHA loans for borrowers with fair credit scores to VA loans for military personnel. We also provide no W2 loans for borrowers without W2 forms, mixed-use financing for those interested in diversifying their rental income, and jumbo home loans for luxury real estate buyers.

Are you ready to harness the power of investment property loans to build wealth in New York City? If so, reach out to our team of expert mortgage consultants, and they’ll guide you through our simple five-step application process!