There are a lot of people who share your desire to invest in single-family rental homes but lack the funds to make it a reality. The positive news is that there are many different ways to invest in rental real estate, even if you are short on funds. When funding an investment property with little or no cash, you might have to get inventive. By implementing one or more of the alternative approaches stated below, you can make your dream of owning rental real estate a reality.
Buy a Primary Residence
It may sound confusing, but one of the great ways to buy your first rental property is to buy yourself a house. Unlike loans for investment properties, several programs are designed to help first-time or other homebuyers purchase a home. Down payment requirements are typically smaller, and loan rates are often much more favorable for owner-occupied properties.
Numerous rental property owners started by buying themselves a house, staying put for a year or two, and then converting it into a rental. This can be an excellent approach to get your foot in the door and start your investment portfolio.
Buy a Duplex
Buying a duplex is another choice that is comparable to the previous one. The logic behind purchasing a duplex is to live in one unit—thus qualifying for some of those advantageous programs offered to owner-occupied properties—and rent out the other. Sharing a house with a renter is obviously a drawback. The positive side, though, is that you’ll be able to collect rent that may just about to cover your mortgage payment, reducing your living expenses and letting you save up for your next investment purchase.
Open a HELOC
If you’re not keen on either relocating or living in close quarters with your renter, a third option is to apply a home equity line of credit (HELOC) on your residential property. If your property values have gone up over the last year or two, your home may have enough equity to permit you to borrow against it and leverage the money to buy an investment property. Most lenders won’t lend you more than 80% of your home’s value, though, so it is best to keep a close eye on your property values and wait until you have a substantial amount of equity to apply.
Reduce Closing Costs
If you’ve got sufficient cash for a down payment and still need money for additional expenses, another option to think about is to request that the seller or your lender pay all or part of your closing costs. Some lenders offer rebates or other programs to help reduce the cash you’ll need to bring at closing. Also, if you’ve got a very motivated seller, they may be eager to cover the closing costs to ensure a quick sale.
For individuals who are ready to put in the work, there are numerous manners to make your dream of owning a portfolio of single-family rental homes come true. Contact Real Property Management Allegiance for assistance from trained experts! From first-time investors to seasoned pros, we help all types of rental property buyers and sellers in Aventura and the surrounding area, assess prospective rental properties, find off-market promotions, and get expert guidance on marketing, rental rates, and more. Contact us online or call 786-206-8611 for extra details.
Originally Published on Mar 18, 2022
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.