If you want to consider investing in single-family rental homes but lack enough capital, you are not alone. The excellent news is that there are many different ways to invest in rental real estate, even though you are short on funds. With regard to funding an investment property with little or no cash, you may have to be creative. You can make your dream of owning rental real estate a reality by adopting one or more of the alternative approaches mentioned below.
Buy a Primary Residence
It may appear paradoxical, but one of the ideal approaches to buying your first rental property is to buy yourself a house. As opposed to loans for investment properties, numerous programs are designed to help first-time or other homebuyers purchase a home. Down payment requirements tend to be lower, and interest rates are often much more beneficial for owner-occupied properties.
Lots of rental property owners commenced acquire a home, residing in it for a year or so, and then converting it into a rental. This can be a fantastic way 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 first. The motive behind purchasing a duplex is to live on one side—thereby qualifying for some of those advantageous programs offered to owner-occupied properties—and rent out the other. The primary problem here is having to share your home with a renter. Yet, the advantage is that you will be collecting rent that may nearly cover your mortgage payment, reducing your living expenses and assisting you in saving up for your next investment purchase.
Open a HELOC
If relocating elsewhere or living in close quarters with your renter does not appear to be a favorable option, an alternative is to obtain a home equity line of credit (HELOC) on your residential property. If your property values have appreciated in the recent year or two, your home may have enough equity to help you borrow against it and utilize the profits to buy an investment property. Most lenders are hesitant to extend loans above 80% of your home’s value, so it is advisable to keep a close eye on your property values and commence the application process only after amassing substantial equity.
Reduce Closing Costs
If you’ve got ample cash for a down payment but do not have enough in other expenses, you can consider requesting the seller or your lender to take care of 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. Additionally, if you’ve got a very motivated seller, they may be willing to cover the closing costs in exchange for a swift deal.
For individuals willing to exert effort, lots of possibilities exist to make your dream of owning a portfolio of single-family rental homes come true. The experts at Real Property Management Peace can give assistance! We support rental property investors in Southern Highlands and surrounding areas, from newcomers to skilled professionals, in assessing prospective rental properties, uncovering off-market deals, and offering expert guidance on various aspects, including rental pricing and advertising tactics. Contact us online or call 702-848-2509 to find out more.
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.
