Many individuals share your aspiration to invest in single-family rental homes but lack the necessary capital to actualize it. It’s fortunate 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 may need to employ creativity. By leveraging one or more of the alternative approaches suggested below, you can make your dream of owning rental real estate a reality.
Buy a Primary Residence
Although it may appear perplexing, a highly effective method 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 interest rates are frequently more advantageous for owner-occupied properties.
Numerous rental property owners initially acquired a residence, resided there for one to two years, and then converted it into a rental. This might be an effective strategy to get your foot in the door and start your investment portfolio.
Buy a Duplex
Buying a duplex is an alternative that matches the prior option. The goal for acquiring a duplex is to reside in one apartment—thus qualifying for some of those advantageous programs offered to owner-occupied properties—and rent out the other. Cohabiting with a tenant is evidently a disadvantage. The good news is that you’ll be able to collect rent that may just about to cover your mortgage payment, reducing your living expenses and allowing you save up for your next investment purchase.
Open a HELOC
If you are averse to relocating or living in close quarters with your renter, one alternative is to secure a home equity line of credit (HELOC) on your residential property. If your property values have appreciated in the past year or two, your home may have enough equity to enable you to borrow against it and utilize the money to buy an investment property. Most lenders won’t give you more than 80% of your home’s value, so it is important to keep a close eye on your property values and delay your application until you have accumulated significant equity.
Reduce Closing Costs
If you’ve got enough cash for a down payment yet require additional capital for expenses, another alternative is to ask the seller or your lender to 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. On top of that, if you’ve got a very motivated seller, they may be likely to cover the closing costs to encourage a quick transaction.
For individuals who are ready to put in the work, there are various ways to make your dream of owning a portfolio of single-family rental homes come true. Reach out to Real Property Management Sailfish Coast for assistance from qualified experts! From first-time investors to seasoned pros, we help all types of rental property buyers and sellers in Palm City and the areas nearby, assess prospective rental properties, locate off-market promotions, and obtain expert guidance on marketing, rental rates, and more. Contact us online or call 772-242-9094 for other information.
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.