You’re not the only one who has fantasized about investing in single-family rental homes but has the necessary funds. Luckily, there are many different ways to invest in rental real estate, even if you are short on funds. You might have to be a little imaginative when funding an investment property with little or no cash. Using a number of the alternative approaches mentioned below, you can make your dream of owning rental real estate a reality.
Buy a Primary Residence
Although it may seem strange, buying yourself a house is among the greatest ways to buy your first rental property. In contrast to loans for investment properties, a lot of programs are designed to help first-time or other homebuyers purchase a home. Down payment requirements are typically smaller and financing rates are frequently significantly more favorable for owner-occupied properties.
The first step for rental property owners was to purchase a home, live there for a year or so, and then converting it into a rental. This might be a fantastic approach to get your foot in the door and start your investment portfolio.
Buy a Duplex
Similar to the first choice, buying a duplex is another. The idea behind acquiring a duplex is to stay on one side—thus qualifying for some of those beneficial programs offered to owner-occupied properties—and rent out the other. This has the obvious drawback of requiring you to live with a renter. However, the benefit is that you will be collecting rent that may virtually cover your mortgage payment, reducing your living expenses and enabling you to save up for your next investment purchase.
Open a HELOC
A third alternative would be to acquire a home equity line of credit (HELOC) on your residential property if relocating or living in close quarters with your renter is not a good thing for you. If your property values has appreciated in the past year or two, your home may have enough equity to let you borrow against it and use the money to buy an investment property. You must keep a close eye on your property values and wait to begin the application process until you have a sizable amount of equity built up, as most lenders will only loan you 80% of your home’s value.
Reduce Closing Costs
Another tactic is to request that the seller or your lender cover all or part of your closing costs if you have adequate cash for a down payment but are somewhat short on other expenses. Some lenders offer rebates or other programs to help reduce the cash you’ll need to bring at closing. Moreover, if you’ve got a very motivated seller, they may be enthusiastic to cover the closing costs to ensure a quick sale.
For those eager to dedicate the effort, there are several approaches to make your dream of owning a portfolio of single-family rental homes come true. Help is available from the experts at Real Property Management Premium! We work with rental property investors in Plaquemine and nearby, from inexperienced to seasoned, to help assess prospective rental properties, uncover off-market deals, and provide professional guidance on everything from rental rates to marketing (and beyond). Contact us online or call 225-570-8739 to find out more.
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