If you’ve been thinking of investing in single-family rental homes but are lacking the funds, you’re not alone. The excellent thing is that there are many different ways to invest in rental real estate, even though you are short on funds. When it comes to funding an investment property with little or no cash, you may have to be inventive. You can make your dream of owning rental real estate a reality by utilizing one or more of the alternative approaches stated below.
Buy a Primary Residence
It may appear paradoxical, but one of the ideal methods to buy your first rental property is to buy yourself a house. In contrast 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 favorable for owner-occupied properties.
Numerous rental property owners commenced purchasing a home, staying in it for a year or so, and then converting it into a rental. This can be a terrific method to get your foot in the door and start your investment portfolio.
Buy a Duplex
Buying a duplex is another alternative that is comparable to the first. The reason behind purchasing a duplex is to reside on one side—thereby qualifying for some of those advantageous programs offered to owner-occupied properties—and rent out the other. The primary drawback here is having to share your home with a renter. However, the benefit is that you will be collecting rent that may closely cover your mortgage payment, reducing your living expenses and helping you to save up for your next investment purchase.
Open a HELOC
If shifting elsewhere or living in close quarters with your renter doesn’t seem like an excellent choice for you, another option is to get a home equity line of credit (HELOC) on your residential property. If your property values has risen 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 reluctant to lend you more than 80% of your home’s value, so you should keep a close eye on your property values and begin the application procedure only when you have accumulated a significant amount of equity.
Reduce Closing Costs
If you’ve got adequate cash for a down payment but are running a little short on other expenses, another approach you could attempt 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. In addition, if you’ve got a very motivated seller, they may be prepared to cover the closing costs to ensure a rapid transaction.
For those who are ready to put out the effort, there are several possibilities to make your dream of owning a portfolio of single-family rental homes come true. The experts at Real Property Management Keystone can help! We assist rental property investors in Carnegie and around, from newbies to experienced, in assessing prospective rental properties, discovering off-market deals, and providing expert advice on everything from rental rates to marketing (and beyond). Contact us online or call 412-385-2300 to find out more.
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