Numerous individuals desire to invest in single-family rental homes but may lack the requisite capital to advance. Thank goodness, there are many different ways to invest in rental real estate, even if you are short on funds. Exploring novel approaches may be essential when funding an investment property with little or no cash. By executing one or more of the alternative approaches indicated below, you can make your dream of owning rental real estate a reality.
Buy a Primary Residence
Although it may appear paradoxical, one of the most successful tactics to buy your first rental property is to buy yourself a house. Unlike loans for investment properties, multiple programs are designed to help first-time or other homebuyers purchase a home. Down payment requirements tend to be lower, and the interest rates frequently present more benefits for owner-occupied properties.
Lots of rental property owners initially buy a house, stay in it for approximately a year, and then convert it into a rental. This method offers a significant possibility to get your foot in the door and start your investment portfolio.
Buy a Duplex
An equivalent option to the original proposal is to buy a duplex. The notion of acquiring a duplex entail inhabiting one unit—thus qualifying for some of those preferential programs offered to owner-occupied properties—and renting out the other. A notable disadvantage in this scenario is the requirement to share your living space with a renter. However, the benefit lies in the fact that you will be collecting rent that may nearly cover your mortgage payment, reducing your living expenses and permitting you to save up for your next investment purchase.
Open a HELOC
If the idea of relocating or living in close quarters with your renter seems undesirable, an alternative option would be to obtain a home equity line of credit (HELOC) on your residential property. If your property values have risen in the past year or two, your home may have enough equity to empower you to borrow against it and use the money to buy an investment property. Most lenders are unlikely to cover more than 80% of your home’s value. Consequently, it is imperative to keep a close eye on your property values and initiate the application process only after accumulating substantial equity.
Reduce Closing Costs
In circumstances when you possess adequate cash for a down payment yet face constraints with additional expenses, one viable strategy is to negotiate with the seller or your lender to assume responsibility for 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. And, if you’ve got a very motivated seller, they might be prepared to cover the closing costs to expedite the sale.
Those willing to exert the requisite effort can investigate several methods to make your dream of owning a portfolio of single-family rental homes come true. The specialist at Real Property Management Verita can help! Our services are designed for rental property investors in Winter Garden and surrounding areas, and they encompass both beginners and experienced experts. We assist in assessing prospective rental properties, uncovering off-market opportunities, and offering knowledgeable guidance on various aspects, including rental pricing and methods of advertising. For further information, Contact us online or call 321-972-6823.
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.