If you’ve been dreaming about investing in single-family rental homes but don’t quite have the cash to do it, you’re not alone. Fortunately, there are many different ways to invest in rental real estate, even if you are short on funds. Creativity may be required when funding an investment property with little or no cash. By employing one or more of the alternative approaches outlined below, you can make your dream of owning rental real estate a reality.
Buy a Primary Residence
It may appear paradoxical, but one of the most effective methods to buy your first rental property is to buy yourself a house. Contrasting loans for investment properties, numerous programs are designed to help first-time or other homebuyers purchase a home. Down payment requirements are generally reduced, and financing rates are frequently more advantageous for owner-occupied properties.
Numerous rental property owners commenced by purchasing a residence, residing in it for approximately a year, and then converting it into a rental. This can provide as an excellent opportunity to get your foot in the door and start your investment portfolio.
Buy a Duplex
An alternative, akin to the initial option, is to buy a duplex. The concept of purchasing a duplex is to reside in one unit—thus qualifying for some of those helpful programs offered to owner-occupied properties—and rent out the other. The evident disadvantage is the necessity of sharing your residence with a renter. However, the advantage is that you will be collecting rent that may nearly cover your mortgage payment, reducing your living expenses and letting you save up for your next investment purchase.
Open a HELOC
If residing or living in close quarters with your renter appears unappealing, an alternative would be to establish a home equity line of credit (HELOC) on your residential property. If your property values have increased in the past year or two, your home may have enough equity to enable you to borrow against it and utilize the funds to buy an investment property. Most lenders would not provide more than 80% of your home’s value, though, so it is advisable to keep a close eye on your property values and initiate the application procedure only after accumulating substantial equity.
Reduce Closing Costs
If you possess sufficient cash for a down payment but are lacking in other expenses, an alternative method is to request that the seller or your lender 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. Additionally, if you’ve got a very motivated seller, they may agree to cover the closing costs to facilitate a swift transaction.
Individuals willing to put in the effort, there are several ways to make your dream of owning a portfolio of single-family rental homes come true. The professionals at Real Property Management Coral are available to assist! We collaborate with rental property investors in Oakland Park and its vicinity, ranging from novices to seasoned professionals, to help assess prospective rental properties, identify off-market opportunities, and provide expert guidance on various aspects, including rental pricing and marketing strategies. Contact us online or call 954-708-1222 for more details.
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.