If you’ve been thinking about investing in single-family rental homes but don’t quite have the cash to do it, you’re not alone. Happily, there are many different ways to invest in rental real estate, even if you are short on funds. You may need to get a bit inventive when funding an investment property with little or no cash. Performing one or more of the alternative approaches listed below, you can make your dream of owning rental real estate a reality.
Buy a Primary Residence
It may look like a contradiction, but one of the best approaches to buying your first rental property is to buy yourself a house. Unlike loans for investment properties, countless programs are designed to help first-time or other homebuyers purchase a home. Down payment requirements tend to be lower, and interest charges are often much more helpful for owner-occupied properties.
Lots of rental property owners commenced by purchasing a house, dwelling in it for a year or so, and then converting it into a rental. This can be an effective way to get your foot in the door and start your investment portfolio.
Buy a Duplex
Another way, similar to the first, is to buy a duplex. The goal behind getting a duplex is to reside on one side—thus qualifying for some of those beneficial programs offered to owner-occupied properties—and rent out the other. The evident disadvantage here is needing to share your home with a renter. On the other side, the great news is that you will be collecting rent that may almost cover your mortgage payment, reducing your living expenses and authorizing you to save up for your next investment purchase.
Open a HELOC
If transferring or living in close quarters with your renter doesn’t fit your taste, another approach would be to open a home equity line of credit (HELOC) on your residential property. If your property values have increased over the last year or two, your home may have enough equity to permit you to borrow against it and utilize the means to buy an investment property. Several lenders won’t provide more than 80% of your home’s value, so you’ll have to keep a close eye on your property values and start the application process only after you’ve got a decent amount of equity built up.
Reduce Closing Costs
If you’ve got sufficient cash for a down payment but are running a little short on other expenses, another way you could try is to call for the seller or your lender to cover all or a portion 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 eager to cover the closing costs to ensure a quick transaction.
For those who are ready to put in the effort, there are several tactics to make your dream of owning a portfolio of single-family rental homes come true. The experts at Real Property Management Ambassadors can aid you! We collaborate with rental property investors in Casselton and its vicinity, from inexperienced to well-informed, to help assess prospective rental properties, locate off-market agreements, and give professional advice on everything from rental rates to promotion (and beyond). Contact us online or call 701-970-2600 if you have inquiries.
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.