If you’ve been picturing the opportunity to invest in single-family rental homes but find yourself running little on funds, you’re not alone. Fortunately, there are many different ways to invest in rental real estate, even if you are short on funds. Getting a little imaginative might be needed when it comes to funding an investment property with little or no cash. By discovering the alternative approaches enumerated below, you can make your dream of owning rental real estate a reality.
Buy a Primary Residence
It might sound like conflict, but one of the best strategies for buying your first rental property is to buy yourself a house. Unlike loans for investment properties, numerous programs are designed to help first-time or other homebuyers purchase a home. Down payment requirements are generally lower, and interest rates typically offer more advantageous terms for owner-occupied properties.
Several rental property owners began their path by obtaining a home, inhabiting it for a year or so, and then converting it into a rental. This can be a wonderful opportunity to get your foot in the door and start your investment portfolio.
Buy a Duplex
Another approach, akin to the first, is to buy a duplex. The goal of purchasing a duplex involves living in one unit—thus qualifying for some of those advantageous programs offered to owner-occupied properties—and renting out the other. The clear downside in this situation is the requirement of sharing your living space with a renter. In contrast, the perks are that you will be collecting rent that may approximately cover your mortgage payment, reducing your living expenses and enabling you to save up for your next investment purchase.
Open a HELOC
If moving around or living in close quarters with your renter doesn’t feel like the best option for you, another alternative to take into account is opening a home equity line of credit (HELOC) on your residential property. If your property values have grown in the past year or two, your home may have enough equity to empower you to borrow against it and utilize the funds to buy an investment property. Generally, most lenders will limit you to 80% of your home’s value, so it is imperative to keep a close eye on your property values. Start the application procedure only after you’ve accumulated a substantial amount of equity.
Reduce Closing Costs
If you have adequate cash for a down payment but find yourself a bit tight on other expenses, one means you might consider is asking 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. And, if you’ve got a very motivated seller, they may be ready to cover the closing costs to help with a swift deal.
For those prepared to invest their time and energy, several opportunities exist to make your dream of owning a portfolio of single-family rental homes come true. The pros at Real Property Management Capital City can assist! We partner with rental property investors in Georgetown and nearby areas, catering to everyone from beginners to seasoned professionals. Our services include assessing prospective rental properties, locating exclusive deals, and delivering expert insights on various aspects, such as rental pricing and marketing strategies. Contact us online or call 512-572-6799 to discover more.
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.
