1. Buy a Primary Residence
This may sound weird, but buying your own house first is a really good step towards rental property investment. Unlike loans for investment properties, there are many different programs 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. Several rental property owners began by living in their own houses. After some time, they then convert it into a rental. This is a great starting point for building your very own investment portfolio.
2. Buy a Duplex
A duplex would also be a very nice first purchase. When buying a duplex, the same programs offered to owner-occupied properties are made available to you. Plus, you can rent out the other side of the duplex to someone else. The drawback, obviously, is that you have to share your own home with a renter. But the upside is that you will be collecting rent that may nearly cover your mortgage payment, reducing your living expenses and allowing you to save up for your next investment purchase.
3. Open a HELOC
If sharing a home with a renter doesn’t quite fit your needs, then you can go for a home equity line of credit (HELOC) on your residential property. As property values continue to rise, yours will, most likely, build up equity. You can then borrow against that amount in a line of credit so as to fund buying your next investment property. It’s possible too, that lenders will not give you more than 80% of your home’s value. So it’s wise to keep track of your property values so you can keep a close watch on your equity.
4. Reduce Closing Costs
If the down payment is already there but you’re short on other expenses, you can try to ask the seller or your lender to pay all or part of your closing costs. There are lenders out there who will offer rebates to try and minimize the cash needed for the closing. There are sellers who have even offered to handle the closing costs so as to seal the sale.
The dream of owning a portfolio of single-family rental homes is very much achievable for those who dare to put the work in. Our professional Gresham property managers can help! We work with rental property investors, from beginning to experienced, to help assess prospective rental properties, locate off-market deals, and offer expert advice on everything from rental rates to marketing (and beyond). Contact us online to learn more.