Many people share the dream of investing in single-family rental homes, and while cash might be a hurdle, there are always opportunities ahead. The great thing is that there are many different ways to invest in rental real estate, even if you are short on funds. Getting creative can be an exciting way to fund an investment property with little or no cash. By discovering the alternative approaches presented below, you can make your dream of owning rental real estate a reality.
Buy a Primary Residence
It might seem surprising, but one of the most successful techniques to buy your first rental property is to buy yourself a house. Unlike loans for investment properties, many programs are 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.
Many rental property owners began the process by buying a home, enjoying it for a year or so, and then converting it into a rental. This is a perfect chance to get your foot in the door and start your investment portfolio.
Buy a Duplex
Another exciting option, much like the first, is to buy a duplex. The entire point of purchasing a duplex is to reside on one side, qualifying you to take advantage of the wonderful programs offered to owner-occupied properties—and rent out the other. One thing to take into account is the chance to share your home with a renter. The great news is that you’ll be collecting rent that could practically cover your mortgage payment, reducing your living expenses and giving you the chance to save up for your next investment purchase.
Open a HELOC
If moving around or living in close quarters with your renter doesn’t seem like the best fit for you, consider the exciting possibility of opening a home equity line of credit (HELOC) on your residential property. If your property values have climbed over the last year or two, your home may have enough equity to enable you to borrow against it and use the money to buy an investment property. Most lenders often offer up to 80% of your home’s value, so it’s a great idea to keep a close eye on your property values. Starting the application process after building a solid amount of equity can set you up for success.
Reduce Closing Costs
If you have the necessary cash for a down payment but are a bit tight on other expenses, you may want to convince 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. Plus, if you’ve got a very motivated seller, they might be excited to cover the closing costs to facilitate a quick sale.
For those ready to embrace the journey, there are countless opportunities to make your dream of owning a portfolio of single-family rental homes come true. The professionals at Real Property Management Solutions are here to assist you! We cooperate with rental property investors in Gresham and neighboring regions, catering to everyone from newcomers to seasoned professionals. Our goal is to help assess prospective rental properties, uncover off-market opportunities, and provide knowledgeable guidance on a wide range of topics, including rental rates and marketing techniques. Contact us online or call 503-224-3002 to learn more.
Originally Published on Mar 18, 2022
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