You’re not alone if you’ve been considering making an investment in single-family rental homes but lack the necessary funds. Fortunately, there are many different ways to invest in rental real estate, even if you are short on funds. Funding an investment property with little or no cash may require some ingenuity. You can make your dream of owning rental real estate a reality by utilizing a couple of alternative approaches mentioned below.
Buy a Primary Residence
Buying yourself a house is one of the ideal ways to buy your first rental property, despite the fact that this may seem counterintuitive. Unlike loans for investment properties, numerous programs are designed to help first-time or other homebuyers purchase a home. Owner-occupied properties typically have reduced down payment requirements and considerably more favorable mortgage rates.
A lot of rental property owners began by purchasing a home for themselves, residing there for a year or so, and then converting it into a rental. This can be an excellent method to get your foot in the door and start your investment portfolio.
Buy a Duplex
Buying a duplex is an additional choice that is comparable to the first. The concept behind purchasing a duplex is to rent out one side while living on the other—thus qualifying for some of those beneficial programs offered to owner-occupied properties—and rent out the other. Having to live with a renter is the clear drawback here. The benefit, however, is that you will be collecting rent that may nearly cover your mortgage payment, reducing your living expenses and permitting you to save up for your next investment purchase.
Open a HELOC
Setting up a home equity line of credit (HELOC) on your residential property would be a third alternative if you don’t want to live in close quarters with your renter. If your property values have gone up over the last 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. However, since most lenders would only grant you 80% of your home’s value, you should keep a close eye on your property values and wait to apply until you have accumulated a sizable amount of equity.
Reduce Closing Costs
Asking the seller or your lender to cover all or a portion of your closing costs is an additional tactic you could take if you have enough cash for a down payment but are slightly short on other expenses. 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 be willing to cover the closing costs to guarantee a speedy sale.
There are numerous ways to make your dream of owning a portfolio of single-family rental homes come true if you are prepared to put in the work. The experts at Real Property Management of Soflo are able to assist! We assist novice and seasoned rental property investors in Miami-Dade County and the surrounding area in assessing prospective rental properties, discovering off-market deals, and providing knowledgeable guidance on everything from marketing to rental rates (and more). Contact us online or call 786-527-1686 for more information.
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