If you’ve been contemplating investing in single-family Renton rental homes though you don’t quite have the cash to follow through with it, you’re not alone. The good news is that there are many different ways to invest in rental real estate, though you are a bit short on funds. Regarding funding an investment property with little or no cash, you may find that you will have to get a bit creative. By applying one or more of the alternative approaches listed below, you may be able to make your dream of owning rental real estate a reality.
1. Buy a Primary Residence
It may appear to be an incongruity, however, one of the best means to buy your first rental property is to buy yourself a house first. Unlike loans for investment properties, there are many different programs created to be useful to first-time or other homebuyers who purchase a home. Down payment requirements are likely to be lower, and interest rates are oftentimes a whole lot better for owner-occupied properties. Most rental property owners get moving by buying themselves a house, living in it for a year or so, and then diverting it into a rental. This can be the best means to get your foot in the door and get moving on your investment portfolio.
2. Buy a Duplex
Another option, same as the first, is to purchase a duplex. The concept of acquiring a duplex is to live on one side – thus qualifying for some of those favorable programs offered to owner-occupied properties – and rent out the other. The apparent snag here is having to share your home with a renter. However, the positive aspect is that you will be collecting rent that may nearly cover your mortgage payment, reducing your living expenses, and letting you save money for your subsequent investment purchase.
3. Open a HELOC
If moving around or living in close quarters with your renter doesn’t quite seem like excellent options, a third method to go for would be to open a home equity line of credit (HELOC) on your residential property. If your property values have been rising over the last year or two, there may be quite enough equity in your home to let you borrow against it and use the money to buy an investment property. Many lenders won’t allow you more than 80% of your home’s value, however, so you’ll have to watch your property values closely and start the application process only after you’ve got a fair amount of equity built up.
4. Reduce Closing Costs
If you’ve got adequate cash for a down payment but are running kind of short for other expenses, another strategy you could consider is to ask the seller or even your lender to pay all or part of your closing costs for you. Various lenders give rebates or other programs to reduce the amount of cash you’ll require to bring at closing. Likewise, if you’ve got a very motivated seller, they may be able to cover the closing costs to make certain of a speedy sale.
For those who are disposed to make every effort, there are countless strategies to make your dream of owning a portfolio of single-family rental homes come true. Our professional Renton property managers can definitely help! We can be of great help to 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.
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