If you’ve been wanting to start investing in single-family King of Prussia rental homes but don’t quite have the money to accomplish it, you’re not alone. The good news is that there are many different ways to invest in rental real estate, even if you are a bit short on funds. Regarding funding an investment property with little or no money, you may need to get a little creative. By employing 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 seem like a contradiction, but one of the ideal approaches to buying your first rental property is to buy yourself a house first. Unlike loans for investment properties, there are many different programs intended to help first-time or other homebuyers purchase a home. Down payment requirements tend to be lower, and interest rates are frequently far more beneficial for owner-occupied properties. Several rental property owners began by buying themselves a house, living in it for a year or so, and then transforming it into a rental. This might be a good idea to get your foot in the door and start your investment portfolio.
2. Buy a Duplex
Another option, comparable to the first, is to acquire a duplex. The objective of owning a duplex is to stay on one side – thus qualifying for some of those favorable programs offered to owner-occupied properties – and rent out the other. The clear problem here is having to share your home with a renter. However, the advantage is that you will be collecting rent that may nearly cover your mortgage payment, reducing your living expenses, and helping you to save up for your future investment purchase.
3. Open a HELOC
If moving around or living in close quarters with your renter doesn’t sound like fantastic options, a third way to go would be to acquire a home equity line of credit (HELOC) on your residential property. If your property values have gone up over the last year or two, there may be adequate equity in your home to let you borrow against it and use the money to buy an investment property. Most lenders won’t offer you more than 80% of your home’s value, however, so you’ll want to keep a careful check on your property values and start the application process only once you’ve had a large amount of equity built up.
4. Reduce Closing Costs
If you’ve got enough funds for a down payment but are getting slightly short on other expenses, another strategy you might consider is to ask the seller or even your lender to pay all or part of your closing costs for you. Some lenders give rebates or other programs to help reduce the amount of money 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 guarantee a quick sale.
There are numerous strategies to make your dream of owning a portfolio of single-family rental homes come true for individuals who are determined to put in the effort. Our professional King of Prussia property managers can help! We engage 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.
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