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4 Alternative Funding Ideas to Begin Your Real Estate Journey

Real estate investor shaking hands to close a deal.If you’ve been dreaming about investing in single-family rental homes yet don’t have the money to make it happen, you’re not alone. Happily, there are many different ways to invest in rental real estate, even if you are short on funds. You may need to get a bit imaginative when funding an investment property with little or no cash. By adopting one or more of the alternative approaches listed below, you can make your dream of owning rental real estate a reality.

Buy a Primary Residence

It might seem like a contradiction, but one of the mind-blowing ways to buy your first rental property is to buy yourself a house. Dissimilar to 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 usually much more positive for owner-occupied properties.

Numerous rental property owners began by getting themselves a house, residing in it for a year or so, and then converting it into a rental. This can be an extra ordinary method to get your foot in the door and start your investment portfolio.

Buy a Duplex

Another choice, like the first, is to buy a duplex. The thought behind purchasing a duplex is to reside on one side—thus qualifying for some of those favorable programs offered to owner-occupied properties—and rent out the other. The obvious downside here is having to share your 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.

Open a HELOC

If moving around or living in close quarters with your renter doesn’t appear to be a good choice for you, a third approach is to open a home equity line of credit (HELOC) on your residential property. If your property values have increased over the last year or two, your home may have enough equity to empower you to borrow against it and utilize the cash to buy an investment property. Most lenders won’t give you over 80% of your home’s value, though, so you’ll need to keep a close eye on your property values and begin the application cycle only after you’ve got a great amount of equity built up.

Reduce Closing Costs

If you’ve got ample cash for a down payment yet are running low on other expenses, another approach you could try is to ask 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. What is more, if you’ve got a very motivated seller, they may be willing to cover the closing costs to guarantee a fast deal.

For those ready to invest the energy, there are numerous ways to make your dream of owning a portfolio of single-family rental homes come true. The professionals at Real Property Management Varanasi can assist! We cooperate with rental property investors in King of Prussia and close by, from beginners to knowledgeable, to help assess prospective rental properties, locate off-market arrangements, and grant professional assistance on everything from rental rates to advertising (and beyond). Contact us online or call 215-770-2707 to get more information.

Originally Published on Mar 18, 2022

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