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4 Alternative Funding Ideas to Begin Your Real Estate Journey

Real estate investor shaking hands to close a deal.Many individuals aspire to invest in single-family rental homes but lack the financial resources needed. The bright side is that there are many different ways to invest in rental real estate, even if you are short on funds. Creativity may be necessary when funding an investment property with little or no cash. By performing one or more of the alternative approaches detailed below, you can make your dream of owning rental real estate a reality.

Buy a Primary Residence

It may seem contradictory, but one of the most efficient strategies to buy your first rental property is to buy yourself a house. In contrast to loans for investment properties, numerous programs are designed to help first-time or other homebuyers purchase a home. Down payment requirements are typically reduced, and financing rates are frequently more advantageous for owner-occupied properties.

Several rental property owners began by acquiring a dwelling, living in it for about a year, and then converting it into a rental. This presents a wonderful opportunity to get your foot in the door and start your investment portfolio.

Buy a Duplex

Another option, similar to the initial, is to buy a duplex. The notion of acquiring a duplex involves inhabiting one unit—thus qualifying for some of those beneficial programs offered to owner-occupied properties—and renting out the other. The clear consequence is the requirement to share your residence with a renter. However, the great thing 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 cohabiting or living in close quarters with your renter seems unwelcome to you, one alternative is to secure a home equity line of credit (HELOC) on your residential property. If your property values have grown in the past year or two, your home may have enough equity to enable you to borrow against it and utilize the cash to buy an investment property. Most lenders typically do not extend more than 80% of your home’s value, so it is prudent to keep a close eye on your property values and commence the application procedure only after accumulating substantial equity.

Reduce Closing Costs

If you possess adequate cash for a down payment but are short on other expenses, you might think about convincing the seller or your lender to shoulder 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. Besides, if you’ve got a very motivated seller, they may be eager to cover the closing costs to expedite the closing process.

For individuals who are willing to put in the effort, there are multiple options to make your dream of owning a portfolio of single-family rental homes come true. The experts at Real Property Management Trustworthy are here to give assistance! We partner with rental property investors in Chapel Hill and neighboring regions, ranging from rookies to seasoned professionals, to help assess prospective rental properties, uncover off-market opportunities, and provide expert guidance on various aspects, including rental pricing and marketing strategies. Contact us online or call 984-666-0912 for more details.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

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