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4 Alternative Funding Ideas to Begin Your Real Estate Journey

Real estate investor shaking hands to close a deal.You are not alone if you have been desiring to invest in single-family rental homes but lack the necessary funds. The great news is that there are many different ways to invest in rental real estate, even if you are short on funds. You may need to be a bit innovative when funding an investment property with little or no cash. Using 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

One of the ideal methods to buy your first rental property is to buy yourself a house, despite the sense of paradox that may be present. As opposed to loans for investment properties, several programs are designed to help first-time or other homebuyers purchase a home. Down payment requirements are typically lesser, and interest rates are frequently more favorable for owner-occupied properties.

Numerous rental property owners start off by acquiring themselves a house, residing there for approximately one year, and then converting it into a rental. This can be a great method to get your foot in the door and start your investment portfolio.

Buy a Duplex

Buying a duplex is an additional alternative, which is comparable to the initial one. The rationale behind purchasing a duplex is to occupy one side—thus qualifying for some of those advantageous programs offered to owner-occupied properties—and rent out the other. There is an apparent disadvantage to sharing one’s residence 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 permitting you to save up for your next investment purchase.

Open a HELOC

If relocating or living in close quarters with your renter does not appear to be an appealing alternative, a third option is to establish a home equity line of credit (HELOC) on your residential property. If your property values have increased in the past year or two, your home may have enough equity to empower you to borrow against it and use the funds to buy an investment property. However, it is important to note that most lenders will not provide you with more than 80% of your home’s value. Consequently, you should keep a close eye on your property values and initiate the application process only after you have built up a substantial quantity of equity.

Reduce Closing Costs

If you have adequate cash for a down payment but are unable to cover other expenses, you may consider requesting that the seller or your lender cover all or a portion of your closing costs. Some lenders offer rebates or other programs to help reduce the cash you’ll need to bring at closing. Also, if you’ve got a very motivated seller, they may be amendable to cover the closing costs to facilitate a swift sale.

There are numerous methods available to individuals who are willing to expend the necessary effort to make your dream of owning a portfolio of single-family rental homes come true. Real Property Management Suncoast’s professionals are available to provide assistance! We partner with rental property investors in North Port and adjacent areas, from beginners to veterans, to help assess prospective rental properties, track down off-market transactions, and deliver professional advice on a variety of topics, including marketing and rental rates (and beyond). More information can be obtained if you Contact us online or call 941-309-1111.

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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