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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 contemplated investing in single-family rental homes but don’t have the resources to make it happen, you’re definitely not alone. It’s great to see that there are many different ways to invest in rental real estate, even if you are short on funds. Getting a bit imaginative can be useful when funding an investment property with little or no cash. Employing 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 a bit opposing, but one of the smartest ways to buy your first rental property is to buy yourself a house. Dissimilar to loans for investment properties, numerous programs are designed to help first-time or other homebuyers purchase a home. You’ll find that down payment requirements are typically lower, and interest rates can be quite advantageous for owner-occupied properties.

Lots of rental property owners began their journey by acquiring a home, dwelling in it for a year or so, and then converting it into a rental. This is a great opportunity to get your foot in the door and start your investment portfolio.

Buy a Duplex

Another alternative, much like the first, is to buy a duplex. Purchasing a duplex is a great idea! You can reside on one side, which helps you qualify for those favorable programs offered to owner-occupied properties and rent out the other. One thing to think about is the need to share your home with a renter. On the positive side, you’ll be collecting rent that could nearly cover your mortgage payment, reducing your living expenses and permitting 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 sound like the best option for you, another approach could be to consider opening a home equity line of credit (HELOC) on your residential property. If your property values have risen over a period of time, your home may have enough equity to authorize you to borrow against it and leverage the cash to buy an investment property. The majority of lenders won’t offer more than 80% of your home’s value, so it is a great idea to keep a close eye on your property values. It’s best to begin the application procedure once you’ve built up a solid amount of equity.

Reduce Closing Costs

If you possess the necessary cash for a down payment but are a bit tight on other expenses, you could consider requesting the seller or your lender to cover 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. Furthermore, if you’ve got a very motivated seller, they may be willing to cover the closing costs to help make the sale happen swiftly.

If you are prepared to exert work, numerous avenues exist to make your dream of owning a portfolio of single-family rental homes come true. The professionals at Real Property Management Clarity Central are available to assist you! We partner with rental property investors in Worthington and the neighboring regions, whether you’re just starting out or have plenty of experience. Our objective is to help you assess prospective rental properties, discover off-market deals, and offer professional guidance on everything from rental rates to marketing (and beyond). Contact us online or call 614-405-2340 for more info.

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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