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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 desire to invest in single-family rental homes but lack the funds to do so. Providentially, there are many different ways to invest in rental real estate, even if you are short on funds. When funding an investment property with little or no cash, unconventional methods may be necessary. Leveraging one or more of the alternative approaches specified below, you can make your dream of owning rental real estate a reality.

Buy a Primary Residence

Although it may appear paradoxical, one of the most effective strategies to buy your first rental property is to buy yourself a house. Compared 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 typically much more favorable for owner-occupied properties.

Several rental property owners commenced by acquiring a residence, inhabiting it for approximately one year, and then converting it into a rental. This might be an effective strategy to get your foot in the door and start your investment portfolio.

Buy a Duplex

A further option, equivalent to the first, is to buy a duplex. The basis for acquiring a duplex is to inhabit one unit—thus qualifying for some of those advantageous programs offered to owner-occupied properties—and rent out the other. The evident drawback in this situation is the necessity of sharing your residence with a tenant. Nonetheless, the advantageous aspect is that you will be collecting rent that may almost cover your mortgage payment, reducing your living expenses and helping you to save up for your next investment purchase.

Open a HELOC

If you are uninterested in relocating or living in close quarters with your renter, you may consider acquiring a home equity line of credit (HELOC) on your residential property. If your property values have gone up in the past couple of years, your home may have enough equity to help you borrow against it and utilize the proceeds to buy an investment property. Several lenders will not extend credit beyond 80% of your home’s value; for that reason, it is vital to keep a close eye on your property values and commence the application phase only after accruing substantial equity.

Reduce Closing Costs

If you have ample cash for a down payment but lack the ability to pay for other expenses, you might consider urging the seller or your lender to subsidize 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. Moreover, if you have a very motivated seller, they may be ready to cover the closing costs to speed up the process of sale.

For those willing to put in the effort, there are many ways to make your dream of owning a portfolio of single-family rental homes come true. The experts at Real Property Management Piedmont can help! We team up with rental property investors in Midtown and adjacent regions, from beginners to seasoned experts, to help assess prospective rental properties, pinpoint off-market prospects, and offer advice from experts on everything from rental rates to marketing (and more). For additional data, Contact us online or call 404-480-4820.

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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