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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 dreaming about investing in single-family rental homes but just do not have the cash needed to make it happen. Thankfully, 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 creative when funding an investment property with little or no cash. Employing one or more of the alternative approaches given below, you can make your dream of owning rental real estate a reality.

Buy a Primary Residence

Even though it seems counterintuitive, one of the best methods to buy your first rental property is to buy yourself a house. Unlike loans for investment properties, numerous programs are designed to help first-time or other homebuyers purchase a home. Interest rates and the amount of down payment requirements for owner-occupied properties are typically more advantageous.

Purchasing a house, residing in it for a year or two, and then converting it into a rental was the primary plan for several rental property owners. This can be an excellent way to get your foot in the door and start your investment portfolio.

Buy a Duplex

One more alternative that is comparable to the first is to buy a duplex. The concept behind buying a duplex is to dwell on one side—thus qualifying for some of those beneficial programs offered to owner-occupied properties—and rent out the other. Having to reside in close quarters with a tenant is the most noticeable disadvantage. On the positive side, you can anticipate collecting rent that will cover your mortgage payment, reduce your living expenses, and allow you to save up for your next investment purchase.

Open a HELOC

If dwelling on or living in close quarters with your renter is undesirable for you, an alternate option is to get a home equity line of credit (HELOC) on your residential property. If your property values have appreciated over the last year or two, your home may have enough equity to permit you to borrow against it and utilize the cash to buy an investment property. Most lenders will not extend credit beyond 80% of your home’s value; for that reason, you must keep a close eye on your property values and wait for loan applications until you have accrued significant equity.

Reduce Closing Costs

Suppose you have sufficient cash for a down payment but are still short on other expenses. Another way to try is to ask the seller or your lender to compensate you for some or all 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 prepared to cover the closing costs to guarantee a fast settlement.

For individuals prepared to exert work, numerous chances are available to make your dream of owning a portfolio of single-family rental homes come true. For assistance, reach out to the experts at Real Property Management Enterprises. Regardless of whether you are a novice or a seasoned investor in Bethany, we can help you assess prospective rental properties, find off-market prospects, and give you expert guidance on marketing, rental rates, and more. Contact us online or call 405-463-0040 for additional 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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