Real estate has generated more wealth than any other means of investment. If you are a beginner investor seeking property, you would like to invest as little money as possible into the deal. Here are some ways to purchase your next investment property with as little money as possible.
1. Purchase a home with a zero cash loan
You can buy a home to live in for at least one year with a zero cash VA or USDA loan. Then you can move out, flip it, and turn it into a rental property. The regulations for a down payment and your credit score for a primary residence are also less strict than for investment properties.
2. Get a Home Equity Line of Credit (HELOC) for your primary residence or another property.
You can leverage equity by having a house equity credit line (HELOC) if you have a good credit score and own multiple properties. You take out a loan of up to 75% to 80% in your property’s equity from this unique form of financing.
You can conveniently buy a property with little to zero cash based on the amount of equity you have in your real estate.
3. Negotiate with your seller to pay closing costs.
The seller may pay buyer closing costs for many real estate transactions to reward selling. But you are likely to pay the entire amount or nearly the full amount, given that all your rental costs are covered, and you have a limited monthly cash flow.
For the full price, however, look for a specific deal if the lender gives you a total mortgage payment (including taxes and insurance), equal to or greater than the rent.
To cover vacancies and renovations, rental properties must always have a cash flow.
4. Use a lending program that pays closing costs or has a rebate for a down payment.
Some lenders have programs that do not rely on having a lot of capital. A Fannie Mae loan requires only 15% down with a good credit score. That alone could mean between five and five thousand dollars fewer, based on the price.
However, if you go through with this, you may need to pay for private mortgage insurance (PMI), meaning less cash flow each month.
Even with little money, real estate investment can help you create more wealth. If you are looking for loans, Pine tree Financial Real Estate Group in Denver can help you get started and answer any questions.