If you are seriously considering real estate investing, here are the most basic ways to get started on your first investment property.
1- As a homeowner, move from your current home, buy a new home, and rent out the first home. This is a very common practice, but it can only be done successfully if you can remove the emotion you feel about your house as you watch someone else live there. One bonus to this scenario is that it only requires 3%-5% as a down payment on the most basic loans for the new home, making it cost effective when looking to being property investing.
2-Take equity from your current home in the form of a home equity line of credit and use it as a down payment for a second house. Depending on the loan and lender you go with, you’ll need at least a 15% down payment, if not 20-25% down.
3-Use savings. If you have a good chunk of savings already, you can use it for a 15-25% down payment (again, depending on the loan and lender you use).
Now, #1 is the most common for beginners, as it isn’t uncommon to want to ‘move up’ in houses, so it doesn’t feel too stressful to simply not sell your old home and turn it into a rental. #2 and #3 can be nice options, though, because you can select a home specifically for its potential as a good rental. A home you love living in may not be rental material.
If you want to know if your current home would make a good rental, feel free to shoot me a message and we can look into it!