Real estate investment is rapidly dominating all the other forms of investment. People are living luxurious, thanks to real estate investment. Some investors have encountered massive losses when running other businesses.
However, the decision to switch to real estate investment has changed most people’s tune. Over the years, owning rentals was meant for a few people; today, multiple investors are in for the business.
Below are some of the practical steps to own rentals when borrowing ideas from Joe Arias from RealSuccess.
Let’s get started:
1. House Hacking
House hacking is the simplest and cheapest way to acquire rentals. It involves purchasing a medium-sized house, using a single unit, and renting out the rest. You can consider buying a house with at least two to four units depending on your capability.
Most investors consider house hacking as free housing; since the income, you get from tenants helps you in servicing your mortgage and other extra costs. It is crucial to consider the demography of the area you intend to hack a house. Your budget is a common denominator while hacking, too; it will help you control the renting price.
Remember, too high rent prices may keep off tenants, whereas meager costs may strain your mortgage repayments.
2. Use The BRRRR Way
It seems clumsy to trust people, but the BRRRR is an effective way of owning rentals. The BRRRR strategy means buy, renovate, rent, refinance and repeat. This method requires you to have the upfront cash to get started; it can be from your savings, borrowing, etc.
The BRRRR method involves going for an old worn-out house, buying them, and refurbishing them. After the renovation, you hand over the rental to a long-term landlord; this helps compensate your upfront cost. However, newbies consider this method as a hectic one, but it is pretty compelling.
3. Seller Financing
Initial rental housing owners acquired them in various ways, e.g., gifts, inheritance, etc. Therefore some keep the rentals lying idle for lack of renovating money, or they don’t have a picture in mind of how to use the houses.
It becomes the easiest way of owning rentals; since the owner gladly receives whatever you offer with open arms.
You can settle for the mortgage without worrying about down payments, but this will depend on the seller. The seller accepts monthly payments, hence a quick and straightforward settlement.
4. Collateral-based Lenders
Moneylenders vary depending on their rules and regulations. The collateral-based Lenders are among the most common types of lenders who aid you in owning rentals. You use the rentals to secure the loan; therefore, the lenders acquire and sell the rentals for the loan settlement if you fail to repay the loan.
A significant drawback in this method is that you must make a substantial down payment. You can borrow down payments from friends, families, or credit cards when you have no personal savings.
A collateral-based loan is beneficial since you don’t incur insurance costs and relatively low-interest rates. It is a significant way of owning your rentals.
Not every rental owner started as a millionaire. Some have a story to tell. Multiple investors are gladly using the house hacking method since it’s pretty straightforward.
Real estate investors are doing great; all credit goes to the BRRRR way of owning rentals. Seller financing and collateral-based lenders are also significant primary methods for owning rentals.