If you read my email last week about stocks vs real estate to determine which was the superior investment strategy…I pointed out one of the biggest downsides to real estate is the amount of capital required to begin investing.
While the stock market will always beat the real estate market with the low barrier to entry to begin investing ($50 can get you shares in a mutual fund for example), lenders are starting to narrow the gap by offering loans on investment properties for as little as 10% down as opposed to 20-25%.
We work with several lenders now who offer a 10% down product and we can help you get started with the pre-qualification process if that is something of interest to you.
In fact, it is becoming so common I would say roughly 30% of our investors are only putting down 10% so that they are able to accumulate more rental properties in a shorter period of time.
Ok, great…So now we know you can get a loan for your first rental property for 10% instead of 20-25%…
But what if you do not have enough cash sitting in your bank account right now?
My guess is you have equity in your primary residence right now…Assuming you have not already done this, utilizing your home’s equity in the form of a cash-out refinance OR a HELOC (Home Equity Line of Credit) is another route you can take to purchase an investment property.
Hopefully this helps someone out there who is looking to buy an investment property but has been held back from doing so because of the 20-25% down payment that you thought you needed.
Now that you have your first investment property, let me show you how you can get the second one with potentially even less capital than your first property!
This is how you can RECYCLE your money:
At Property Rush we teach our investors how to utilize the
Buy. Renovate. Rent. Refinance. Redo.
This strategy is how you supercharge your real estate portfolio in a very short period of time.
Property Rush takes care of identifying a quality investment property, renovating it, then renting the property. Once the property appreciates in value over a period of time (could be 6 months or 24 months)…Depending on the market you can then have the property reappraised and most banks will lend to you at 75% of market value.
Depending on how much the property has appreciated during this period of time, you could in fact get back the original down payment that you put on the home and then use that cash received with the cash-out refi to buy ANOTHER property with recycled money which then doubles your cash on cash return!
I hope this opens up the possibilities for anyone that has been keeping themselves from investing in real estate because they may not think they have enough cash to get started.
Real Estate like everything else in life is changing rapidly which is why it is important to continually educate yourself on what is out there. Education makes all the difference.
“I find so many people struggling, often working harder, simply because they cling to old ideas. They want things to be the way they were; they resist change. I know people who are losing their jobs or their houses, and they blame technology or the economy, or their boss. Sadly they fail to realize that they might be the problem. Old ideas are their biggest liability. It is a liability simply because they fail to realize that while that idea or way of doing something was an asset yesterday, yesterday is gone.”
― Robert T. Kiyosaki, Rich Dad, Poor Dad