So you have thought about investing in real estate and becoming a landlord. I bet you think that it sounds pretty nice to have a monthly income outside of your 9-5, and guess what, you would be right. Maybe you are wondering how you can make this happen for you, maybe you don’t even own your own home, or maybe you don’t have 20% to put down on a rental property. Let’s discuss three different ways you can make your dream of being a landlord a reality.
House Hacking: This is the process where you purchase a multi family property and then live in one unit, while you rent out the others. You are able to collect rent from one or more tenants which directly helps to pay for the mortgage. This is beneficial in a situation where you don’t already own your own home or if you are concerned about paying a very high mortgage. No one wants to be house poor, and this situation can help with that while at the same time setting you up to be a landlord.
Cash Out Refinance: If you already own a home and have a bit of equity you can engage in a cash out refinance. This allows you to refinance your home while at the same time pulling out equity that you can use as a down payment on an investment property. Doing so now may allow you to capitalize on the record low interest rates currently available to borrowers.
Buy Today, Become a Landlord in a Few Years: If you don’t have 20% down, and you don’t already own a home then this might be the best solution for you. You can put down less than 20% depending on certain factors and buy a personal residence now. In the future you can either purchase another personal residence and use the first home as a rental or engage in a cash out refinance as explained above.
With these three tools becoming a landlord is not as far out of reach as you may have originally thought. Stay tuned for more posts about becoming a landlord, and if you have any directed questions don’t hesitate to contact us.