5 Budget-Friendly Ways To Start Investing In Real Estate by MyProperty

Investing in real estate is one way to get significant returns from your hard-earned money. However, you’ll still need to have a big capital to start–if you’re not exploring different options in the market. On the contrary, it is possible to begin your investment plans due to the many real estate assets available. 

 

Even if you have little cash, you can get your dream property through these five budget-friendly ways:

Rent-to-Own Properties

Suppose you are looking for a secondary property that generates passive income. In that case, rent-to-own properties are ideal investments even with little cash. This arrangement allows you to rent the property with the intention of buying it at the end of the rental period. As such, you won’t need to have a large sum of money while gradually getting the property you want. Besides guaranteeing your hold on the property, you can rent it while earning passive income from your tenants. You’ll be able to save money and earn cash to pay for the property in full.

 

While renting to own seems a cost-effective choice, note that your monthly payments will be higher than average in the market. But with a few money-saving tactics, you’ll eventually ensure your hold on the property.

Zero-Downpayment Properties

Many condos in the market today are sold without a downpayment required, sometimes without interest either. This payment method means you won’t have to put down a considerable amount of cash at the beginning of your investment. If you rent your zero-down payment condo, you’ll start earning passive income that helps you cover your balance.

 

With properties that offer deferred cash payments, your monthly fees will be much higher than when you make a down payment. Terms will be shorter too, sometimes spanning a fixed five-year period. Consult your broker for suggestions on properties being offered with zero downpayment.

Pasalo (Assume Balance Mortgage)

With an assume balance mortgage, you can buy a property that is still in the middle of its term loan. You’ll assume the mortgage balance of the previous owner of the house or condo unit. Since you are taking over someone else’s debt and pre-owned property, you’re essentially saving money because your payments will be relatively cheaper than the traditional way of purchasing a real estate property. When you’re with a good price negotiator, you can keep more money.

 

Before dealing with any transactions, it is best to do your research. Learn more about the terms and conditions of a pre-owned property before taking over someone’s mortgage. You must also work with lawyers and brokers who can guide you through all legal and financial processes.

Real Estate Investment Trusts (REITs)

REITs are a relatively new type of investment in the Philippines since the rules surrounding it were only decided last year. They work like mutual funds where investors pool their money to purchase shares, thus supplying for the REIT company’s gaining of assets. 

 

REITs are used to purchase various properties, namely office buildings, residential buildings, shopping malls, hospitals, tollways, and warehouses. As such, investing in assets enhances the value of shares.

Existing Equity

Suppose you already own a house. In that case, you might be able to leverage your property investment by getting a home equity loan. This type of financing lets you borrow up to 80 to 90 percent of your equity. 

 

Keep in mind that equity is the difference between the market value of your home and your mortgage balance. As your property’s value increases over time, so does your equity,  which then increases the loan amount you’re allowed to borrow. As such, you’ll be spending less cash from your pocket.

 

You can also buy an income property with a home equity loan, such as a condo rental or a beach house. As you generate profit and build wealth, you’ll pay off your mortgages and have the opportunity to invest in other properties.

 

You might doubt the possibility of investing in real estate when you don’t have that much cash. But by exploring the market and considering these five budget-friendly payment strategies, you’ll find great property deals that will fulfill your dreams.

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