Creative ways to get first rental

[Romario Nicholas]

Hi everyone, i am researching creative ways to get my first rental property. I have a W2 job that would take me about 1-2 years to save up for a downpayment on a 200k home in charlotte. But that would take such a long time.

Has anyone ever used government grants to help purchase their first rental? 

I want to provide affordable housing options to low income residents in charlotte, and i think this will give me the learning i need to get into real estate. 

Any helpful ideas would be appreciated

[Patrick Collins]

Hey @Romario Nicholas! I was in a very similar situation to you and was struggling how to fund and structure a deal. I also live in Charlotte and grew up here so I know the market pretty well. I have been able to see it grow over the past 10 years so I'll let you know what I think and have learned.

Even though knowing what to look for is important, knowing what not to look for can help narrow your search tremendously. So, I'll start with that. 

- Don't look for a 2-4 unit property in CLT. They are very expensive right now and the cheapest one is around $400k so it'd potentially take twice the amount of time to fund it traditionally.

- Don't necessarily jump at the first "low" down payment option because even though FHA is 3.5%, there's ways around CLT and NC in general to get more assistance with down payments. @Princess Small provided a great example

- Private money will be hard to raise if this is your first deal. Ask family and friends but it's not always the best option.

Now for options to explore!

- Definitely search for creative finance options! They give you the potential to bring less money to the closing table, avoid bank and agent costs, and can lower your monthly payments in comparison to traditional financing

- For traditional options, look into doing a conventional loan with NC Housing Assistance or 203k renovation loan. The NC Housing tool is very powerful because it gives you $8,000 in down payment assistance and doesn't charge you any interest on it (I can explain more of how it works over the phone). The 203k renovation loan is a process where a GC and appraiser comes to the property you're interested in and gives you a loan based on the ARV of that property. Both can be very useful in your situation.

- Look for another young investor or convince a buddy to house hack with you. Even if it's a 2/1 house, you can still make this work in your guys favor. Create an LLC and pay yourselves rent every month. 2 reasons for this: 1- it will continue to increase your credit score assuming your financial responsible with everything else. 2- Once you save enough, you can go to a lender in the future and show that your LLC is a revenue generating business that you can get a loan on.

I hope all this helps! There's definitely more details on each of these aspects so feel free to reach out and I can help walk you through some options!