If you’ve got one rental property under your belt and you want to expand your portfolio, what’s the best way to move forward? Especially if you’re short on a down payment, what are some funding options? That’s the first question I’m answering on today’s show!
This Q&A episode features three great listener questions on second property funding ideas, paying transfer taxes, and using a reappraisal for instant equity. As always, I appreciate your questions, and I hope you can learn something from other listener questions. Click play to hear my answers on episode 853 of Investing in Real Estate!
On this episode you’ll learn:
- How to finance a second rental property.
- What you need to know about transfer taxes.
- What to consider about renovating distressed properties.
How to Finance a Second Rental Property
Even if you don’t have enough saved up for a down payment, there are many ways you can expand your rental portfolio. It’s also important to consider that you can often use multiple methods. If you’ve got a chunk of savings plus an IRA, you may be able to get a loan on the remainder. One major benefit of working with my team is that we can help figure out a custom plan for you. Other options to consider include private money, using equity on your rental or primary residence, and a self-directed IRA. The options are endless!
What You Need to Know About Transfer Taxes
Certain states charge a transfer tax for transferring your property into an LLC. Each state varies on the types of fees and taxes they charge, but I know Pennsylvania specifically charges a hefty tax! We did a full episode on transfer taxes a few years ago, you can find that episode here.
Although I’m not a lawyer, I do have some experience with the Pennsylvania transfer taxes. There are a few creative loopholes you may be able to take advantage of, including transferring into a trust. I would suggest reaching out to an attorney in your state who is familiar with these laws and exceptions.
What to Consider About Renovating Distressed Properties
Renovating a distressed property can be a great strategy for getting into real estate. You can create a ton of equity in a property and really start growing your portfolio. My best advice is to make sure the numbers make sense before you dive in. Don’t massage the numbers, and be sure that your numbers are solid before you purchase the property.
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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