Are you wanting to invest in rental real estate but don’t have the 20% down payment to get started? Then no worries, here is a simple strategy to use to get in on the rental real estate game.

Did you know you can purchase a primary residence every year? Did you know you only need 3-5% down for a primary residence? The caveat is that you must live in it the majority of the time for it to be considered a primary residence. If you are caught not living in it, then you could be charged with mortgage fraud (even though unlikely), so we don’t want to do that. Here are 3 strategies:

1. Purchase a new primary residence every 1-1.5 years. You would live in it for 1-1.5 years, buy another primary residence, move into the new house, rent out the old one, and rinse and repeat. In 10 years, you could have close to 10 properties while putting down very little money! This could be bothersome though as moving is a royal pain in the ass…
2. Purchase a primary residence, live in it for 1 year, and then buy another property BUT you will only live in the new one 51% of the time! You can furnish both houses, split your time in between them, and AirBNB the one you are not in at that time. If you did this, you would essentially live FOR FREE because the rental income from AirBNB would be more than enough to pay the mortgages plus put some cash in your pocket! Rinse and repeat and you could have a handful of rental properties in 5 years. You can AirBNB a house in basically ANY city for 1-2 week stays. People will book them, I guarantee it!
3. Buy a duplex, live in one unit, and rent out the other unit. This is called “house hacking.” Many people are doing this and if you purchase the right property and rent out the other unit correctly, then you would have NO mortgage payment. The rent from the other unit should pay your mortgage entirely. You are living for FREE! Rinse and repeat every couple years and in a matter of 10 years, you could have a handful of duplexes that could potentially generate enough cash flow to live off PLUS you would have lived mortgage/rent free. Think about how much money you could save!

Another strategy you can deploy is buying a secondary home! Secondary homes, or vacation homes, only require a 10% down payment! I have used this strategy before to reduce the needed down payment on an investment property. Here is how you do it:

1. Purchase a secondary home in another area of your state or the country.
2. Put 10% down.
3. Visit it a few times a year as a free vacation home.
4. AirBNB it out the rest of the time!
5. If you do this, you will pay the mortgage PLUS build a powerful passive income stream PLUS have a free place to stay when you go on vacation. A WIN WIN!

Do not let the fear of needing a large down payment prevent you from getting in on real estate. Anyone can use the above strategies to get into rental real estate and build a substantial portfolio in just a few short years!