Investing Without Buying Your First Home

Investing in real estate feels more like a dream than a reality for many people right now. With cities like New York, Los Angeles, and Miami being more expensive than ever, the days of starter homes are over. As people rent for longer periods, by the time they can afford to buy a home, it may no longer meet their needs. Many renters are now opting to become landlords themselves. While this might sound impossible given the current market, according to Kearvyn Arne, being a first-time investor—even in today’s market—isn’t quite as much of a dream as many people think.

A Harvard alumnus, Arne is the founder of Vynar Capital, a company that has empowered numerous clients to achieve millionaire status through strategic property investments. His ventures have secured over $50 million in funding. He tells me that while investing in real estate sounds intimidating, it’s easier than many people think.

The New Way Of Real Estate Investing

While the old way of investing in real estate was owning a home to live in, many people are opting to rent their residences and purchase smaller investment properties instead.

This is a different approach to long-term wealth. “The first step is educating yourself—understanding the market, financing options, and identifying the type of investments you’re interested in, including single-family homes, multi-family properties, or short-term rentals. Connecting with experienced investors, attending seminars, and analyzing potential deals are essential,” says Arne.

There’s No Need To Save For A Down Payment

One of the biggest barriers to entry is the down payment, but it’s possible to invest without a huge amount of capital as long as you have good credit. “You don’t need to wait years to save up for a down payment. If you have a steady income and good credit, you can leverage your credit to secure capital for investing. Many people think saving is the only way, but with the right strategy, you can use credit to obtain the necessary funds, purchase properties, generate income, and pay off the loan,” explains Arne.

Depending on the type of loan (e.g., FHA or conventional), Arne says new investors typically need between 3.5 percent and 20 percent of the property’s purchase price for a down payment.

Buy A First Property, But Not A First Home

While many think buying their first home is their first investment, Arne recommends purchasing an investment property while renting a residence. “It depends on your priorities. If building wealth is your goal, focus on investment properties first. For instance, instead of buying a one-bedroom condo for yourself, consider renting where you live while investing in a multi-family property or a short-term rental. This way, your investments can generate income and eventually fund your ideal home purchase. Waiting until you can afford a property that truly meets your needs is often a smarter financial decision.”

Don’t Need To Invest In The Big City

If investing locally (especially in a city) is too much of a challenge, Arne advises expanding looking to the suburbs or nearby towns. “Build your portfolio in these areas, and as your wealth grows, you can transition into higher-priced markets.”

Before the pandemic, there was an Airbnb gold rush in major cities, but the more stable investment is affordable properties that can be rented out long-term, even if they’re not in the hottest neighborhood.

This is how Gabriel Pincus, a registered investment advisor (RIA) and president of GA Pincus Funds, built his real estate portfolio. Pincus lives outside of Nashville, Tennessee, and found that properties farther from the city were a better choice for him and his business partner. He also found they aligned better with his investment strategy. “The properties that my partner and I ended up purchasing are about 50 miles south of my primary residence and not located in an area conducive to short-term rentals, so we opted for long-term rentals. The properties we’ve acquired are in the same neighborhood, lowering our aggregate costs and enabling us to help improve the look of the neighborhood.”

Understand You Need to Be A Landlord

While Pincus has been successful with his real estate investments, there were minor missteps after purchasing his first rental property. “I decided that since I lived closer to the property than my partner, I would serve as the full-time landlord. This decision lasted for about 45 minutes. After realizing the amount of work required, our real estate agent offered to serve as a management company for our first property and any subsequent properties we purchased. This was a life-saving offer. In my opinion, being a landlord for multiple single-family properties is more challenging than having a full-time job.”

While hiring a property manager cuts into his bottom line, it’s ultimately a small price to pay.

This is also why Arne suggests investing in luxury properties such as one-bedroom condominiums in buildings with on-site maintenance, concierges, and amenities. These properties, which are often ideal for both long- and short-term rentals, provide a more hands-off approach for owners who may be better equipped to handle finances than floods, leaks, and blown fuses.

Consider Investing In Hotels

Those with more funds may want to consider investing in hotels—even first-time buyers. While it’s a high-risk situation, according to developer and entrepreneur Lorne Greenberg, it’s also high-reward. “Unlike traditional rentals, hotels operate as businesses, meaning small changes—like hiring the right staff, optimizing service, or refining operations—can have a big impact on revenue and guest satisfaction,” he says. “Unlike traditional real estate investments such as multifamily rentals or office properties, hotels require active management and can be subject to seasonality, market fluctuations, and economic downturns.” Still, a successful hotel can pay off exponentially.

Another option is corporate apartments, such as Greenberg’s Soho Residences, which has locations in both Toronto and Ottawa. He developed these properties to cater to a variety of clients, all of whom have one thing in common—discerning taste. “Our suites provide extra space, kitchens, and a level of personalized service that exceeds alternatives like Airbnb. As we expand, we look forward to bringing our residences to new markets across Canada and the U.S., offering travelers and long-term guests an elevated stay experience.”

Think Long-Term

Arne advises understanding that real estate is a long-term journey. “Patience and persistence are key. Always be willing to learn, and don’t let fear of missing out push you into rushing deals. Build a strong network, do thorough due diligence, and remember that your first deal is often the most important learning experience.”