Total Newbie Question from Minneapolis

[David Annis]

Hey there,

I'm new to BiggerPockets and investing in general and had a question that I'm sure many of you have answered over the years, likely in the forums as well.

Anyway, here's the scoop. I'm new to investing. I own a home in Minnetonka, and want to purchase a sub 200k single family home as a rental. Its my understanding that I'll likely need 20% down for a second, non owner occupied home. So

1 - Is that an accurate assessment?

2 - I could come up with the 20% in cash, but I'd rather keep that liquid if possible. Are there smarter ways to finance a rental property vs. dropping all that cash up front?

Thanks in advance for your patience and consideration.

Dave

[Brie Schmidt]

@Joe Fairless has some good ideas if you dont want to use up all your cash. We have done conventional financing for investment properties and there are a lot of hoops with a lot of cash needed.

* 25% is the minimum down payment for conventional financing here in Chicago

* 6 months of payments for the property in reserves and 3 months payments on your owner occupied property.

* If it is not currently rented out you must qualify for the loan on your own (from your day job) Even if it is currently rented and you do not have 2 years of tax returns showing you make income from being a landlord they may require you to qualify for the loan on your own.

Conventional financing for investments is not easy, we have to prepare our finances for about 6 months before making a purchase/refi because if all these things aren't in place we can't move forward. I would suggest speaking with a lender in your area very familiar with investment financing.