Financing Down Payment for Rental?

[Kourtney Post]

I'm new to investing and looking into getting some rental properties. I've talked with my mortgage broker and they're willing to finance a rental property but I will need 20-25% down. My husband and I currently have only about $12,000 in cash on hand (but no debts, aside from our current mortgage). From what we can see our only options to getting into a rental is 1. Save until we have enough cash - could take several years 2. Finance a down payment. 3. Partner with someone who can front the rest of the down payment. Or 4. Sell or rent our current home and move into a multi family - renting the other unit(s). (We have 3 small kids so this wouldn't be ideal... But still possible). I guess what I'm wondering is, is it ever a good idea to borrow money for a down payment? That makes me nervous. We could borrow against our 401Ks, or a HELOC but I don't know enough about either to know if they would be good options. Anyone have advice on this? I'd rather not wait years to get started but I want to go about it the right way.

[Larry Watson]

You best option would be to move into the one of the units to get FHA financing. Rent out your primary home, then start looking for another rental that you and your family can move into. If you keep looking you wont have to live in your apartment long.