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Updated over 3 years ago, 07/19/2021

User Stats

11
Posts
2
Votes
Timothy Allen
2
Votes |
11
Posts

How do I purchase with little to no money down?

Timothy Allen
Posted

Hello,

I am currently living in Norfolk, Va and house hacking a place I purchased in November of last year. I am looking to buy a rental property in the area for roughly 100-120k but I do not have the 20% down that most banks require. What are some ways that I can still get the money needed for a property without having to fork out 10-12k? 

User Stats

32
Posts
22
Votes
Chase Taylor
  • Rental Property Investor
  • Virginia Beach, VA
22
Votes |
32
Posts
Chase Taylor
  • Rental Property Investor
  • Virginia Beach, VA
Replied

How much equity do you have in your current place? I've utilized 100 LTV helocs from a local CU that can give you some cash for a new deal. You could also move into a new house hack. Beyond that you could look at creative financing - owner, sub2, find a partner. With this finding an owner who will give you financing with little to no down will be a hard sell. I would also be cautious as well, if you don't have the 20% down what do your reserves look like? With little to no money your vulnerable especially as you add more units.

User Stats

21
Posts
24
Votes
Russell Beach
  • Rental Property Investor
  • Virginia Beach, VA
24
Votes |
21
Posts
Russell Beach
  • Rental Property Investor
  • Virginia Beach, VA
Replied
Originally posted by @Chase Taylor:

How much equity do you have in your current place? I've utilized 100 LTV helocs from a local CU that can give you some cash for a new deal. You could also move into a new house hack. Beyond that you could look at creative financing - owner, sub2, find a partner. With this finding an owner who will give you financing with little to no down will be a hard sell. I would also be cautious as well, if you don't have the 20% down what do your reserves look like? With little to no money your vulnerable especially as you add more units.

Hey Chase. Side track....who are you using to get 100% LTV HELOCS?. I've got a cash flowing STR in Wintergreen that I'd love to pull back out $150k+ to put elsewhere.

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User Stats

170
Posts
81
Votes
Alan Lacey
  • Lender
  • Grand Rapids, MI
81
Votes |
170
Posts
Alan Lacey
  • Lender
  • Grand Rapids, MI
Replied

@Timothy Allen I sure this is the obvious answer but low down options almost all reserved for primary residence. The real answer is to but a new principal residence every year if life and circumstances allow it. No cheaper way to finance. Obviously rents being sufficient to offset payments important part of be able to keep qualifying.

User Stats

272
Posts
304
Votes
Sean Rooks
Pro Member
  • Rental Property Investor
  • High Point, NC
304
Votes |
272
Posts
Sean Rooks
Pro Member
  • Rental Property Investor
  • High Point, NC
Replied

Could also find a Seller Finance, or Subject-to with a low down payment term. But I agree, the best way would be to purchase a new primary when able and move in. 

  • Sean Rooks
  • Account Closed
    • Investor
    • Scottsdale Austin Tuktoyaktuk
    4,138
    Votes |
    4,205
    Posts
    Account Closed
    • Investor
    • Scottsdale Austin Tuktoyaktuk
    Replied
    Originally posted by @Timothy Allen:

    Hello,

    I am currently living in Norfolk, Va and house hacking a place I purchased in November of last year. I am looking to buy a rental property in the area for roughly 100-120k but I do not have the 20% down that most banks require. What are some ways that I can still get the money needed for a property without having to fork out 10-12k? 

    Time travel to 2006 when money wasn't needed?

    User Stats

    32
    Posts
    22
    Votes
    Chase Taylor
    • Rental Property Investor
    • Virginia Beach, VA
    22
    Votes |
    32
    Posts
    Chase Taylor
    • Rental Property Investor
    • Virginia Beach, VA
    Replied

    @Russell Beach Bayport Credit Union. I doubt they’ll do it on an investment property however. 

    Account Closed
    • Rental Property Investor
    • Torrance, CA
    1,208
    Votes |
    724
    Posts
    Account Closed
    • Rental Property Investor
    • Torrance, CA
    Replied

    @Timothy Allen Honestly, drive for DoorDash or something and save the darn money. Sometimes I think people put so much work into finding an easy way around a problem, that if they put that same energy directly at the problem, they’d get there faster. If you’re currently house hacking aren’t you’re living expenses less than average?

    User Stats

    12
    Posts
    3
    Votes
    Nick Jones
    • Rental Property Investor
    • Baltimore, MD
    3
    Votes |
    12
    Posts
    Nick Jones
    • Rental Property Investor
    • Baltimore, MD
    Replied

    Chase really hit the nail on the head with his initial answer, especially the part about the dangers of not having reserves. For low down payment options though, creative financing seems like your best bet, if you don't have the ability to house hack another home using owner occupied financing. If the deal is good enough, using private money or hard money, letting the seasoning period pass, then refinancing into a bank loan is an option, as well. 

    For bank financing though, some lenders will accept as low as 15% down on investment property purchase loans, if you can currently manage that, however, be aware, that there will likely be some type of reserve requirement that you'll have to meet on an investment property loan. 

    User Stats

    401
    Posts
    233
    Votes
    Zach Wain
    Lender
    • Scottsdale, AZ
    233
    Votes |
    401
    Posts
    Zach Wain
    Lender
    • Scottsdale, AZ
    Replied

    @Timothy Allen

    Conventional loans only require 3% downpayment based off the sales price. Fha requires 3.5% down

    Both are great low down payment options that are fixed loans with low rates, and cheap pmi if you have a great credit score.

    Helocs are usually variable rates and usually a higher rate than a conventional or fha fixed loan

    User Stats

    11
    Posts
    6
    Votes
    Dan M.
    • Real Estate Agent
    • McLean, VA
    6
    Votes |
    11
    Posts
    Dan M.
    • Real Estate Agent
    • McLean, VA
    Replied

    Since you've almost been there a year, you could just repeat what you did with your current place. FHA loans are 3.5% down and you can get many owner occupied conventional loans for 5% down.

    I'm actually hosting a house hacking seminar on doing exactly what you're doing at the end of the month. We'll be at Commonwealth Brewing at 7pm on 28 July if you're interested. Message me if you want more info, I'm happy to chat!