How do I purchase with little to no money down?

[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? 

[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.

[Russell Beach]

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.

[Alan Lacey]

@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.

[Sean Rooks]

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. 

[Account Closed]

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?

[Chase Taylor]

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

[Account Closed]

@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?

[Nick Jones]

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. 

[Zach Wain]

@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

[Dan M.]

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!