What is the best strategy you have seen for acquiring a second buy and hold rental property?

[Clinton Holmes]

Hello BP!

It's a rainy day in Boston and being cooped up inside has led me to start thinking about what is the best strategy to finance my second rental property.

I'd prefer it to be a multifamily (MFR) but am open to single family (SFR) or condo if they have some unique opportunity to them.

Here is what I came up with so far:

1. Save up enough to put 25% down as an investment property and try to get traditional financing. I think this might be difficult given I already have one mortgage in my name.
2. Home line of equity on my current property. I think this could prove challenging too, because I only put 5% down on the 2 family residence I am now living in and I don't think a bank will give me an home line of equity when I already have such a low stake.
3. Re-fi. Same challenge as above unless there is considerable appreciation in Salem, MA.
4. Partner and form an LLC. There are 2-3 friends / family members that I'd be comfortable doing a deal with. I was thinking we could form an LLC, all put money into it and have the LLC buy a property. Question here is can an LLC get financing or will it have to buy in pure cash?

What do you think of these options? Are there any financing strategies you've heard of or used to buy your second rental property?

Thanks in advance for the help BP!

-Clinton

[Joe Fairless]

@Clinton Holmes for my 2nd property I went on HomePath.com (I have no affiliation w them) and found a property. That way I could use a Home Path loan and only pay 10% down. I bought a house for 81k and only put $8,100 down. It was about 12k total after all closing costs. It was built in 2006 and already had tenants in it so I got a check for prorated rent when I closed.   Might want to look into that.