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Updated almost 6 years ago on . Most recent reply
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Investing in Rental Property with a family loan!
Hey everyone! I am new to this website but I have been reading up on the books and these forums for my first rental property investment! I live in the amazing city of Denver but also an expensive city :/ So I have a few different questions and any insight is greatly appreciated.
1. Potentially I am looking for a 3 bedroom property under $350,000. These are really hard to come by in good neighborhoods and when they do, they're gone so quick. Any ideas for looking for 3 bedroom properties in an expensive market like this?
2. I am planning to buy the property in cash with a loan from my family. The 20% aka down payment will not be a loan. So technically $280,000 would be a loan. But I wanted to ask if after buying the property and getting it rented, I can look for a local lender to finance my $280,000 loan so I can repay my family back. Would there be any problems with this? What kind of potential issues shall I be looking into?
3. Lastly, I know that buying with cash makes you more attractive to the seller. Do you think this can offer an advantage and I could potentially make a lower offer than the ones with a traditional or FHA loan?
Background:
I already own my primary residence and have a mortgage on it. My husband is not on the mortgage so I would use him to get a local lender to my family back.
Thanks in advance.
Preeti
Most Popular Reply
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@Preeti Sampath so I apologize for the delay in my reply. To address your questions.
1) Ideas for looking. Driving for dollars, door knocking, direct mail, and cold calling come to mind. Figure out the areas where those properties are located and do your own off-market marketing for them. I think it's pretty easy to get a 10% discount going this route.
2) Problems... Tons of problems borrowing from family but hopefully you have thought of that. Issues, get everything in writing and record the deed of trust, make timely payments and have proof of payments.
3) As was stated, typically cash doesn't command a discount in this market but it does win the deal at or near (~1% of) the highest offer in my experience. With off market deals, most folks don't even know to ask how you will be paying for the property.
Background: The husband needs a good w2 job in most cases. Since investment property typically pays for itself, there would be no need for you not to be on the refi mortgage. The exception to this is the 10 loan limit for individuals in your future investing endeavors.