Help getting a down payment for rentals

[Andrew Sanders]

I'm fresh out of college (engineer at Boeing) and my gf and I are wanting to buy another rental. (I bought one years ago with money from a deceased relative) and I'm wondering if there are any creative ways to get a down payment? We need around 25k down for each property and while we can save up that money it would take a good 18 months to get and we want to get investing right away. So we're treating this as a challenge, getting the down payment else where (this is along the lines of Rich dad poor dads theory of not using your own money). Does anyone have any ideas of how to do this or have experience with this?

[Michael B.]

A couple of thoughts, which you may not like.

First, be careful investing with girlfriend. If things go badly personally that could be a disaster for your investment. If you're not going to 'put a ring on it' you need a formal partnership agreement drawn up.

Second, there's a reason that banks likes you to save up a downpayment. It makes the investment less likely to go down in flames. It shows that you can put long term savings ahead of immediate consumption.

As Jon says the key to wealth is to live on less than you make and invest the rest. Take your time and save the money. A highly leveraged disaster at a young age can affect your financial future for decades. Don't fall for the real estate guru crap about the easy wealth through real estate. It's hard work for uncertain returns.

Pay off commercial debt (car, credit cards, student loans) first. Then save for a down payment. Maybe on your 5th rental there will be room to get creative. But keep it vanilla for now. There's plenty of time later to add risk.