How can I buy first rental property with less then 15% down?

[Natan Gutt]

I live in MN and im trying to purchase my first SFR as a rental property. However I look at it I need to pay 15% down or live in it for a year first. Is there a way to secure a loan that would require 10% or less as a down payment? Thanks for the help!

[James Hamling]

@Natan Gutt the down payment potential is not a universal one, the individual property, condition, use will have a major impact. 

As a general rule the best way to leverage into a property deal is via FHA which will allow as little a 3 1/2% down. BUT but but, that is not always a good thing, being so heavily leveraged. Let's say you got less than a good purchase price, say less than 1%, maybe close to 1/2% mark as I am hearing too often now. First time you have vacancy, or water heater goes out, furnace breaks, it could financially cut deep.

Hard Money Loans (HML) are about the single worst thing you could do to buy a rental property, only thing worse is paying 2X market rate, that's about it. If you need a HML to acquire a rental, then DONT acquire that rental. You would have better odd's going to a casino and putting everything you have on black at the roulette table than you do of having a good outcome of a rental property bought via HML.

HML are for short term real estate deals, NOT long term. The alternative of finding a private $$$$ partner will always be much better, for many reasons.

The #1 best deal is the one you make a great return at, the #2 best deal is the one you never did! Rule #1 is to make $, rule #2 is DONT LOOSE MONEY, and rule #3 is NEVER FORGET RULE #2!. 

It is very easy to loose 2,3, 4+ deals worth of profit on one loose.