How & Where can I get the funds to put 20% down

Question

Hi Everyone,

I am new, 23 years old and want to get into REI. I am researching and trying to figure out my niche. I'm being drawn to multifamily and apartments, buy and rent out. I want to get started but don't have any money saved up or enough to put down 20%.

I know theres many ways to get it, I just want some feedback from the community on it.

Thank you,

Ramon Flores · Answer

@Dorothy Williams Have you thought about getting a fourplex or a duplex using an FHA loan? They require 3.5% down and tyou can get a multifamily for you to live in. This will be a great way to start. Best of luck!

Ujwal Velagapudi · Answer

If you want to invest yourself, you simply have to earn more income and/or decrease your expenses so you can save more. You can supplement your current income with real estate related jobs/tasks so you learn more about the industry, which will be helpful when you look to borrow since you will be able to show that you have experience to a lender. Becoming a wholesaler of properties, a licensed agent working part time, property manager for a few rentals in your local community, etc.

As far as getting into these deals without your own money, you can find a lot of ways on this forum to purchase properties with little/no money. I'll tell you though that I tried purchasing my first property at 22 with financing, and was turned away given my little income shown on my tax return (I was a student the prior year), no experience, and they didn't like the property location. So I would suggest working on increasing your income, credit score, decreasing debt, increasing industry experience, etc. so that you improve your chances of getting approved by an underwriter as you work towards your goal of obtaining 20% down.

Todd Dexheimer · Answer

Buying an owner occupied building will allow for a small down payment.

Friends and family may want to partner with you if the deal is good and you're well educated.

You can flip or wholesale a few deals to get some capital for a down payment.

You could rob a bank...this is maybe ill advised

Lydia R. · Answer

@Dorothy Williams If you dont want to put 20% down then you will have to buy a multifamily 2-4 units) and occupy one of the units. You can get an FHA loan and put down as little as 3.5%. I would suggest you speak to some lenders. Due to current economic conditions some lenders are tightening their lending criteria so it would be helpful for you to know what that criteria is.

Justin V. · Answer

@Ramon Flores @Dorothy Williams

I second Ramon,

House hack your way to cashflow. Find a low % down loan for multi family. Rent out the other units as well as take on roommates. The more bedrooms the better. Look to see if you are making what you should be at your current w2 job. The more you can grow your income and reduce your living expenses, the faster you’ll be able to ramp up.

If 3.5% down is a lot, look hard at how to improve your current w2 income and lower living expenses.

I wouldn’t go looking for investors until you have done it and have systems in place. I was able to get 4 family and friend investors after my 3rd brrr, but the other 20 I approached weren’t so keen. I doubt any would have invested when I was just starting out despite having been in construction for 6 years previously.

-Justin

Alleia James · Answer

@Todd Dexheimer Hi Todd!

I am in a similar situation. I recently graduated from UIC and I work as an Accountant. Wholesaling laws are VERY strict in Illinois and I believe it's illegal if you do not possess a real estate license. What do you recommend I do to get some more capital?

@Greg Dickerson Hi Greg! What financing options do you recommend for first time homebuyers?

Warmly,

AJ

Greg Dickerson · Answer

There are a lot of programs for first time buyers that only require 3.5-5% down if you have good credit and steady employment. You can also use creative financing techniques as well as raising money from investors but you really need to know what your doing first before you do that.

Erik Hatch · Answer

Friends and Family

Scott Mac · Answer

Hi Dorothy,

You could get a 2nd job and save it up pretty quickly.

You just have to able to have the self-control not to spend it on other things, and just let it accumulate in a Savings Account.

Good Luck!

Todd Dexheimer · Answer

You can certainly still flip houses. Takes a little more work, but provides more profit as well.

How & Where can I get the funds to put 20% down

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