Yeah but how much capital do you need?

[Ryan Friend]

Hello, 

I am new to REI. I am interested in the buy and hold strategy. I bought a home in 2020. I do not have the capital to buy another property myself. When raising capital, do you need enough $ for the entire price of the home + fees + rehab up front? Or do you just need capital for a 20% down payment and use your LLC to get a loan from the bank for the rest? Any input appreciated!

Ryan

[Scott E.]

If the home does not need remodeled you can get a conventional loan from the bank and you will need to put ~25% down.

If the home does need remodeled you can get:

-A hard money loan from a hard money lender

-A private equity loan from a friend, family member, or acquaintance

In either of these cases, you usually will need to bring around 25%-30% of the purchase price. The lender funds the rest of the purchase, and a lot of the time they will fund 100% of the remodel.

There are ways to do deals with none of your own money. Entire books have been written about creative financing options. I'm just sharing the more common strategies, which do require some of your own skin in the game.