Low cash for down payment

[Alexander Prell]

Hello everyone! I am a brand new, young real estate investor looking for my first deal. I've picked out my buy box and target properties and the math all works out, cash flow in a rapidly growing equity market. My only concern is for many of the properties I am looking at, my cash reserves limit me to a 15-20% down payment. Any cheaper properties I've looked at I haven't been able to make the math work. I was wondering if anyone has advice or strategies in terms of financing in this situation. I potentially have some family investors willing to help with down payment as well.

[Jason Wray]

Alexander,

You only need to put 15% down on an investment property even up to 4 units.  You can also buy a vacation home which only requires 5% down.  A Vacation Home/Second Home can only be a Single Family, Townhome or Condo (Not 2-4 units).  You can rent out a vacation home and transition it into a full time rental or refinance it in 12-24 months.

Family is good when you are in a bind but I would avoid investing with family if at all possible.  There are way to many minor things that can cause a bad experience and when someone wants to sell their share or cash out without much notice it can be tough.

If you can borrow the money and plan to pay it off/back by 12/24 months it would be best versus co-owning. Any downpayment you borrower you can always refinance and pay it off or down in as little as 6 months. If you ever have any questions feel free to reach out I enjoy talking REI and helping BP members when ever needed!

[Patrick Roberts]

@Alexander Prell Do you own a primary yet? If not, househacking is probably worth looking at. You can buy your first property as your primary, then convert it to a rental when you're ready. This would reduce the downpayment without bringing horrible loan terms. If you buy an investment property with only 15% down, the terms will not be pretty.