Found a great property before cash lined up

[Doug Johnson]

All,

I am a new investor looking for buy and hold cash flowing properties and as I have been searching I found a multi-family property I like and the numbers play out really well. The seller wants 178,000 and the agent believes we can ask for less and get it.   Suddenly I am realizing that I do not have money for a down payment. I have great equity in my home and a good job. 

Can that equity be used as a down payment at closing?  

Would I have to get a HELOC or 2nd mortgage before making an offer?

Any creative ideas?  Oh. Did I say I am new at creative financing so please educate me if I am missing the bigger picture. 

Much thanks,

Doug

[Charlie MacPherson]

@Doug Johnson No reason I know of that funds from a HELOC can't be used as a down payment. You should talk with a lender to get a pre-approval ASAP.

A good pre-approval requires you to submit bank statements, W2s, tax returns and pay stubs.  A garbage pre-approval doesn’t - like Rocket Mortgage’s TV ads saying that they can pre-approve you in 8 minutes.  (They can, but it’s not worth the paper it’s printed on).

If it’s a good deal, you can write the offer now and get the property tied up - but write the offer contingent on financing.  You should also include a home inspection contingency too.

Depending on the contract language in your state, it may require you to apply for financing by a certain date - be sure not to miss that date.

Good luck!