Financing STR Same neighborhood as current property

[Justin Melton]

Obviously the location of a property doesn’t impact the down payment/financing but there is a property 2 doors down from the property my wife and I just purchased and started renting April 1.  We are killing it this month with 0 reviews to start.  I know we just bought it but I see huge upside/potential.  

I would like to buy the other one for sale but the 50k down payment would not be super practical right now as I just shelled out $50k down payment for the next be I just bought.  The property for sale is overpriced (they bought it for $175k last year and want $183k for it.  I’m sure they have a mortgage so I can’t get it for say $160 for example. Any ideas?

[Travis Timmons]

There's no easy answer. You have to find the money somewhere if you want it that badly. If you don't have it, you have to find a lender (bank, mortgage broker, private money, etc.) or convince the seller to do something creative. It's unlikely, but not impossible.

If it were me, I'd find a friend or family member with some cash, convince them that it is a good investment and say that you will manage it for them at market rate of 15-25% depending on your market. It increases your income and protects you from the risk. The other benefit is that if it goes sideways, you are just a vendor, not a partner that they are married to. They can fire you and find a new manager.  It's not an earth shattering idea, but it increases your income and protects you from yourself (wanting to scale too quickly, making compromises, and introduces extra risk).

I'd suggest taking a breath and getting a sample size of more than 1 month of bookings before buying the next one, but I get it.