Downpayment Financing Options Question

[William Shields]

I am interested in a property. The property is going for $950k and 25% of that would be $237k. We do not have $237k laying around. How do people come up with that amount of money to cover the downpayment? For example if we apply for a DSCR loan can we take out a personal loan to cover the deposit? I know when you are getting a loan you can't apply for other loans so I am trying to figure out a way to do this. We don't have friends or personal contacts that can contribute to this. We are new to multifamily investing. Assumptions: The rents collected cover the mortgage, taxes & insurance.

[Kevin Sobilo]

@William Shields, usually personal loans from a bank are smaller $25-50k max. So, if you don't have some significant funds that isn't an option.

You could ask for a seller carry-back. Where the seller basically acts as a bank and carries a second mortgage on the property to cover your shortfall. That may or may not be an option in this market depending on what kind of offers they are getting. This would typically be a short term loan with a higher interest rate that you would pay the seller.

Rents covering mortgage, taxes and insurance is NOT NEARLY ENOUGH. I budget 15% of incoming rent for vacancy, capital expenses, and maintenance and if I was hiring a property manager another 10%. Then you want to make a good cash-flow on top of that!!!