3 Options to Finance Your First Turnkey Rental Property

One of the most commonly cited obstacles to buying investment real estate is lack of funds. It’s challenging enough for most folks to come up with a down payment for a primary residence, let alone do it all over again to buy a turnkey rental property. And, if you’re self-employed, retired or don’t have traditional W-2 income for any reason, it’s especially difficult to obtain purchase financing.

At my company, MartelTurnkey, we help people in a wide range of financial circumstances get funding to buy any of our single-family turnkey rental homes. If you’re looking to finance your first turnkey rental property, here are some funding sources to consider as an alternative to conventional lender financing.

1. Self-Directed Retirement Account

If you have an IRA or a 401k, you can use those funds to make a down payment on a real estate investment property or buy it outright. The rental income would then go back into your retirement account either tax-free or tax-deferred. However, you can’t invest in real estate with retirement funds that are in a traditional custodial account. In order to invest IRA or 401k funds in real estate, you first need to self-direct your retirement fund. This does two things; it puts you in control of all your investments and gives you the option to invest in real estate (as well as other investment vehicles). Speak to a financial advisor who specializes in helping people self-direct their retirement accounts for further details. If you don’t have one, feel free to reach out to me so that I can connect you to one.

2. Asset-Based Lender

An asset-based lender makes lending decisions based on the financials of the turnkey rental property you want to buy, not your income. They’ll look at the cash flow potential, the property’s P&L and appraisal values. A true asset-based lender won’t even ask to look at tax returns. However, they will likely want to see a bank statement in order to verify that the borrower has sufficient cash for the down payment, plus some left over for maintenance and upkeep.

At MartelTurnkey, I recently helped a buyer get financing from an asset-based lender. This particular buyer owned his own company and didn’t take any money out, so he had no W-2 income to show. The asset-based lender took the financial information mentioned above and approved the loan. It ended up being one of the easiest closes we’ve ever had, and the buyer also got pretty good terms on his loan. Bear in mind that MartelTurnkey sells fully-renovated, cash flowing properties with tenants in place. Therefore, my buyer didn’t need to show that he had money in the bank for renovations because the property was already rehabbed and rented.

3. Seller Financing

Another possible way to finance your first turnkey rental property purchase is with seller financing. When I first started MartelTurnkey, many early investors were people who owned their own business or flipped houses full-time, which meant that most banks wouldn’t finance them.

As a Canadian immigrant, I was also sensitive to the fact that there were many citizens from other countries like Canada who wanted to invest in real estate in the U.S. but were unable to do so because they didn’t have a social security number or credit history to get conventional financing.

This led us to offer seller financing on our rental properties to those who qualify. MartelTurnkey is one of the few turnkey rental providers that actually offers clients seller financing. We’ve helped many clients who’ve maxed out their 10 loans with Fannie Mae to continue to buy our turnkey rentals through our seller financing program. If you don’t have W-2 income and want to explore the option of buying turnkey rental properties with our seller financing, send me a message or shoot me an email. I’d love to help!

At MartelTurnkey, we get buyers from all walks of life, in all kinds of different financial situations. Even if you think you can’t get approved for conventional financing, there might be another way to buy one or more of our turnkey rental properties. I’m experienced with helping our buyers find alternative financing. I’m happy to hop on the phone with you if you’re interested in learning more about MartelTurnkey’s portfolio of available properties.