All Forum Posts by: Brandon Proctor

1 - Hard money lender

2 - Doing a sandwich lease option

3 - Doing a few Wholesale deals to build up your cash

4 - Partner up with another investor

5 - Look for houses where your cash position will work.

As an "investor" with my first rental just purchased and undergoing rehab right now, I just managed to solve that equation (for one property - I'm sure I will have to figure it out again soon for the next). I originally was going to go the FHA route - as that required only 3.5% down, but due to seller issues I ended up fortuitously stumbling across a private lender who was willing to finance 100% of the property - with the expectation/requirement that I build equity in the next two months through improving the property. This was definitely a non-standard approach through an acquaintance, but from what I am gathering, non-standard approaches are fairly frequent in this industry. Good luck figuring it out - I'm a firm believer that if you just focus on educating yourself, while at the same time taking action (even if you don't yet know how to do it properly) results will happen. Definitely look more at FHA - even FHA 203k. 2-4 unit MF properties, living in one and renting the other seem to be a proven strategy for a low-cost entry into this business.

Sorry to post yet again @Brandon Proctor , If you have a retirement account, you can check with that account manager to see what your options are about borrowing against yourself.  For example, if you have a tax-sheltered annuity with $40,000 in it, you can borrow up to $20,000.  You'd have to pay it back with minimum interest.  The bonus here is that the interest you pay is actually going into your account - not a lender.

@Brandon Proctor 

I forgot one very cool option! You can find duplexes/triplexes to live in that are near the price of a regular SFR. The bonus here is that the banks will account for the fact that you will have the other unit(s) rented out and may approve you for more money. The rent coming from the other units will undoubtedly ease your financial burden on the mortgage payment every month. This is a great option if you're ok living with common walls. You can also use FHA loans on 2-4plexes as long as you intend on living in a unit for at least 1 year - just like a SFR

@Brandon Proctor 

I've also been aggressively persuing investing with little money down.  Depending on what you're interested in doing specifically with investing, there are different options I've read about.  I'll list a few below with a few comments:

1: FHA - requires you to live in the residence (at least one year by contract), lower interest rate, but required mortgage insurance, 3.5% down, very strict appraisal and inspection FHA requirements, you can only have one FHA loan (within a certain distance of each other). There are different FHA loans to accomodate structural or cosmetic fix-ups if needed.

2:  Do you have a Key Bank in your area?  They do "community loans"... same sort of story where you need to live there for at least a year.  Don't know much more about it other than lower interest rate.  If you don't have a Key Bank, you can always check around your local banks/credit unions to see if they have something similar.

3:  Hard money lender - you can google search or search bigger pockets for more information.  Sometimes they will lend 100% of what you need but with the trade-off of charging you a very high interest rate (10-18%).  Typically lending options last up to one year before you need to refinance or use your exit strategy.  I believe this type of lending is best for doing flips.  

4:  Does your job have a benefit/discount on loan information/closing costs/etc?

5:  Owner financing - You can easily find properties that owners are willing to finance and be your "lender".  I find them often on Craigslist.org in the real estate section.

6:  Lease Option/Lease Purchase:  Like a taste-test, you can "rent" for however long the lease lasts, then purchase using some of the "rent" you paid as toward your down on that property.  

I've been studying lots of financing and am always hungry for more information.  Much of this information is referenced from bigger pockets and from a book I read on lending, "Mortgage Secrets All Borrowers Must Learn - But Lenders Don't Tell" Gary W. Eldred, PhD.  It might be sort of dry, but extremely informative about your buying options.  

I hope this helps!

Is it possible for you to live in the house and rent out rooms? That would give you give your foot in the door with you low downpayment. If you do the VA loan it is 0 down. Than you could save up for your next rental at 0% down. That is how we started only add in a repair :)