{"id":165019,"date":"2024-01-22T11:05:21","date_gmt":"2024-01-22T18:05:21","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=165019"},"modified":"2024-02-07T03:18:03","modified_gmt":"2024-02-07T10:18:03","slug":"new-interest-free-financing-program-for-investors","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/new-interest-free-financing-program-for-investors","title":{"rendered":"A New Interest-Free Financing Program for Investors Is Coming Online: Is It Right for You?"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC5092396019\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><a href=\"https:\/\/www.biggerpockets.com\/blog\/cash-out-refinance-vs-heloc\" target=\"_blank\" rel=\"noreferrer noopener\">Cash-out refinancing<\/a> is pretty common in real estate investing. An investor will cash in on the <a href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-home-equity\" target=\"_blank\" rel=\"noreferrer noopener\">equity<\/a> they have on an existing property and then use those funds toward a <a href=\"https:\/\/www.biggerpockets.com\/blog\/down-payment\" target=\"_blank\" rel=\"noreferrer noopener\">down payment<\/a> on their next property. Rinse and repeat.<\/p>\n\n\n\n<p>That complicated process may soon be unnecessary thanks to a new fintech company.<\/p>\n\n\n\n<p>Downpayments, a Miami-based financial tech startup, has come up with a way for investors to tap their existing property equity to buy new properties\u2014no refinancing required. Here\u2019s how it works and what investors need to know about it.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How the Program Works<\/h2>\n\n\n\n<p>Downpayments essentially gives investors a loan, which they can use toward their down payment. There are two options: <\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>An interest-free loan of up to 10% of your next investment\u2019s purchase price<\/li>\n\n\n\n<li>A 20% down payment at a \u201ccompetitive\u201d interest rate (currently 7%)<\/li>\n<\/ul>\n\n\n\n<p>In both cases, the loan must be paid off within four years of closing.<\/p>\n\n\n\n<p>The program can benefit investors with a number of goals. As the company <a href=\"https:\/\/downpayments.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">explains on its website<\/a>:&nbsp;<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>Depending on your circumstances, this may mean different things; it might mean preserving your savings or avoiding having to go through a cash-out refinance in order to access the capital, which often means breaking a low fixed-interest rate. It might also mean you can buy your next investment property sooner, or without an equity partner, so you can control your own destiny and have the freedom to grow your property portfolio on your own terms.<\/p>\n<cite>Downpayments.com<\/cite><\/blockquote>\n\n\n\n<p>Of course, nothing comes for free. While using Downpayments won\u2019t require you to refinance your loans, you will need to put your property up as collateral. You\u2019ll also need to use Downpayments\u2019 brokerage services as you shop for your next investment.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>As your registered in-house brokerage, Downpayments will curate your listings, provide on-demand showings, comparable sales, and guide you to the closing table.<\/p>\n<cite>Downpayments.com<\/cite><\/blockquote>\n\n\n\n<p>Essentially, you won\u2019t pay Downpayments directly, but it will get a commission from your eventual property purchase (just as any real estate agent would).&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Is Downpayments Right for Your Portfolio?<\/h2>\n\n\n\n<p>Right now, Downpayments is only available to investors purchasing properties in Florida, but the company says it\u2019s expanding to other states later this year. (No word on what those states will be, though.)&nbsp;<\/p>\n\n\n\n<p>Still, even if the program\u2019s available in your area, think carefully before proceeding. While it\u2019s billed as an alternative to cash-out refinancing, Downpayments doesn\u2019t help you avoid financing altogether. In fact, it just adds another loan to your mix\u2014meaning extra monthly payments to balance and an even further leveraged property.&nbsp;<\/p>\n\n\n\n<p>If you do use it, make sure you\u2019re on a good budgeting system and are prepared to make your payments\u2014on time, every time. As with any loan against your property, there\u2019s a risk of <a href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-a-foreclosure\" target=\"_blank\" rel=\"noreferrer noopener\">foreclosure<\/a> if you\u2019re unable to make your payments.<\/p>\n\n\n\n<p>You\u2019ll also want to consider the brokerage requirements, especially if you have an agent you typically use when vetting new investments. Using Downpayments could mean forgoing that agent\u2019s guidance or, potentially worse, doubling down on commissions if you decide to use both services.<\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_267ea8eee2884a31cd3d73402bd9f77e\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_4750c47df7f2992aefd1e26eb1ad3843\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_1199ed69313cf3b06083dfc7218c9476 class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/new-interest-free-financing-program-for-investors&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/new-interest-free-financing-program-for-investors&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The program allows you to receive a partial down payment loan with no interest. We&#8217;ll explain how it all works and if it&#8217;s a smart move for investors.<\/p>\n","protected":false},"author":613679,"featured_media":165021,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7406,7119],"tags":[],"class_list":["post-165019","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-creative-financing","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/165019","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613679"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=165019"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/165019\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/165021"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=165019"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=165019"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=165019"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}