Find out how much money you can borrow. Then save up the down payment for that amount. If the bank will lend you $80K, you save $20K and buy a house for $100K with the 20% down payment.
Rental Property Investor · Augusta, GA · Member since 2017 · 825 posts · 278 votes
7y
@Leslie Eason, talk to other experienced investors around you. if you do a conventional mortgage, you will need 25%-30% down and also want to have reserves for the repairs that always pop up at inconvenient times.
Find out how much money you can borrow. Then save up the down payment for that amount. If the bank will lend you $80K, you save $20K and buy a house for $100K with the 20% down payment.
Insurance Agent · Thornton, CO · Member since 2018 · 74 posts · 51 votes
7y
Don't forget to have at least 3 to 6 months emergency reserves for your own protection from unforeseen personal expenses...medical, car repairs, unemployment, etc.
Philadelphia, PA · Member since 2017 · 824 posts · 1k+ votes
7y
Personally I like to have enough money to not have to worry about if something big happens. To me, that's about 5k to 10k in reserves; thinking new roof, flood, something. Chances of it happening might be lower, but piece of mind in your operations can be a fine line between success and failure.
Don't forget you'll have closing costs, marketing costs, repairs, etc., off the bat. Don't buy a 100k house and dump the 25% into it and have no money left over. If you've got debt dragging you down, take care of it to at least a comfortable/manageable level. If you would lose it all if the next paycheck didn't come, in my mind you are at significant risk for failure.
Lender · St. Louis, MO · Member since 2019 · 45 posts · 27 votes
7y
@Leslie Eason Plan for having the following:
1) Down payment
2) 2% closing costs and escrows
3) 6 months' payments in reserve
4) Repair costs to rent
If you move into a duplex or triplex and renting out the other part(s), down payment will be 3.5% minimum FHA. If single family house where you're renting rooms, consider 5% down Conventional (less cost and mortgage insurance than FHA). If you aren't going to occupy, 20% down is minimum, and better rates come with 25% down+.