getting funds for my next property

16 Replies

I bought my first rental property this summer and its been rented out pretty much since it was listed on my management companies website. The income is great and I want to get another property asap. the city that Im living in, grand rapids michigan, is growing at a tremendous rate and rents are through the roof. 

I had to use most of my savings for the down payment for my rental and now Im just waiting patiently to save up money for the next purchase. at the pace Im at I dont think Ill be able to buy another property until spring of 2016, unless I hit the lottery or get a new job that pays more. 

What techniques are out there to get funding for a new property besides waiting and saving up my current rental income and income from my job??

Have any equity in this rental house?

Do you own a personal property? Have you thought about moving into the house. Than you can buy an house with 5% down. You can rent out the rooms allowing you can live rent free, or close to it. Than you have another property that you are building equity. At the same time you are saving for the next property.

Welcome to BP.

You could always partner up with other people. You could buy a fourplex with as less as 3% and live in one of the unit. 

Hope it helps.

 @Elizabeth Colegrove
that is a good suggestion, something that I would consider for sure
Originally posted by @James Syed:

Welcome to BP.

You could always partner up with other people. You could buy a fourplex with as less as 3% and live in one of the unit. 

Hope it helps.

 3% sounds great, are you saying 3% because the more investors come in the lower the downpayment would be?

@Josip Galic  

I am saying 3% because that is the lowest down payment you could go for other than owner financing in which you could buy with no money down. 

Does it help?

Originally posted by @James Syed:

@Josip Galic 

I am saying 3% because that is the lowest down payment you could go for other than owner financing in which you could buy with no money down. 

Does it help?

 yes, thanks

I have not hit the lottery either [email protected]#$   So I am on the look out for either seller financing or 'subject to' deals.  

Thank you @Josip Galic  ip Galic for starting this thread. I am researching for my first investment property in Georgia and need to think of creative ways to drum up the money without breaking my bank. A 20 or 30% down payment seems to be the 'buy-in' I am getting for investment property purchases. I am thinking a HELOC from my personal property and a few other options. Other than living in the rental (duplex/4-plex) have others found other ways to lower that hurdle for down-payment? VA? HUD? Fannie/Freddie? what's out there that may be a lucrative starting point? Oh, and @Josip Galic , let us know what happens! Happy New Year!

Originally posted by @William Gustin :

Thank you @Josip Galic ip Galic for starting this thread. I am researching for my first investment property in Georgia and need to think of creative ways to drum up the money without breaking my bank. A 20 or 30% down payment seems to be the 'buy-in' I am getting for investment property purchases. I am thinking a HELOC from my personal property and a few other options. Other than living in the rental (duplex/4-plex) have others found other ways to lower that hurdle for down-payment? VA? HUD? Fannie/Freddie? what's out there that may be a lucrative starting point? Oh, and @Josip Galic , let us know what happens! Happy New Year!

Happy new year to you as well. One of my friends suggested a HELOC from her credit union which sounds great but I read that the financial institutions give you between 80 to 90% of what your primary residence is appraised at. 80% would give me about 50000 to play with which isnt that much unless you find a great deal. Does anyone know if you can combine a HELOC with a conventional loan?

Originally posted by @Steve B. :

I have not hit the lottery either [email protected]#$   So I am on the look out for either seller financing or 'subject to' deals.  

 I haven't run across seller financing or subject to deals. Can you clarify?

Generally you can have a conventional loan as a primary and a HELOC as a secondary as long as the total LTV does not exceed 80%. Any bank coming into a second position like that will get an appraisal and limit the size of the HELOC to the 80%.

About seller financing - this is when the seller gives you a loan to buy the property.   Basically they act as the bank for you.    This could work for a seller that does not have an existing mortgage and wants to stretch out their income over time.

About 'subject to' - this is a essentially taking over the existing mortgage on behalf od the seller.   It is legal but a pretty sensitive issue for the existing bank.

Search around on BP for a lot more discussion of either of these methods.

Depending on what you're looking for, Grand Rapids is chock full of seller finance and subject-to deals. I'll keep an eye out for ya if you can let me know your criteria.

@josip galic Look into what  Michael Lerch is offering... Maybe you will struck a nice deal there. If you want to know more about seller finance, you can always search the forums or buy Brandon turners book. I have the paper version lying around can mail it to you if you want!

@Josip Galic  I reccommend as stated above getting into an owner fin deal or a property in need of a rehab.  Subject to loans are not a good idea. Many experienced investors will tell you to stay away from these deals. Here is why:  at some point you will buy the property from the seller. There name will still be on the deed until you actually purchase the house. If the seller for any reason such as : gets sued, tax lien, personal judgement, files bankruptcy, defaults on the mortgage, etc etc ......,any of these items will be an issue prior to an actual closing or the property being taken and auctioned in the case of a bk. you are in a deal where you do not have a clear and insured title insurance policy.  I am not saying every subject to deal is bad but there is a substainal amount of risk. I personally do not do them.

In an owner fin deal there is an actual closing your name or entity is on the deed and you have title insurance on the property.

As far a picking up a few more properties maybe pick up a distressed property that you can renovate and build somewhat of instant equity and then refi. Use the 50k just for closing cost etc. Keep drawing your cash out every few months to add to your portfolio.  Repeat cycle for several years and before to long you will have a nice portfolio. There are several private money companies actually offering fairly good rates for rental refi right now and most have double the limit of properties they will refi compared to a traditional bank.

It also depends on your strategy and the type of property you are looking to acquire.  Good luck to you on building a nice portfolio base.

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