How did you manage to finance your first rental property?

10 Replies

I am still educating myself on real estate. I am wanting to finance my first home next year. I am planning on spending the next 5 months educating myself. No one in my family has invested in real estate so there is not much I can ask them. My question is, how did you guys manage to finance your property? I graduated from college last year so i currently don’t have enough for a down payment or rehab cost. Any advice/guidance would be greatly appreciated.

@Juan Alvarez I am not sure if this will help you or not but here goes. I actually owned a home when I purchased my first rental property. I like you did not have enough money to qualify for traditional lending. Luckily for me, I have family that has some money. I approached my family and asked them about being a private lender. We worked out the details I basically put 3% down about $5k and now I have a mortgage with them. The property is in my name and I am responsible for everything. We recorded a deed of trust which is a form of a mortgage here in Florida. 

If you have never purchased a home before you might qualify for an FHA loan which could be as little as 3.5% down.

@Juan Alvarez I second Josh Mitchell; if you can grab an FHA 203k loan, that is a great way to maximize a house hack. You get experience with renters, experience rehabbing. The downside is you are a landlord living among your tenants. This gets old pretty quickly. FHA only requires that you live on the property for 12 months, just enough time to tolerate that situation.

I will suggest this.... get in front of multiple lenders, ask for any grants that may be available, or other programs that might offer down payment assistance... usually for certain neighborhoods the city/county is trying to spur investment within. 

My first investment property was a 2 family at 175k... i was going to put the min 3.5% down... but my lender found a grant through the cincinnati port authority.... they had grants for buying in certain neighborhoods... this particular grant was only for first time buyers, in certain neighborhoods, and you had to have 720+ credit and not make more than 100k with your W-2... but they paid my entire downpayment... and all i needed was to bring 3k in closing costs..... this allowed me to get in for so low.... I was able to buy a pure investment property just 5 months later.... but the first deal was what really allowed me to expand and begin my journey as a real estate investor. 

Cheers and best of luck.... know that this househack could be the thing that jump starts your journey to financial freedom... @Juan Alvarez

Jake