How can I buy my first property with very little down payment?

Question

I have been learning for a long time, but have never purchased an investment property. I have good credit, but  little cash. I'd love to purchase a 2-4 unit property and have some purchase strategies:

1. Find an owner who'd owner finance a large % and I'd borrow a small down payment from family, have an amortization schedule that allows cash flow with a several year balloon payment, and refinance in several years to pull out equity to buy another property and pay off the owner.

2. Obtain FHA financing with a 5% or less down payment. However, with a residential property wouldn't they consider my own personal residential mortgage and not the anticipated income of the rental property, therefore disqualifying me because of a too high debt to income ratio?

I realize scenario #1 will be even more difficult to find than typical financing and that the numbers in both scenarios will have to be even better than in a 20% down payment situation in order to achieve positive cash flow, but if I can know WHAT to do then I can set about doing it.

Please let me know, in a positive way, if people think these ideas will or will not work or if anybody has other ideas. Thank you.

Dennis M. · Answer

A few thousand is not going to be enough under virtually any strategy . Keep stacking bro

Account Closed · Answer

My answer and it vias. But I’d say 20% of the purchase price plus closing costs (3-8k) and some reserve money 2-3 months of mortgage payments. But you can do it for closing plus down payment and if you have a good paying job in my opinion.

Account Closed · Answer

IMO - in my opinion.

You have a primary residence.  Can you rent out rooms?

Have you minimized your expenses and maximized your savings towards getting enough for a down payment.   Can you take out a HELCO on your personal property to get the down payment money?

Rob Greenawalt · Answer

Thank you to everybody contributing here. I appreciate the input.

@James Canoy  Thank you. The BP article on buying subject to was a good perspective on the topic.

@Dennis M. only have a few thousand to work with of my own.

Account Closed Thanks again.

Rob Greenawalt · Answer

Michele, I am talking generalities. However, if I had a shot at the necessary financing, I'd look more seriously at anywhere from a 2-4 unit property.

Bob Prisco · Answer

@Rob Greenawalt  dont , flip the contract make money, do again and again. Get experience then buy for yourself .

Good luck

Michele Wax · Answer

I would love to help you find the type of financing you are looking for. Are you looking at a specific property already or are you talking generalities?

James Canoy · Answer

Have you considered a commercial loan? Are you a veteran?

James Canoy · Answer

@Rob Greenawalt

https://www.biggerpockets.com/blog/2016/07/03/subject-to-real-estate/

How can I buy my first property with very little down payment?

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