Coming up with down payment money at the beginning
Rental Property Investor · Jacksonville, NC · Member since 2020 · 9 posts · 4 votes
Coming up with down payment money at the beginning
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Investor · Cincinnati, OH · Member since 2018 · 304 posts · 185 votes
5yDo you have anything you can sell? Sell an expensive car and buy a cheaper one? Equity in a property you have? Work overtime? Get a better paying job? Flip things on FB and Craigslist? Gamble? Borrow from a family member? Hard money loan? Bank LOC? Use a low down payment loan?
I'm spitting out random ideas.... it's much more helpful if you can give background to the amount you need, what dp% you are going for, what assets you have
39 Replies
- Investor · Tampa, FL · Member since 2017 · 589 posts · 251 votes5y
Honestly peeling back the expenses is one of the fastest ways. Get clever and see what you can reduce and put more of your income back into your pocket.
- 5yDaniel ScottPro MemberOrlando, FL · Member since 2020 · 34 posts · 10 votes
Borrow against your 401k ?
- Real Estate Agent · Winston Salem, NC · Member since 2014 · 486 posts · 303 votes5y
@Brendan VanDalinda I would recommend FHA or USDA loan. Saving money and finding someone who is interested in doing owner financing as they may accept a lower down payment.
- Member since 2020 · 1 post · 2 votes5y
@Andrew Powers
Great advice, I did all of that, from April til now, during pandemic, instead of staying home, I worked as much overtime as possible, saved it all.. Set me up
- Investor · Fort Walton Beach, FL · Member since 2015 · 568 posts · 966 votes5y
Great ideas here. Have you considered house hacking? There are programs that can help you buy at 0-3.5% downpayment.
There's 4 ways to house hack. I outline them here if you wanna check it out House Hacking Video
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes5y
Originally posted by @JD Martin:
Since you're military, and I'm ex-military, let me tell you a story.
When I got to boot camp (not sure if they do this any more), they gave us a "chit" book. Paper coupons with increments wrote on them - $5, $1, $10, etc. This was an advance against our pay (I made $400/month when I went in). You had to buy all your own shaving cream, toothpaste, etc. with these chits. They took all your cash when you went in so no one could gamble. You got to go to the "C" store once a week and buy your stuff with these chits, and you got cash back on the difference of what you bought. If/when you got up to $24 they made you get a money order and send it home. You weren't allowed to buy anything that was "contraband", which was pretty much anything that wasn't toothpaste or shaving cream.
I was in the Navy choir (yeah, I could sing pretty good back then 😃 ). Because of that I got to go to the "C" store on my own. Pretty soon guys in my company realized that I could get things at the store (contraband) because I was separated from the rest of the company. Pretty soon these same guys were giving me $5 paper chits for a bag of 50 cent Doritos. They never got the connection that these paper chits were money and you would cash out at the end, nor did they care - they couldn't bear sacrificing another day if they could have a $5 bag of 50 cent Doritos today. So I ran my little smuggling business, paid $5 chits for 50 cent Doritos, and stashed all the cash in a big manila envelope that I wrote my mother's name and address on (they weren't allowed to look at your mail). When I left boot camp I had almost my entire chit book left and over $1000 in cash in a big manila envelope 😂 .
Now, here I wish the story had a happier ending, in that I used that for the first down payment on a house hack. No, I bought a first class ticket home after BC and pissed the rest of the money away drinking and cavorting for 2 weeks. But that's not the moral of the story here, which is: opportunity is where you find it. If you want a down payment bad enough you'll eat Ramen Noodles instead of steak. You'll take in a roommate or two from your company, guys who are desperate to get out of the barracks (that's what one of my shop buddies did, only I was the paying roommate instead of the guy making the money). You'll figure out a side hustle. ETC.
You're a Marine. You didn't get picked for your good looks. These days I like hiring veterans (good ones) because they know how to get things done and how to figure it out. There's no guide book here. Your path can be anything you want it to be. If you want to eat steak, get a good side hustle. Sell the house and buy a duplex. ETC. I had a lady in my office once made several thousand dollars over the course of a year selling used clothes she would buy in Goodwill and sell over Ebay and Etsy. She had to get good at identifying good clothes, but what a hustle she had.
Love your chit story, JD. Meet demand and capitalize on opportunities.
When is was an active Marine, I did the same things. When we got deployed to some s hole sandbox, I brought a ton of cash and tons of tobacco. Sold tobacco on iou's, the cash 4:1 when we had a long layover in Shannon, Ireland. The whole airport was a bar.
I was also a hard money/ payday lender. On the 7th and 22nd or so a string of brothers would need $60 or whatever for weekend liberty. I'd hold their stereos til payday.
I saved well over 50% of my low pay. This was very early 90's. It's what you make of it, Brendan. Prioritize your spending and buy another househack in a year with 5% down.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes5y
Originally posted by @Steve Vaughan:
Originally posted by @JD Martin:
Since you're military, and I'm ex-military, let me tell you a story.
When I got to boot camp (not sure if they do this any more), they gave us a "chit" book. Paper coupons with increments wrote on them - $5, $1, $10, etc. This was an advance against our pay (I made $400/month when I went in). You had to buy all your own shaving cream, toothpaste, etc. with these chits. They took all your cash when you went in so no one could gamble. You got to go to the "C" store once a week and buy your stuff with these chits, and you got cash back on the difference of what you bought. If/when you got up to $24 they made you get a money order and send it home. You weren't allowed to buy anything that was "contraband", which was pretty much anything that wasn't toothpaste or shaving cream.
I was in the Navy choir (yeah, I could sing pretty good back then 😃 ). Because of that I got to go to the "C" store on my own. Pretty soon guys in my company realized that I could get things at the store (contraband) because I was separated from the rest of the company. Pretty soon these same guys were giving me $5 paper chits for a bag of 50 cent Doritos. They never got the connection that these paper chits were money and you would cash out at the end, nor did they care - they couldn't bear sacrificing another day if they could have a $5 bag of 50 cent Doritos today. So I ran my little smuggling business, paid $5 chits for 50 cent Doritos, and stashed all the cash in a big manila envelope that I wrote my mother's name and address on (they weren't allowed to look at your mail). When I left boot camp I had almost my entire chit book left and over $1000 in cash in a big manila envelope 😂 .
Now, here I wish the story had a happier ending, in that I used that for the first down payment on a house hack. No, I bought a first class ticket home after BC and pissed the rest of the money away drinking and cavorting for 2 weeks. But that's not the moral of the story here, which is: opportunity is where you find it. If you want a down payment bad enough you'll eat Ramen Noodles instead of steak. You'll take in a roommate or two from your company, guys who are desperate to get out of the barracks (that's what one of my shop buddies did, only I was the paying roommate instead of the guy making the money). You'll figure out a side hustle. ETC.
You're a Marine. You didn't get picked for your good looks. These days I like hiring veterans (good ones) because they know how to get things done and how to figure it out. There's no guide book here. Your path can be anything you want it to be. If you want to eat steak, get a good side hustle. Sell the house and buy a duplex. ETC. I had a lady in my office once made several thousand dollars over the course of a year selling used clothes she would buy in Goodwill and sell over Ebay and Etsy. She had to get good at identifying good clothes, but what a hustle she had.
Love your chit story, JD. Meet demand and capitalize on opportunities.
When is was an active Marine, I did the same things. When we got deployed to some s hole sandbox, I brought a ton of cash and tons of tobacco. Sold tobacco on iou's, the cash 4:1 when we had a long layover in Shannon, Ireland. The whole airport was a bar.
I was also a hard money/ payday lender. On the 7th and 22nd or so a string of brothers would need $60 or whatever for weekend liberty. I'd hold their stereos til payday.
I saved well over 50% of my low pay. This was very early 90's. It's what you make of it, Brendan. Prioritize your spending and buy another househack in a year with 5% down.
LOL. That's awesome. It's funny how if you look back on it, you will find that a lot of RE investors were probably budding entrepreneurs all the time, they just never realized it. For me it was just always figuring out how to hustle; growing up so ridiculously poor, you either learned to hustle or you starved!
A funny tagline to my smuggling business: a few guys had saw these little game watches in the C store and wanted them (this was late 80s). I think I was buying them for $20 and selling for $50 or something like that. Anyway, whenever I bought anything I told them "if you get caught, you didn't get it from me", and to their credit not a man ever snitched (only a couple ever got caught). Well, the watches got a guy caught one day because they didn't have it muted and the company commander walks in and hears "beep, boop, bap" on this watch. So he grabs the watch and orders everyone in the company on the line for a snap inspection, which was your blanket on the floor and the contents of your locker drawer (you had one drawer for your mail and valuables) on your blanket. I was about 7th or 8th from the beginning of the line and the CC is walking down the line using a long stick to poke through each guy's stuff. He gets to me and sees this huge manila envelope, which was barely able to be closed by this time as boot camp was almost over, but it's sealed closed. So he flips it using his stick and sees my mother's address on the envelope, looks up at me and says "Martin, you must be real, real homesick to have that many letters to mommy in there". :D
Skyline Properties - Rental Property Investor · Northern Colorado · Member since 2020 · 40 posts · 55 votes5y
@JD Martin
- 5yJason G.Pro MemberRental Property Investor · Long Island, NY · Member since 2015 · 434 posts · 495 votes
Originally posted by @Brendan VanDalinda:
I’m pretty new and am struggling figuring out good ways to come up with the money for a down payment! Any ideas?
Being pretty new I would recommend recognizing that there is absolutely no rush. Spend time learning about real estate investing by reading books, browsing forums, and watching webinars. Real estate investing is not a get rich quick scheme, but rather an established path to gain wealth over a long period of time. You mentioned you already own a home and are house hacking. What do you mean by house hacking in this context? Is it a duplex with a unit rented out, is it being fully rented out while you live elsewhere, are you renting rooms? If you are intent on purchasing a property now using a partner or a mortgage program that allows a low down payment, will the properties in your area cash flow? Will you be able to afford to cover the PITI and other expenses if the unit is vacant? Will a partnership dilute the individual profits to the point where the investment wouldn't be worth pursuing? Conventional lenders will typically require 20-25% down and six months reserves. Sometimes it is just a matter of saving the down payment over time and then investing, saving again plus using the profit from the investment to buy the next, and keep going.
- Investor · Raleigh, NC · Member since 2019 · 433 posts · 743 votes5y
Live off 50% of your income. If you can't do that, you either have an expense problem or an income problem.
If it's an expense problem, do an audit of your expenses, figure out what you can cut out. But at some point, you just can't cut anymore. For housing, you could try downsizing to a smaller apartment, getting a room mate to take on expenses, or moving back in with parents. For transportation, trade in your car for something more fuel efficient and with a lower payment. Most other stuff is going to be subscriptions, food and entertainment. Cut the subscriptions, don't buy drinks at restaurants and bars (I bring a flask.... shhhhh)
If it's an income problem, yeah you could sell stuff but that's a one time shot. You need something recurring/repeatable. Change your job or pick up a weekend job. Maybe you change jobs and move to a smaller apartment that's closer to work. That could drive down housing and transportation (most people's biggest expenses) while raising income.
Yes, it's tough and maybe this post is just tough love. But keep in mind that it's only for a short while. Once you get one rental, you have passive income to get the next one... and the next one... and the next and so on.
- Inland empire · Member since 2020 · 26 posts · 9 votes5y
Hello, @Brendan VanDalinda not sure if it was mentioned but Brandon turner has a good book on how to invest with little to no money that’s a good read!
- Rental Property Investor · Wasilla, AK · Member since 2017 · 6 posts · 5 votes5y
@Brendan VanDalinda
There is always the second VA loan option. But you have to be able to explain why you're buying a second home. Closer to work, PCS to a new base, family needs, etc... basically it's going to need to be an upgrade from your current home. Here's how I went about it. I got a VA loan and owner occupied for 3 years while renting the other side. In that 3 years, my wife and I had another child, then used my 2nd VA loan to purchase our SFH. I now have a cash flowing duplex with a stupid low interest rate that I'll hopefully be able to HELOC in a couple years to make another investment purchase. In the mean time I'm doing anything I can for a side hustle... I live in Alaska, so I have a plow on my truck, so when it snows I'm out plowing driveways. I'm also a mechanic, so I find dead cars on Craigslist or FB marketplace and bring them back to life and sell those, usually doubling my money or more. All of the extra money I bring in goes into funding my next purchase. Leverage your skills and abilities and find a side hustle to bring in some extra cash. Find a part time job. Find someone who's doing real estate that you can in some way help them and just soak up knowledge.
- Real Estate Agent · Las Vegas, NV · Member since 2020 · 459 posts · 305 votes5y
Find a cheaper fixer and BRRRR it. Use hard money and gap financing. Just make sure the deal is good enough to afford all the interest and fees.
Good Luck!!
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