Getting approved for first rental property
8 Replies
Greyson Calem
from Dallas, TX
posted about 1 month ago
I’m looking to purchase my first rental property (preferably multi family/duplex) to start generating some cash flow. I currently own a home (3 bed 2 ba) and rent out the other two rooms to help out with mortgage payments. I have good credit (740+) and a pretty good amount of cash saved up. I’m just shy of having enough for 20% down on most decent properties. My question is whether or not it’s possible to get approved for a loan with less that 20% down on a property that will not be my primary residence? From research it seems like most people get started by owner occupying their first property so they can put down 3.5%-5%. I already have a primary residence and don’t want to move out or convert it to a rental. Looking for a creative strategy to get financed on my next move. Thanks!
Dmitriy Fomichenko
Solo 401k Expert from Anaheim Hills, CA
replied about 1 month ago
@Greyson Calem good luck with your REI journey!
Greyson Calem
from Dallas, TX
replied about 1 month ago
@Dmitriy Fomichenko Thanks!
Stephen Brown
Real Estate Agent from Toledo, OH
replied about 1 month ago
Hard money loan funding institutions will lend you more than 80% LTV but the interest rate is higher. :)
Jason Shackleton
Investor from Ontario - Business U.S
replied about 1 month ago
@Greyson Calem Sounds like you are off to a great start. With most conventional mortgages you are going to be looking at that 20% down payment requirement on a rental. I believe with some private money lenders (higher rates) you can get away with a lower downpayment amount on certain products such as a fix and flip loan product. You could potentially do a quick flip and use the proceeds from that deal to close on the next buy and hold. Hope this helps.
Good luck saving up you are so close!
James Leigh
Rental Property Investor from Jacksonville, FL
replied about 1 month ago
@Greyson Calem Hey Greyson, not sure if you’ve looked into owner financing yet or not. I’m closing on a Duplex Tuesday using owner financing. I’ve found a few different properties that the seller was willing to owner finance. Two of those accepted my offer of 10% down ( I didn’t close either of those due to inspection issues). The one I’m closing on next week I’m doing 30% down due to it being Multi-Family. I wanted the seller to know I mean business and will have a vested interest in making sure he receives his payments. But, keep an eye out for the owner finance options. Easy way to gain control of a large asset for a small down payment and lock it down. Giving you more time to secure better financing or to save financing for the next property.
Best of luck!
Greyson Calem
from Dallas, TX
replied about 1 month ago
@Jason Shackleton I’ll get there. Wish I had started earlier but excited to begin the journey nonetheless!
Greyson Calem
from Dallas, TX
replied about 1 month ago
@James Leigh great advice. Thanks!