15% down payment on investment properties
I have been a mortgage broker so long that I remember the market crash of 2008 and the incredible rise in values from 2001 to 2005. I thought I know almost everything about buying and financing an investment property but I learned something today. One of my A full doc lenders said they will finance a rental property with just 15% down in California. This is not a dscr loa. It is a conventional full doc loan. The interest is higher than owner occupied and a tad bit higher than if the investor buyer put down 20% to 25% down. I was curious about pricing so I did a scenario where an investor was to purchase a home in Sacramento county for 450k with 15% down. The interest rate came out to 6.99%. People should not be naive to think they will get positive cash flow with just 15% down unless they got one heck of a deal. If a person found an off market deal that did not need a ton of work then putting 15% down could be a way to get into a long term rental without puting the normal 20% to 25% down. There are those deals out there where the fix n flip buyer doesnt think the price is low enough to make a profit so a buy n hold investor could purchase the property.