What strategies can be deployed to avoid having to pay 20% on an investment property?
Hey Henry, this is a great question!
Here are some ideas:
If you can find a seller financing deal, often times down payments are negotiable and flexible.
You might also want to look into an FHA-style loan, the lowest amount you can put down on a house hack deal on a small MFR would be 3.5%. However, it would have to be your primary residence.
There are also other options like hard and private money lenders.
In some states or areas, there are down payment assistance programs and grants so do some research and see if these apply to you.
If you're going the conventional route lenders will want to see more not less.
Hopefully, this gave you some more options. If you have questions don't hesitate to contact me! Goodluck!
@Joel Calkins thank you.
If you are going to be owner-occupied, any of the conforming residential loans (eg FHA, VA, USDA, conventional, etc.) can go lower than 20%. Otherwise, the "investment" conventional loan is pretty much your only other option for a conforming loan.
Hard money loans generally require you to have as much as 30% "contribution/down" if you have little experience, and are only for short terms, i.e. 6 to 12 months. You will have to get some sort of long term loan afterwards. So, since you said investing, this isn't a viable strategy since your exit strategy for a HML requires being able to get a long term loan.
I believe any down payment assistance will require owner-occupation.
To do less than 20% and not be owner-occupied, you have to go with some non-traditional routes. however, I am pretty sure anything you find will wind up being cost prohibitive. But, maybe something will be there that meets your requirements. Good luck.