Selling to buy another property... Is it reasonable?

6 Replies

Hello BPers!

So, I was looking at my property portfolio growth plan I made when I was brand new to real estate investing and I noticed that my plan was missing a very important part... How am I going to afford the down payments on this properties? I don't know how I managed to miss that but I did. I spent an 30 minutes staring blankly at my computer screen, trying to mentally refer back to what I had read in Brandon's book "The Book on No & Low Money Down Real Estate Investing". 

Then, I started to wonder, "Why couldn't I just sell the house later on and use the money to buy a house?" Now, this is where I need help from you guys. I was looking at selling at the two year mark but the rational side of me says that there's no way I can make anything off a ~$100k property in just two years. Then again, I've never sold a property before so what do I know? 

By the way, I'm not making a lot of cash from work. Enough to live, yes, but not enough to afford a 20% down payment which is why I'm trying to find a different route.

Have you ever looked into the FHA loan product? It can get you into a 1-4 unit for 3.5% down. I'm sure you'd qualify if you sold your current house.

Most people here grow their portfolios through leverage. If you combine finding and buying great deals, adding sweat equity or forced equity, you'll create equity in those properties much more quickly than waiting for inflation or appreciation. Assuming you have good credit and some experience, a lender will loan you money against that equity- that loan becomes your down payment for your next property. In my mind, the best bang for your buck on residential is a HELOC for many, many reasons. Best of luck!

Originally posted by @Michael Ablan :

Have you ever looked into the FHA loan product? It can get you into a 1-4 unit for 3.5% down. I'm sure you'd qualify if you sold your current house.

I thought that the FHA loan would only work if I was living in one of the units? I'm up for the idea of house hacking but don't think I'll be able to do that with all the properties I plan on buying.

@Keeynisha Yearwood 

There are plenty of ways to find money to invest. 

1. Lower your expenses. Have you done a budget to see where you spend the most and understand how to cut on those? Your daily expenses, your shopping habits, ... etc.

2. You say you already own a property.. Is there a way you can refinance what you have, so that you keep more money in your pocket? i.e.: if you are on 15 years, can you refi to 30, roll closing into the loan ... 

3. Increase income: Have you considered taking a side hustle to improve your cash position? Do you have a room in your current house you can rent? airbnb? 

4. Have you considered finding deals and finding partners/using other people money to finance your deals? You don't always have to go solo. Partner up ... etc. 

Originally posted by @Henri Meli :

@Keeynisha Yearwood 

There are plenty of ways to find money to invest. 

1. Lower your expenses. Have you done a budget to see where you spend the most and understand how to cut on those? Your daily expenses, your shopping habits, ... etc.

2. You say you already own a property.. Is there a way you can refinance what you have, so that you keep more money in your pocket? i.e.: if you are on 15 years, can you refi to 30, roll closing into the loan ... 

3. Increase income: Have you considered taking a side hustle to improve your cash position? Do you have a room in your current house you can rent? airbnb? 

4. Have you considered finding deals and finding partners/using other people money to finance your deals? You don't always have to go solo. Partner up ... etc. 

 I'm currently looking at getting a part job along with some little side hustles to save up funds. I don't have the house just yet. I'm looking to buy it in July/August because that's when my current apartment lease is up. A partnership would be an ideal situation. Preferably, if it's one where where their money is used to fund the deal and I just put in the work. I've been looking for one but I'm also looking for an alternative just in case that plan doesn't work out.

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