Down payment question

11 Replies

Need a little BP advice. I won’t bore you with details of the property, but essentially I’m looking at a minimum of $1,000 a month cashflow with no improvements. If I were to purchase, I will easily be between 1,300-1,500 CF. Asking price is 260,000. I have negotiated down to 240k. The bank has verbally agreed to loan me 240k provided I can put 20% down (48k)+closing costa I have 25k ready and waiting to put into the DP. I could wipe out my emergency fund for the remaining but really don’t want to. What other ways can I finance the rest of the down payment?

@Shane Albert You could finance the rest with 1. a personal loan, 2. Use cars as collateral, 3. partner with another investor, 4. Find a hard money lender for the difference in the down payment needed to close, and/or 5. Look into a cash advance on credit cards. You may have to be creative if these options don't work for your scenario.  

If you plan on living in the property you would be able to put less money down. Something to consider. 

Good luck.

@Shane Albert -  @Damon Pendleton 's talking about seller-financing or owner carry.  The owner may consider it if he has already paid off the existing mortgage. In other words ask the owner if he would be willing to carry you the balance of the down payment you need.  The bank may or may not approve, however, as Damon rightly pointed out.

@Shane Albert

I don't know how common it is but I'm not the only one on BP that's getting 5% down loans. 

In my case I have been using the same small town bank for 30 years. In the last couple of years they given me 7 loans with 5% down and I have my builder building another one. 

Keep in mind that they didn't start out giving me 5%, it was 20%, then 15%, then 10% and now 5%. What really helps me is when I sold my first portfolio in 2007 I parked $250k in investments with them. So they know where some of my money is. 

I have been telling anyone who will listen to build a relationship with their small bank or credit union that does in house loans and stop chasing banks. I certainly wouldn't be where I am today had I keep chasing banks.

Last Friday I closed my 43rd loan with them a $300k new construction loan with 0 down, no points, 5% for 12 months. Bought 2 flops for $50k cash and gave 1 house to a house moving company and building a new office building with a projected profit of $350k. 

Is there any reason not to just write a big check I don’t want to write? I have the funds to get this deal under contract but I also feel that I could do more smaller properties faster with the 52k I would need for the down payment.