short term down payment loan until my other property sells
6 Replies
Matt Riley
Rental Property Investor from Austin, TX
posted about 1 year ago
Question for you guys - I've found an investment property that I REALLY want, believe is a great deal, and will be very profitable long term. Purchase price $480k. So need $96K for 20% down payment. I own another property (no mortgage) that I've listed for sale at $139k, so obviously that would cover the down payment, problem is it's not going to sell before I need to make an offer on this new property (which is now). What is the best way to go about getting a short term $96k loan for the down payment on my new property, which I will be able to pay back as soon as my old property sells? Thanks so much everybody!
Chris Mason
(Moderator) -
Lender from Oakland, CA
replied about 1 year ago
Lurkers: If you have a bunch of equity sitting around doing nothing, at the very least get a maxed out HELOC. They're available with no closing costs, sometimes not even the appraisal.
Hi @Matt Riley , I'll assume you don't have that HELOC, or you wouldn't be asking the question. :)
You could write the offer contingent upon the sale of the other property. You could get a little creative, like "Matt to decrease asking price of the property pending sale by $10k upon acceptance of this offer, and will accept the first offer from a preapproved buyer at that price point" to let them know you're serious.
OPM or a HML on the property pending sale. Unsecured borrowed funds can't be a down payment paired with a FNMA loan, but secured borrowed funds can be. DTI would still need to work.
You could write the offer contingent upon getting a HELOC. Texas has wonky HELOC rules that I'm not up to speed on.
None of the 3 are perfect, it's possible you simply will not be the strongest offer, but those are some options.
Todd Rasmussen
Rental Property Investor from La Verne, CA
replied about 1 year ago
Could Matt cross collateralize? Or is the sale going to mess that up for a reason I'm not considering?
Chris Mason
(Moderator) -
Lender from Oakland, CA
replied about 1 year ago
Originally posted by @Todd Rasmussen :@Matt Riley @Chris Mason
Could Matt cross collateralize? Or is the sale going to mess that up for a reason I'm not considering?
No reason that couldn't work in theory, but that would probably be slower than a HELOC + vanilla mortgage, or sell and then buy (assuming the other property is priced to move, not priced to go stagnant).
John Teachout
Rental Property Investor from Concord, GA
replied about 1 year ago
You could put a small amount down as earnest money and then work all the resources to come up with the funds.
I assume you have no assurance your offer will be accepted in the first place?
Damian Gutierrez
from Southern California
replied about 1 year ago
@Matt Riley Hard money sounds like Hard Money is the way to go. If you plan on selling your property within the next month or two you wouldn’t be charged much interest on the Hard Money anyway. Just have to be careful with points upfront.
Alan Nelson
Investor from Indianapolis, IN
replied about 1 year ago
@Matt Riley, did you find funding for the Austin deal?