Where Do You Find the Funds for the Down Payment?

Creative Real Estate Financing
1yFollow

Where Do You Find the Funds for the Down Payment?

Clint Miller
Member since 2024 · 126 posts · 9 votes

Seller financing opens up great opportunities for real estate investors, but coming up with the down payment can still be tricky.

1Reply
13 views

Most Popular Reply

Gregory SchwartzBusiness Member
Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
1y

I have 1 partner who provides up to 75% of the down payment, however, my goal has always been to live below my means, save money, and invest the saved money as a downpayment. 

In the last 5 years, we've invested over $300k of savings toward down payments and rehabs. 

[email protected]443-812-0357
Schwartz Realty Group5116 Reviews
WebsiteView Page
3Reply
See this reply in the discussion

15 Replies

Jump to latestLatest
  • Gregory SchwartzBusiness Member
    Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes
    1y

    I have 1 partner who provides up to 75% of the down payment, however, my goal has always been to live below my means, save money, and invest the saved money as a downpayment. 

    In the last 5 years, we've invested over $300k of savings toward down payments and rehabs. 

    [email protected]443-812-0357
    Schwartz Realty Group5116 Reviews
    WebsiteView Page
    3Reply
  • Mike GrudzienPro Member
    Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
    1y

    Clint,
    Was that a question or a statement?
    Mike

    1Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Clint Miller:

    Seller financing opens up great opportunities for real estate investors, but coming up with the down payment can still be tricky.


     I do not see why a down payment in real estate is "tricky". You typically need a down payment for many things you buy. Its not tricky, it just takes discipline to save $.

    7e investments53 Reviews
    WebsiteView Page
    2Reply
  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    1y

    Down payment funds may seem tricky to those who get lured in by the countless con artists on social media selling the notion 100% financing using other people's money is easy. There's also plenty of lenders who falsely represent the true capital requirements to originate their loans or are merely up front fee collectors.  Ultimately buying real estate without down payment funds is far trickier of a process.

    [email protected]
    2Reply
  • Alan AsriantsBusiness Member
    Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
    1y
    Quote from @Stuart Udis:

    Down payment funds may seem tricky to those who get lured in by the countless con artists on social media selling the notion 100% financing using other people's money is easy. There's also plenty of lenders who falsely represent the true capital requirements to originate their loans or are merely up front fee collectors.  Ultimately buying real estate without down payment funds is far trickier of a process.


     If you don't have the funds yourself, you need to develop a solid relationship with those that do. They also have to trust you.

    [email protected]267-767-0111
    Alan Asriants - New Century Real Estate 590 Reviews
    View Page
    0Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    1y

    I've bought 5 houses by using 401k loans as down-payments. I've bought some houses with 0% interest for a year credit cards and a few with consumer lines of credit from banks. I use all the rental cash flow to pay these loans off asap, then repeat. I've also used a HELOC to buy a couple houses. And don't forget about tapping into equity if you have any. I bought 14 houses basically for free by harvesting the equity in my houses by doing 5 cash out refis. I use that cash to scale up and buy more cash flowing houses with zero $ out of pocket. That's how I've grown my portfolio of SFR without using hardly any of my own money.

    1Reply
  • David F.
    Member since 2018 · 113 posts · 135 votes
    1y

    I work 2 jobs. 1 to live off, and the other for down payments. I've been able to buy a rental house a year for the last 5 years. I figure REI is like most other things in life… hard work and persistence will get you there. A tiny % of people can avoid the hard work by getting creative or lucky, but most have to work hard, take action, and be patient.

    2Reply
  • Cory KingBusiness Member
    Real Estate Agent · Knoxville, TN · Member since 2021 · 164 posts · 77 votes
    1y

    there's people out there who will fund downpayments for equity in the deal or a preferred return. hit up local meetups and facebook groups and have some conversations

    0Reply
  • Jeremiah Dunakin
    Member since 2022 · 186 posts · 192 votes
    1y
    Quote from @John Morgan:

    I've bought 5 houses by using 401k loans as down-payments. I've bought some houses with 0% interest for a year credit cards and a few with consumer lines of credit from banks. I use all the rental cash flow to pay these loans off asap, then repeat. I've also used a HELOC to buy a couple houses. And don't forget about tapping into equity if you have any. I bought 14 houses basically for free by harvesting the equity in my houses by doing 5 cash out refis. I use that cash to scale up and buy more cash flowing houses with zero $ out of pocket. That's how I've grown my portfolio of SFR without using hardly any of my own money.


     John I’m so glad to see others pursue this way. I have one single family rental now. I used 401k loan to get money for down payment and repairs. It is the best money I’ve ever spent. I can take two loans out and I am looking to do it again as my first loan is about paid for. I am paying original loan off two years early. Even if I do exact same thing I will have two houses instead of one to pay loan back. Again very nice to see others pursue this avenue 

    0Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    1y
    Quote from @Jeremiah Dunakin:
    Quote from @John Morgan:

    I've bought 5 houses by using 401k loans as down-payments. I've bought some houses with 0% interest for a year credit cards and a few with consumer lines of credit from banks. I use all the rental cash flow to pay these loans off asap, then repeat. I've also used a HELOC to buy a couple houses. And don't forget about tapping into equity if you have any. I bought 14 houses basically for free by harvesting the equity in my houses by doing 5 cash out refis. I use that cash to scale up and buy more cash flowing houses with zero $ out of pocket. That's how I've grown my portfolio of SFR without using hardly any of my own money.


     John I’m so glad to see others pursue this way. I have one single family rental now. I used 401k loan to get money for down payment and repairs. It is the best money I’ve ever spent. I can take two loans out and I am looking to do it again as my first loan is about paid for. I am paying original loan off two years early. Even if I do exact same thing I will have two houses instead of one to pay loan back. Again very nice to see others pursue this avenue 

    Yeah, it’s worked out well for me. Several people told me I shouldn’t do this, but it’s one effective way that helped me scale up to 29 SFR in 9 years. I pay my loans off aggressively with the rental cash flow then keep repeating. For me it’s been the fastest way to scale up along with my cash out refis to harvest the equity. 
    1Reply
  • Dominic Mazzarella
    Investor · Hendersonville, NC · Member since 2016 · 498 posts · 285 votes
    1y

    Here are a few strategies to consider for funding a down payment:

    1. Partnering: Like Gregory mentioned, finding a partner who can contribute to the down payment in exchange for equity or a profit share is a solid option.
    2. HELOC or Cash-Out Refi: If you have equity in your home or another property, a home equity line of credit (HELOC) or cash-out refinance can provide the funds you need.
    3. Private Money: Reach out to friends, family, or private investors who may be interested in lending you the down payment with a promissory note.
    4. Seller Second: In some cases, the seller might agree to finance a portion of the down payment as a second mortgage.
    5. Live Frugally and Save: It takes time, but reducing expenses and setting aside funds from your income is a tried-and-true method.

    The right approach depends on your situation and deal structure, but a mix of creativity and resourcefulness can go a long way. Good luck!

    0Reply
  • Anade Davis
    Member since 2024 · 20 posts · 8 votes
    1y

    100% true

    0Reply
  • Stanley Yeldell
    Member since 2025 · 116 posts · 52 votes
    1y

    Partner with an Equity Investor:

    Bring in a partner who provides the down payment in exchange for a share of the deal’s profits.

    1Reply
  • Haley Brodecki
    New to Real Estate · Redondo Beach, CA · Member since 2025 · 2 posts · 0 votes
    1y
    Quote from @John Morgan:

    I've bought 5 houses by using 401k loans as down-payments. I've bought some houses with 0% interest for a year credit cards and a few with consumer lines of credit from banks. I use all the rental cash flow to pay these loans off asap, then repeat. I've also used a HELOC to buy a couple houses. And don't forget about tapping into equity if you have any. I bought 14 houses basically for free by harvesting the equity in my houses by doing 5 cash out refis. I use that cash to scale up and buy more cash flowing houses with zero $ out of pocket. That's how I've grown my portfolio of SFR without using hardly any of my own money.

    Hi John,

    this is great to hear. I'm new to all of this and looking at 401k loans and HELOC as options. Were you investing with a vacation loan / 10% down? I'm curious what markets you've invested in if you don't mind sharing. Thanks!

    0Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    1y
    Quote from @Haley Brodecki:
    Quote from @John Morgan:

    I've bought 5 houses by using 401k loans as down-payments. I've bought some houses with 0% interest for a year credit cards and a few with consumer lines of credit from banks. I use all the rental cash flow to pay these loans off asap, then repeat. I've also used a HELOC to buy a couple houses. And don't forget about tapping into equity if you have any. I bought 14 houses basically for free by harvesting the equity in my houses by doing 5 cash out refis. I use that cash to scale up and buy more cash flowing houses with zero $ out of pocket. That's how I've grown my portfolio of SFR without using hardly any of my own money.

    Hi John,

    this is great to hear. I'm new to all of this and looking at 401k loans and HELOC as options. Were you investing with a vacation loan / 10% down? I'm curious what markets you've invested in if you don't mind sharing. Thanks!

    My first properties were STR in Branson, MO. I paid cash for them (130k and 56k). I got the cash from a HELOC, Roth IRA and 401k loans. Then did cash out refis to get all my $ back. Then I’d take that cash and buy more and more properties with either putting 20% down or paying cash then doing a BRRRR. I kept recycling equity to buy more and more cash flowing houses since I didn’t have any savings. lol. I’d pay my 0% interest for a year credit card loans and 401k loans off asap then repeat. It was an easy way to scale up with no money out of pocket. I just keep using my rental cash flow to pay off these short term loans. Dave Ramsey probably wouldn’t approve, but it’s how I was able to scale up to 29 buy n hold SFR. The cash flow now is good enough for me to retire. 
    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free