How to get a second income home without 20% down?

Question

I am already living in my my own home that I purchased about three months ago and finished the renovations in it.

I have found a property that I am positive I can cashflow $7-750 a month.  The issue is that I don't have 20% to put down on the property. I have heard that I could make the property my second home and main residence and then just rent the one I am in but I was under the impression that I would have to live in it for a year.

I suppose I could do that but I have a friend who is a girl that I was hoping to have manage the home. (tenants bills ect. and give her a break on rent) I would rather just have it as an income property and avoid any legality issues.

Are there lenders that will do this type of loan for me? If so, what should I recommend or avoid when attempting to take out this type of loan?

Thank you!

Account Closed · Answer

Friends and family may be the only place to find a no money down loan. Be careful. Do your homework and double check all of your numbers backward and forward and use the tools Bigger Pockets provide.

Good luck.

Cody Barrett · Answer

Ben's course on creative financing and valuing real estate was an incredible help on how to structure these kinds of deals for me.  Really it comes down to who is in your phone. How many investors, contractors, millionaires, mentors, and the like do you have in your contacts? None? Network network network network.  Word of mouth while offering value to others will help big time.  Keep finding solid deals to bring up in conversations with those people and when the right deal hits the table you should have some interest.

Ben Leybovich · Answer

It's called creative finance...

Justin Wilcox · Answer

I don't come from a lot of money family wise. I've managed to stay debt free my entire life through college and getting my MBA. I would think maybe my Dad might do it, but he is so risk adverse that I don't think he would.

As for other strategies, I suppose I could ask the owner if they would finance?

The only other option I can think of is to re appraise my house I am in now with all the upgrades and remodeling I've done and attempt a HELOC and hope that it would be enough for 20% for a rental property to get conventional loan and rate.

Andrew Michael · Answer

No lender is going to give you a no money down deal especially on an investment property.  Even with a strong local bank relationship they are still going to require you to have some skin in the game.  For this deal you either need to partner with someone or look into owner financing options.  Have you explored any of these strategies?

How to get a second income home without 20% down?

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