Investor · Roselle Park, NJ · Member since 2015 · 27 posts · 13 votes
I am currently 22 and I have a triplex in Elizabeth NJ that I purchased with an FHA loan. Im looking to acquire a another 3 family in Elizabeth but am encountering problems using private money to fund the down payment. My lender told me I would need the standard 25% down payment and 6 months reserve PITI for the property I am purchasing 2 months reserve for my 1st property and the money can not be gifted. The house I am looking to purchase is about 160k and I am about 10-15k short of having enough for down payment, closing and reserves. Any tips on how to go about using private money to fund the down payment?
Lender · Jersey City, NJ · Member since 2016 · 68 posts · 24 votes
9y
A private money lender will most likely not give you the money you need. They want you to have skin in the game.
As said above, your best bet is to go to a bank and try to get the down payment. Or work with someone that can get you 90-100% of the purchase price. If you want 100% of the purchase price and rehab funds be prepared to take a hit on the interest rate. However, I'm sure you see how getting into a property with no money down can be very beneficial despite the interest.
Rental Property Investor · Knoxville, TN · Member since 2015 · 76 posts · 14 votes
9y
@Neil Patel Check with other banks. We found a local bank that gave us a portfolio loan that did not have as many strict guidelines. We put down 20% and were able to borrow the downpayment. My husband and I used a HELOC from our primary residence to fund the down payment on our first rental. We are using the BRRR method though. We have plans with our lender to refi in a couple months to get most of what we put in it back to pay back our HELOC or do it again. We are trying to find more money to get more BRRR properties. Private lenders (family and friends) is what we are hoping for.
Lender · Jersey City, NJ · Member since 2016 · 68 posts · 24 votes
9y
A private money lender will most likely not give you the money you need. They want you to have skin in the game.
As said above, your best bet is to go to a bank and try to get the down payment. Or work with someone that can get you 90-100% of the purchase price. If you want 100% of the purchase price and rehab funds be prepared to take a hit on the interest rate. However, I'm sure you see how getting into a property with no money down can be very beneficial despite the interest.
Investor · Roselle Park, NJ · Member since 2015 · 27 posts · 13 votes
9y
Hi @Luis Roel I do have 25% 40k for the down payment required but i wont have enough by the time the house would close for the 6 month reserves PITI on purchase home and 2 month PITI on 1st home.
Investor · Lake Worth, FL · Member since 2014 · 378 posts · 184 votes
9y
Try a credit union. Sounds like you are dealing with a major bank with strict guidelines. You should have no problem with 25% down if the property valuation is right. I use hard money (20%) down, heloc funds, partners with skin in the game and always looking for private money. Check at your local REIA also for referrals to lenders. My current flip was with a private lender for 10% and 20% down payment. I fund my re-hab expenses myself and lenders will check out your experience and quality of work. Good luck, you are heading in the right direction but always check with multiple lenders. It pays to see what the competition is offering.