My name is Neha and I am planning to purchase a triplex in Massachusetts as an investment property. It is a gut renovation and everything is brand new. I also own another triplex for more than a year now. The triplex is selling for 330k and makes a monthly rental income of $3,700. I want to buy it with a down payment as low as possible. Can anyone tell me what my options are? Is it possible to get a loan with 20% down?
@Neha S. $330K for a renovated 3-plex? That sounds VERY low in price, unless it's west of Springfield, or possibly south coast.
Are you comfortable with the area crime wise? Are the rents able to support that deal?
Most investment purchases will require a 25-30% down payment.
Do you mean 330K before renovations?
@Charlie MacPherson It's east of Springfield and it's towards Boston. The ROI is more than 15%. The rents are good too. The only problem is with the down payment. Is there any way I can put 20% down or less?
@Rich N. Thanks for replying. I spoke to a number of banks and they are asking me for minimum of 25% down payment.
@Julia Ann It's 330K after renovations.
@Neha S. I've reached out to my lending contacts who have all told me that 25% is required for non-owner-occupied.
One thing to try is to find a local bank with a presence in the community where the property is located and ask about a portfolio loan. Those MIGHT have looser standards.
@Charlie MacPherson Thank you for reaching out to your lending contacts. I will work on finding a few local banks who can do lower than 25%.
@Neha S. Wow, that was quite a deal! How did you source it?
I'm sure you know this already, but you can do a much smaller down payment if you purchase it as your primary residence and move into one of the units. You'll be required to live there for at least 12 months, after which you are free to move out and keep it as a full rental.
@Julia Ann Yeah it definitely is a good deal and I don't want to let it go. One of our friend's friend owns this property and it isn't listed yet.
Owner finance, then cash out refi and pay off the owner? The time lines on this won't be quick though.
@James Marshall Thanks for the suggestion. We live in a property that we own and the one I am looking to invest, is not a great place to live. It is just for an investment purpose.
@Matt K. This is something I could give it a try. Thanks for the suggestion.
Originally posted by @Neha S. :
@Matt Katsaris This is something I could give it a try. Thanks for the suggestion.
If you are getting a good deal money might not be the motivation for the sale. Demonstrate to the seller the "value" in doing owner finance... whatever that may be to them to increase the odds.
@Matt K. Yes, I will definitely. Thanks Matt.
@Neha S. I just talked to another lender who can do 20% down. It's Lisa Larkin at Shamrock Financial. I'll PM her contact info.
Just for full disclosure, they are not paying me for the referral.
@Charlie MacPherson Thank you so much for your help Charlie. I did speak to Lisa.
@Jason D. Do you know anyone who can do with 15% down?
@Jason D. That would be great if you can find the contact information so that I can contact the lender.