How are you getting your cash for down payments?

12 Replies

How are you raising cash for a 25-30% down payment to get to the LTV of 70-75%? I am new to financing my properties through any other way than conventional financing and I have all my cash tied up in down payments on properties. I buy and hold typically. I need 30% for a new property and I don't know how to get it. Any tips you can provide would be helpful. Am I doing this all wrong?

From flipping the same cash over and over...and making new friends (profits) every time.  I only needed one new cash, the rest is reusing the same cash over and over...and making friends with each use.

Whatever market you are in, all you should need is one set of cash for the first deal.  After that, you should be using the same cash over and over.  Cash should never be the problem...unless you're spending your seed money.

hey I am super new but what about tapping into the equity on your other properties? the line of credit would allow you to use it for down payment and once paid off, it is replenished to be used again.

Originally posted by @Joe Villeneuve :

From flipping the same cash over and over...and making new friends (profits) every time.  I only needed one new cash, the rest is reusing the same cash over and over...and making friends with each use.

Whatever market you are in, all you should need is one set of cash for the first deal.  After that, you should be using the same cash over and over.  Cash should never be the problem...unless you're spending your seed money.

 Just so I'm sure I understand, does that work with buy and hold? 

Originally posted by @Wendy Schultz :
Originally posted by @Joe Villeneuve:

From flipping the same cash over and over...and making new friends (profits) every time.  I only needed one new cash, the rest is reusing the same cash over and over...and making friends with each use.

Whatever market you are in, all you should need is one set of cash for the first deal.  After that, you should be using the same cash over and over.  Cash should never be the problem...unless you're spending your seed money.

 Just so I'm sure I understand, does that work with buy and hold? 

 Modified...yes

Originally posted by @Matt Maniaci :

hey I am super new but what about tapping into the equity on your other properties? the line of credit would allow you to use it for down payment and once paid off, it is replenished to be used again.

Thank you. I have thought of doing that but haven't pursued it yet. I don't do a lot of rehab work so my properties don't gain a ton of equity right away. Maybe that's part of the trick. 

Originally posted by @Grant Rothenburger :

@Wendy Schultz Are you able to cash out refinance any other properties?

I think that will be my next step. I haven’t yet but looks like I should try. Thanks 

All I have ever known to do is just save for down payments. Best to always buy properties that give you instant equity gains after repairs. Even by using hard money to purchase and then refinancing into a 30 year loan usually I'm out around 10k from what I started with (perhaps you can get zero out of pocket deals if they are discounted enough). Then there is the often unmentioned reserve capital. I think lenders have backed off a little since the last time I bought but with each property purchased you need even more money than you started out with since more reserves are needed. If you are getting your loans down to 75% LTV by putting 25% down then there is no equity to take out and use for another property.

Originally posted by @Wade G. :

All I have ever known to do is just save for down payments. Best to always buy properties that give you instant equity gains after repairs. Even by using hard money to purchase and then refinancing into a 30 year loan usually I'm out around 10k from what I started with (perhaps you can get zero out of pocket deals if they are discounted enough). Then there is the often unmentioned reserve capital. I think lenders have backed off a little since the last time I bought but with each property purchased you need even more money than you started out with since more reserves are needed. If you are getting your loans down to 75% LTV by putting 25% down then there is no equity to take out and use for another property.

 Thank you! This is helpful

@Wendy Schultz

I have been investing in index funds since 2013 (although the market has been terrible over the past few months haha).. always living way under may paycheck 

I plan on keeping the money there until my next purchase 

Then I look to refi out of my current FHA loan, into another fha purchase- then go conventional

@Wendy Schultz I save money from my W2 job and reinvest all our cash flow into down payments. Not super creative, but has been working for us to add one property per year.

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