Looking to Finance a Duplex with $0 money down in Albany NY Area

14 Replies

Looking to get into owning rentals. Found some great duplexes in the greater Albany, NY area. Looking for advise on how to fund them with $0 out of pocket for a down payment. Any creative ideas out there?

@Donald DiBuono   Yes, great suggestions from Jaysen above!  

Also keep in mind Donald, make sure you have reserves to run the rental business.  I generally shoot for $10k per property.  Eviction expense, loss of rental income and a refrig or washing machine all happening at once can run $5k easily.  Doesn't happen often, but with more properties and time, it will happen.

Of course, there is also $2-3k in closing costs on average (inspection, appraisal, insurance and tax downpayments, utilities deposits, etc).

- Tom

If the property is good candidate for forced appreciation, get hard money loan for buy and rehab cost.  Rent and Refi out.

@Jaysen Medhurst i have found some really good properties with good CAP Rates that i currently do not have the cash for but would love to purchase. I am 99% done with a flip property that should hit the market in a week or so but a 25% down payment will crush me as i am looking to scale. Any other creative ideas?

Originally posted by @Tom S. :

@Donald DiBuono   Yes, great suggestions from Jaysen above!  

Also keep in mind Donald, make sure you have reserves to run the rental business.  I generally shoot for $10k per property.  Eviction expense, loss of rental income and a refrig or washing machine all happening at once can run $5k easily.  Doesn't happen often, but with more properties and time, it will happen.

Of course, there is also $2-3k in closing costs on average (inspection, appraisal, insurance and tax downpayments, utilities deposits, etc).

- Tom

This..  Almost impossible to manage a rental with no money.

@Donald DiBuono , I don't know about "most," but both strategies are nearly limitless.

Owner financing: you can ask that the owner finances the down payment at terms that work for you. Or, if they own the property free and clear, see if they'll do 100% owner financing. This has some advantages for the seller like lower tax liabilities and a continued income stream, even after selling the asset.

Equity partner: a partner puts up the cash, you...well, you do basically everything else. The profits are split at whatever percentages work for both parties. Since I think you're relatively new, probably 75/25 or 60/40 in favor of the equity partner. 

@Donald DiBuono   Chiming in as I've done a number of owner finance purchases next door to you in VT. 

 I typically offer 5-20% down, 5-6% interest rate, 30 year amortization, 5-7 year balloon.  The details can be negotiated of course, but I've found these terms spark interest.  My average percent down is 10%, and personally I've never had any takers at 0% down.

Get it appraised, inspected, and use a good attorney that has experience with these transactions.  And of course, make sure it's a deal, independent of the financing offered.

Good luck!

Originally posted by @Jaysen Medhurst :

@Donald DiBuono , I don't know about "most," but both strategies are nearly limitless.

Owner financing: you can ask that the owner finances the down payment at terms that work for you. Or, if they own the property free and clear, see if they'll do 100% owner financing. This has some advantages for the seller like lower tax liabilities and a continued income stream, even after selling the asset.

Equity partner: a partner puts up the cash, you...well, you do basically everything else. The profits are split at whatever percentages work for both parties. Since I think you're relatively new, probably 75/25 or 60/40 in favor of the equity partner. 

 Thanks for this information - I've been looking for partners but trying to figure out how to structure deals. You mentioned profits are split 75/25 or 60/40 in favor of the one bringing in down payment. What about equity in house - assuming house gets sold in future are profits from the sale also split similar way to profit split? 

I've seen splits in the following way: if you need 100k to close, you get profit split and equity split based on whatever you bring to the table. So if you bring 20k to the table you get 20%. If someone else brings 30k to the 100k then they get 30%. So now there are 50k left and whoever brings that will get 50% of profit and equity split. 

@donald

Fyi most closing costs here have been minimum $6k for a multifamily. If you shop around for inspection, attorney and title, you can save ~$300 more. This does not include Radon, sewer, or pest inspection.

Also, home insurance here is always higher than what the banks quote. Expect ~$1000-1200 for a year on these old houses.

Keep in mind taxes are pretty high... 3.4 in some areas, and you have to prepay that as well. So some taxes may be $6-8000 on a ~$200k house