Rental purchase financing

4 Replies


I found a duplex I'd love to purchase, however, I'm having difficulty coming up with the 20% down most lenders require for an investment property.  My credit is excellent, I just don't have the down payment funds currently.  Any ideas to overcome this barrier?

Thank you!!

First spot I would look is at any equity you may have in your home if you have any. 

Second, think about your 401k. You will pay yourself on the interest plus rental property has many more benefits and generally speaking better returns than the market over a longer period of time

Third, you could always ask for owner financing. This is definitely pending the situation they are in. Usually a small down payment and favorable terms then refi out in 5ish years. 

Fourth, don’t be afraid to ask a friend. That’s what I did and my buddy and I now own 9 units collectively. They could also get the money out of their 401k or any current equity in their personal home

Let me know if you have any questions and good luck!

@David Lewis based on your post it seems like you are buying a property at market value? Do I have that right? Have you looked into the BRRRR method? Buying a property at market value is not what most successful investors would do for the very problem you are facing - the downpayment. Not to mention that if you buy a property AT MARKET value, then you are actually paying OVER MARKET value because of closing costs. I hope this makes sense how I am describing it. Try looking into some different strategies (mainly buying off market) to try to find a better route. Thanks!

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Piggy backing off @Andrew Postell, definitely look into BRRRR! If the property has any value-add opportunities, you could go hard-money, increase the value of the property and then refinance into a long term loan, paying off your hard money. This allows you to make a cash offer with the hard money, giving you the opportunity to negotiate a lower purchase price. Once you refinance, your down-payment is wrapped up into the LTV and if all goes well, you can actually pull cash out of the deal. This cash then becomes the down payment on your next property, in which you rinse and repeat! Ofcourse, you have to do your due diligence and find a good deal from the get go!

Definitely recommend reading/listening to David Greene's BRRRR book!