I was catching up on some old shows on the DVR and on Discovery Channel and the star of the show Undercover Billionaire, Glenn Stearns said that most people buying real estate think you have to put down 20 to 30% down but that's not true and on the show he only put down 10% and got another $10,000 to fix the place up wrapped into the loan.
I listen to a lot of podcast about real estate and I keep hearing host and guest who say they only put down 5% or less as a down payment.
As someone who wants to do invest in cash flowing real estate I have always thought it was true that as investors we need 30% for the down payment, but I never seam to have my act together to save up the money to get started before I have some emergency that needs my money (I manifest my own bad luck). But a 10% down payment I can come up with in short order and keep doing as long as it's really doable.
What am I missing...?
Please educate me on my missed information so I can finnally get stated on my path to wealth.
@Wade Alderson FHA loan requires 3.5%, VA loan requires 0%, seller financing can be done at 10%, etc
@Bryan S. I know that FHA is for people living in the property. But in the show Glen was not living in the house before he flipped it. Do you think he got a FHA loan and was able to do that because there are no FHA police? Also doesn't FHA make you pay a kind of fine for paying off the loan before 12 months? (What I do not know and wish to learn there are whole books about I just can't find them)
Typical Fannie Mae and Freddie Loans are 75% LTV for 4 units and under. Most brokers worth a salt can make this happen. If you are looking to get down further to the 10% range for down payment you are going to have to claim that you are moving into the property and if you want money to fix it up you'll need several contractors to get bids from before you close to do a 203b loan where they wrap the fix up money into the loan and pay the contractor out of escrow. You'll probably need to have a longer closing time to make this happen.
With larger deals, above 4 units, I'm not sure it's available without seller financing. The best way to get seller financing is by door knocking and hitting the pavement.
Brandon always says that the people that find the good deals are willing to do what everyone else won't.
A flip? Definitely not FHA, I missed that part. They were almost definitely using hard money or private money for this deal.
Not only can you get 10% down loans you can get 5% down. It's not hard because I have been doing it for over 20 years. The secret (which actually is not a secret because any seasoned investors knows this) is you need a small bank or credit union that keeps loans in house.
Some Fix and flip loans will go up to 90% of the purchase and will fund 100% of the rehab. They will typically do this to 75% of ARV. Get with a lender that specializes in fix n flip loans. You can do these terms every day of the week!!!
I got a conventional loan a few years ago for 5% down.
Learn CREATIVE financing techniques then find MOTIVATED sellers who will accept 10% or less down.