Financing second STR

[Justin Melton]

We own one str in the Midwest (small college town) and it has done very well.  We actually purchased it for a place for my parents to stay occasionally but they are going to purchase something else.  Anyway, we are wondering about buying #2.  There is a house for sale in the same market that is for sale for about $120k.   AirDNA says $40k.  Rabbu says $17k.  Knowing the market Im confidently saying conservatively $25k and optimistic would be $35k annual revenue.  We self managed and my teenage daughters clean it.  It is proximate to a university and hospital.    

We aren’t flush wish cash right now for a down payment.  We could probably swing 10%. Any advice on down payment options with low down payment?  Thanks in advance!  

[Collin Hays]

Quote from @Justin Melton:

We own one str in the Midwest (small college town) and it has done very well.  We actually purchased it for a place for my parents to stay occasionally but they are going to purchase something else.  Anyway, we are wondering about buying #2.  There is a house for sale in the same market that is for sale for about $120k.   AirDNA says $40k.  Rabbu says $17k.  Knowing the market Im confidently saying conservatively $25k and optimistic would be $35k annual revenue.  We self managed and my teenage daughters clean it.  It is proximate to a university and hospital.    

We aren’t flush wish cash right now for a down payment.  We could probably swing 10%. Any advice on down payment options with low down payment?  Thanks in advance!  

If it sounds like a decent deal, you need $15K-ish to close. Borrow it from your 401K. I did this once to buy a cabin.  Borrowed $50K if I recall correctly.  Early withdraw it from your iRA. Yeah, you pay taxes and penalty on it, but you're going to eventually pay taxes on it anyway. The only thing you are getting hung with is a 10 percent penalty.  In the scheme of life, $1500 isn't going to make any difference.  Sell a car and use the proceeds, or get a loan against your car if it's paid off.  Or do a cash out refi on your existing property and use the equity to buy the house.