Lenders for Earnest Money Deposit / Down Payment

[Miranda G.]

Before you say 'you should have the money to get into a contract' I normally wouldn't be in this situation but I've just closed on a property that was all cash 2 weeks ago and a friend calls me on a property that's truly an amazing deal that I want to get into contract (has stable tenants renewing contracts above market, I can get for under market). I'm in process of selling another property with no mortgage now and have the financing lined up for the next purchase as I'll have ample equity in a few weeks. But to get into contract I need a EMD (which at the size of the new purchase is not small).

What are my options? I don't want to take out a personal loan if I can help it. And besides bridge loans, which I'm already looking into, are there any other creative ways to hack this? 

[John Clark]

Quote from @Miranda G.:

Before you say 'you should have the money to get into a contract' I normally wouldn't be in this situation but I've just closed on a property that was all cash 2 weeks ago and a friend calls me on a property that's truly an amazing deal that I want to get into contract (has stable tenants renewing contracts above market, I can get for under market). I'm in process of selling another property with no mortgage now and have the financing lined up for the next purchase as I'll have ample equity in a few weeks. But to get into contract I need a EMD (which at the size of the new purchase is not small).

What are my options? I don't want to take out a personal loan if I can help it. And besides bridge loans, which I'm already looking into, are there any other creative ways to hack this? 

If it’s such a sure thing great deal, why are you against a 90 day personal loan? Your pitch doesn’t pass the smell test. 

[Miranda G.]

I'm not trying to pitch anything. I'm asking for any insight. I don't have anything to prove here.

[John Clark]

Quote from @Miranda G.:

I'm not trying to pitch anything. I'm asking for any insight. I don't have anything to prove here.

You want a “hack” for covering a (per you) 30 day (at most, per you) gap in funds? For a sure-thing deal? But you say no to a quick and easy personal loan? Why?

[Miranda G.]

Quote from @John Clark:

Quote from @Miranda G.:

I'm not trying to pitch anything. I'm asking for any insight. I don't have anything to prove here.

You want a “hack” for covering a (per you) 30 day (at most, per you) gap in funds? For a sure-thing deal? But you say no to a quick and easy personal loan? Why?

Because it may take longer to sell the condo. EMD on the new purchase is >$100K. Most personal loans are <$50K. If you’ve got any ideas, would appreciate it.

[Logan Singleton]

If you have a stock portfolio and or retirement accounts, most brokerages will allow you to borrow up to 40% of the portfolio's market value. 

[Amir Khan]

Quote from @Miranda G.:

Before you say 'you should have the money to get into a contract' I normally wouldn't be in this situation but I've just closed on a property that was all cash 2 weeks ago and a friend calls me on a property that's truly an amazing deal that I want to get into contract (has stable tenants renewing contracts above market, I can get for under market). I'm in process of selling another property with no mortgage now and have the financing lined up for the next purchase as I'll have ample equity in a few weeks. But to get into contract I need a EMD (which at the size of the new purchase is not small).

What are my options? I don't want to take out a personal loan if I can help it. And besides bridge loans, which I'm already looking into, are there any other creative ways to hack this? 

 You may want to consider transactional funding. There are lending specialist (also private lenders) who will lend you funds for EMD etc for short-term only. Charges are high, but if you don't want a personal loan to cover EMD, then this could be an option for you. Good luck!

[Bryan Maddex]

Quote from @Amir Khan:

Quote from @Miranda G.:

Before you say 'you should have the money to get into a contract' I normally wouldn't be in this situation but I've just closed on a property that was all cash 2 weeks ago and a friend calls me on a property that's truly an amazing deal that I want to get into contract (has stable tenants renewing contracts above market, I can get for under market). I'm in process of selling another property with no mortgage now and have the financing lined up for the next purchase as I'll have ample equity in a few weeks. But to get into contract I need a EMD (which at the size of the new purchase is not small).

What are my options? I don't want to take out a personal loan if I can help it. And besides bridge loans, which I'm already looking into, are there any other creative ways to hack this? 

 You may want to consider transactional funding. There are lending specialist (also private lenders) who will lend you funds for EMD etc for short-term only. Charges are high, but if you don't want a personal loan to cover EMD, then this could be an option for you. Good luck!

 I love when aged posts get resurfaced with a recent update sometimes!  Can offer potential learning for others. 

OP @Miranda G. I am fairly certain no longer needs funding, but for any others that stumble across this post since it has been resurfaced, you need to know that Unsecured Borrowing is not allowed by any traditional loan options (fannie, freddie, USDA, FHA, VA). Those funds cannot be used to help you with down payment or closing costs.

Also, please do not get "gift funds" from a family member if you plan to repay that gift. That is considered mortgage fraud and is probably one of the highest forms of mortgage fraud that happen.  Instead, have your family record a private note on your existing property. Those funds are valid if you supply the note and mortgage/D.O.T. 

Valid options would be:
-Cash Out Refinance on a vehicle.
-Heloc on exiting property.
-Bridge Loan on exiting property.
Some lenders will do 1 loan on both properties and allow you to payoff part of that loan once you sell the exiting property. This is called Cross Collateralization loans. Way underused! 
-Private Money loan on exiting property, make sure you get the mortgage/deed of trust recorded. Lender will want to see a copy of the NOTE as well to use your payment in debt to income on your new purchase. 
-401k Loans are a fantastic place to get access to short term funds. It is not taxes, does not report to credit, does not affect your debt to income! Many 401ks will allow you to borrow up to 50% of the value of your 401k or $50k, which ever is less. Has to be with your current employer. 
-Someone stated a margin account against your investments. Also does not report to credit or affect debt to income.

Risky option - do a IRA or 401k rollover to your checking account. You have 60 days before you have to put this money back into a qualified plan. Miss by a day and you are paying a hefty tax bill (income taxes plus early withdraw penalty if you are younger than 59.5 years old). Talk to your CPA / Financial planner about this option as it does carry risk!

If you are purchasing an investment property, consider bringing on a partner to your LLC. Many DSCR lenders do not care where your deposits come from, just that you have funds to close.

Happy viewing of an old post!