10 Ways To Fund Your Next Investment Property Purchase

10 ways to fund your next investment property purchase:

1. Traditional financing with 20% down. This is the most common form of financing for buy and hold investors. Also a good strategy for flipping. The interest rate and financing costs will typically be lower than other options.

2. Construction loan. Similar to #1 above but increases leverage and reduces out of pocket expenses by rolling the cost of rehab into the loan. 20% down payment plus renovation is typical.

3. Commercial Loan. Typically a maximum of 5 year term. Sometimes fixed and sometimes floating with the prime rate. This is a good option for construction loans or self employed individuals since they will typically view an applicant more holistically than a conventional lender. Meaning you get credit for assets, years in business, years investing, etc.

4. Hard Money-Can be expensive, but if the deal is attractive to the lender, they can be a great option for short term holds.

5. Family, Friends, Angels. Leverage your relationships with the people that know and trust you. Win/Win!

6. Seller carry. Have the current owner tote the note while you renovate. Offer a profit split to the owner at sale.

7. Sweat for equity. You could provide GC, Real Estate, or a multitude of other services in return for a piece of the action.

8. Solo 401k using loan feature. By converting your IRA to a solo 401K you can harness the features of an employer 401K, including a loan of up to 50% or $50,000 to be used for any use you see fit. And the interest is paid back to the account. So essentially, a free loan.

9. Self Directed IRA-buy investment property within your IRA

10. Traditional 401k using loan feature. Same as 8 above.

This list just scratches the surface of the many ways to finance or acquire investment property.

What’s your favorite strategy?

Disclaimer: I am not an attorney, accountant, or financial advisor. This information should not be construed as legal or financial advice. Contact a licensed attorney, accountant, or financial advisor with questions regarding these options.