How To Fund Downpayment for Next Rental Property

Question

Hey guys! We just closed on our first rental property last week. We will be cash flowing about $450 per month. However, my parents lent us the downpayment + closing costs, so most of our cashflow will be going directly to them for a little while.

I just recently came across a quadplex in my area that is fully leased, grossing $3,675 per month, while the landlord pays gas/water, and electric/internet are tenant paid. They are asking $350,000. I am thinking about offering $320,000 based on my current evaluation of the property. My only issue is coming up with the 20%-25% down. I do not want to borrow any more from my parents, but also do no have the funds personally to bring to closing.

What routes could I be looking into?

Thanks!

Joe Funari · Answer

@Branden Barber Welcome to why REI has a high barrier to entry. But don't get discouraged. I recommend you reach out to my recommended lender, Andrew Postell @Andrew Postell. He is a fellow investor and lender specializing in investment properties here in Texas. At lease have a conversation with him. He can discuss creative ways for you to save the monies for your next rental. I and many of my clients have been using him over the years. Hope this helps.

Mike Klarman · Answer

I think you need to slow down and rethink the steps.  You want to make offers without the capital. I'd lock down some capital first, then whatever that number is, you at least know what you can afford.  I feel like doing it this way will eventually catch up to you and you may lose EMD money or be sued for breach of contract.  I've seen it happen.

Kyle Mccaw · Answer

@Branden Barber Congrats on closing your first rental — that first one is always the hardest.

Ezekiel Trevino · Answer

Make some friends with hard money lenders. You could live in one of the units and rent out the rest. If you do that you could put 3.5% down.

Preston Dean · Answer

Hi @Branden Barber

I know exactly what property you're referring to 3950 Lisbon St

No real easy way around acquiring $87,500 from someone + closing costs. You'll probably need about $100K at the minimum to cover everything.

Sounds like you need a money guy/private money lender.

Let me know if I can help

Jaycee Greene · Answer

@Branden Barber Find a local investor that will fund the down payment

How To Fund Downpayment for Next Rental Property

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