Looking For Down Payment Advice
Member since 2026 · 3 posts · 3 votes
Looking For Down Payment Advice
Most Popular Reply
Technology · New York, NY · Member since 2026 · 8 posts · 3 votes
5hUlster County has some solid pockets, but an 80k to 170k spread on a 3/1 usually means the appraisal comps or the rehab scope are still pretty rough.
If this is your first deal and hard money wants 15% or 20% down that you just dont have, trying to stretch yourself thin with high interest short term debt is how people get trapped. Hard money lenders charge points upfront and high double digit interest, so every month the rehab gets delayed eats directly into that profit margin.
Honestly your best move here is either finding an experienced local partner who brings the cash in exchange for 50% of the equity, or wholesaling the contract to another investor and pocketing a 10k or 15k assignment fee. Taking a clean fee on your first deal gives you real operating cash for the next down payment and saves you from the stress of managing a full rehab with zero reserves.
14 Replies
- 18hTyler MccleanPro MemberInvestor · Nassau County, NY · Member since 2022 · 95 posts · 26 votes
Do you own another property? Investment or primary?
- Member since 2026 · 3 posts · 3 votes18h
Unfortunately I don’t, this would be my first property.
- 18hTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
Are you going to live in the property? That would allow you to do a smaller down payment. Also, don't hard money lenders charge a lot more than banks to borrow money?
- 18hTyler MccleanPro MemberInvestor · Nassau County, NY · Member since 2022 · 95 posts · 26 votes
Hard money lenders close fast and ask a lot less questions but they only work with investors they won’t finance primaries. If you have no where else to pull the equity from my next suggestion would be to find a partner who either has the funds or has equity in a property they can pull from and either split the rental with them or do a buy them out afterwards.
- 16hDivin KanyamaBusiness MemberAccountant · Seattle, WA · Member since 2025 · 546 posts · 232 votes
Welcome, @Ashia Simmons. For a first BRRRR, the projected profit range is wide enough that I would verify every assumption before focusing on how to fund the down payment. Confirm the purchase price, rehab scope, contingency, carrying costs, hard-money points and interest, realistic after-repair value, market rent, and refinance terms using independent local professionals.
For the equity requirement, possible options include negotiating a lower price or seller credit, bringing in an equity partner, using a private lender, or finding a lender with a different loan-to-cost structure. Each option changes the economics and risk. Any partnership or private loan should be documented by an attorney, with ownership, repayment priority, decision-making, guarantees, overruns, and exit rights clearly defined.
Most importantly, avoid using every available dollar for the down payment. Keep reserves for surprises, delays, and a refinance appraisal below expectations. Ask the hard-money lender for a complete written sources-and-uses schedule and the exact refinance assumptions needed to recover your capital. If the deal only works with the highest projected value, no overruns, and a perfect refinance, it may be safer to renegotiate, add a well-qualified partner, or pass. Protecting your ability to do the next deal matters more than forcing the first one.
- 10hMatthew MorrowBusiness MemberInvestor · PA - NY - NJ · Member since 2019 · 793 posts · 273 votes
@Ashia Simmons welcome. Hard money almost always still wants you to bring something, so you're not the only one stuck on this. When I started I didn't have a pile of cash either. I lived in my first place, fixed it up, and used the equity from it for the next one. Slower, but it's how a lot of people get going. If you want to do this deal now, a partner who brings the down payment for a piece of it is probably the most common route. I'd just get really comfortable with the rehab number and the ARV first. That profit range is pretty wide, and the purchase price is what decides whether it works. Good luck with it.
CORE Team | Realty ONE Group Supreme548 Reviews - 10hAshish AcharyaBusiness MemberCPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
Ashia, if the numbers are as strong as you’re projecting, I’d slow down before trying to solve the down payment and make sure you’ve stress-tested the entire deal.
With hard money, I’d make sure your projected profit is after financing, closing costs, rehab, holding costs, and the costs of either refinancing or selling. I’d also build in a healthy contingency for the rehab. A deal can look very different if the project takes three extra months or goes $20K over budget.
From the tax side, I'd keep the acquisition, rehab, financing, and improvement costs organized from day one. The tax treatment can also be very different depending on whether you ultimately hold the property as a rental or sell it as a flip.
If you plan to do flips consistently rather than just this one project, I'd also eventually evaluate whether an S-Corp makes sense for the active flipping business. It isn't automatically a tax-saving move, so profit, volume, reasonable compensation, payroll costs, and your overall situation all matter.
For this first deal, I'd focus on making sure you have enough capital to finish the project comfortably, not just enough to get through closing.
Feel free to DM me, I’d be happy to send over a few resources that might be helpful.
INVESTOR FRIENDLY CPA®4.9242 Reviews Quote from @Ashia Simmons:
Hello all my name is Ashia. I am a new real estate investor in the ulster county, NY area. I'm in the middle of trying to work a deal on a 3bd/1 ba single family property in my area. This would be my first deal and I'm looking to do the BRRRR method. It's a very profitable deal that could net me anywhere between $ 82,500 to $172,500. Im working with a hard money lender, but the problem that I'm running into is coming up with the down payment. Can anyone offer any advice?
Hi @Ashia Simmons welcome to BP and the real estate investing community!
It's great that you're exploring the BRRRR strategy for your first deal. One of the biggest challenges new investors face is coming up with the initial capital, even when the numbers look promising.
First, let me ask you an important question: Will this property be your primary residence, or will it be strictly an investment property?
If you plan to live in the property as your primary residence, you may qualify for first-time homebuyer programs that offer lower down payment requirements, depending on your eligibility and the property's condition. This could be an alternative worth exploring before committing to an investment-property loan.
If it's strictly an investment property, I recommend reviewing the entire deal with your lender, including the purchase price, renovation budget, after-repair value (ARV), and your expected refinance proceeds. Make sure your projections account for closing costs, holding costs, financing fees, and unexpected repairs.
Depending on the deal, your experience, credit profile, and the lender's guidelines, there may be financing structures worth exploring to help reduce the amount of cash you need to bring to the table. Other options include partnering with a private investor, bringing in a joint-venture partner, or negotiating with the seller, provided the terms make financial sense.
At JCREIG Capital Funding, we work with real estate investors on financing strategies for fix-and-flip projects and long-term rental investments. Looking at the acquisition and refinance strategy together can sometimes help identify options you may not have considered.
My biggest piece of advice: Make sure your exit strategy works before moving forward. With a BRRRR deal, you need to evaluate not only the renovation and potential ARV but also whether the property will qualify for refinancing and support your long-term goals.
Congratulations on taking the first step, Ashia! With the right numbers, planning, and financing strategy, you may have more options than you realize.
- Chicago, Cook County · Member since 2026 · 6 posts · 0 votes8h
Ashia, the money side is well covered above, so I'll add the house side. A projected profit of $82,500 to $172,500 is a $90,000 spread, and on a 3 bed, 1 bath that usually means the rehab number and the after-repair value are still loose. Tightening those will do more for you than any funding trick, and a lender or partner will ask about them first anyway.
A few things that help before you commit:
- Get the scope in writing, line by line, split into must-do (water, roof, structure, electrical, plumbing, heat) and nice-to-have (finishes). A single lump number hides what's missing.
- Find where water has been. Check the basement or crawl space for stains, white residue on the masonry, or fresh paint on just the bottom of the walls. Then check gutters, downspouts, and grading outside. Water is behind a lot of the surprise costs in older houses.
- Ask what the plumbing and wiring actually are. Old galvanized pipe, cast iron drains, or old wiring behind a newer panel can move the budget a lot.
- Since you're refinancing, price the finishes to what the appraiser and the rental market will pay for, not what you'd want to live with.
- Add a real contingency, 10 to 15 percent or more on an older house, and count carrying costs if the job runs long.
If the deal still works at the low end of your range with that contingency in, you're in much better shape to bring a partner in.
Kyle
(AI helped me draft this.)
- Technology · New York, NY · Member since 2026 · 8 posts · 3 votes5h
Ulster County has some solid pockets, but an 80k to 170k spread on a 3/1 usually means the appraisal comps or the rehab scope are still pretty rough.
If this is your first deal and hard money wants 15% or 20% down that you just dont have, trying to stretch yourself thin with high interest short term debt is how people get trapped. Hard money lenders charge points upfront and high double digit interest, so every month the rehab gets delayed eats directly into that profit margin.
Honestly your best move here is either finding an experienced local partner who brings the cash in exchange for 50% of the equity, or wholesaling the contract to another investor and pocketing a 10k or 15k assignment fee. Taking a clean fee on your first deal gives you real operating cash for the next down payment and saves you from the stress of managing a full rehab with zero reserves.
- Lender · Dallas, TX · Member since 2024 · 15 posts · 5 votes5h
Ashia, most lenders will do up to 90% of the purchase and 100% of the rehab, but that's for experienced flippers. On a first deal, expect to bring more, and the loan is capped around 70 to 75% of the ARV either way.
I'd highly consider finding a partner with experience and splitting the first deal. You each bring 50% of the down payment to the table, and if they've got flips under their belt and they're on the LLC, that usually helps your leverage too.
One more thing. $82K to $172K is a wide profit range. I'd tighten up the ARV before you lock anything in.
I run a lender, so weigh that.
- Lender · Houston, TX · Member since 2026 · 70 posts · 18 votes3h
Ashia, since this is your first property and the down payment is the sticking point, I would first ask the hard-money lender for a complete sources-and-uses worksheet. Confirm the exact cash required at closing, how rehab draws work, the reserves required, and the refinance assumptions. Your projected profit range is wide, so it is also worth stress-testing the ARV, rehab budget, points, carrying costs, and exit appraisal before adding another layer of debt. I'm Nyisha with EquityNest Capital. If you would like, I'm happy to review the deal structure and see whether a different acquisition-and-rehab program could reduce the cash requirement. No pressure.
- 1hRyan BakerBusiness MemberLender · Strongsville / Cleveland, OH · Member since 2026 · 32 posts · 4 votes
Hi Ashia, congrats on going after your first BRRRR. A few down payment paths are worth comparing. If you'll live in it first, owner-occupied loans (FHA, low-down conventional, or a renovation loan like FHA 203k or HomeStyle that rolls the repairs into the loan) need far less cash than an investor loan.
If it's a pure investment, a fix-and-flip or hard money loan can cover a big chunk of the purchase and rehab, and then you refinance into a DSCR or conventional loan once the work is done and it's rented. Some people also use a HELOC on their own home or bring in a partner for the cash piece.
The right fit depends on whether you'll live there, your credit, and the rehab budget. Happy to walk through the numbers on a quick call. My direct line and email are on my profile.
(Drafted with AI assistance.)
- Specialist · NJ · Member since 2022 · 1k+ posts · 657 votes19m
You found a deal online that has that kind of profit margin?
How do you know the rehab is accurate? How do you know there isn't mechanical, roof, or foundation issues?
If you don't even have the downpayment money, then how about the holding costs, overage costs on the rehab (100% will be), insurance costs.
You are brand new and you think you found the six figure profit deal. Right there out in the open.
I'd slow down. Your new and I have hundreds of hard money loans under my belt as a broker, consultant, and investor. No way you found what you think. I should say the odds of this deal being what you think are slim. And even if it was a deal you do not have the money, experience, or connections to get it done.
So if this deal is a winner, it is a loser for you and if it is a loser, it is a loser for you. I don't see how you can win.I think anyone offering lending options is doing a huge disservice. It says online the median home value is around 500k. So let's take 70% of that and that is 350k - that is the project cost. Let's say 100k in rehab. That's a 250k purchase. You put down 20% that is 50k. You need 20% of the construction budget for the contractor to start - that's another 20k. You have closing costs and if this is a wholesale deal, YOU PA all closing costs that will be another 10k - 15k depending on the wholesale fee. What are we up to? 80k? Then all the holding costs on a 300k note at 12% so that is 36k per year or 3k per month. Conservatively 6 months so that is another 18k. Insurance will be 150/200 per month that's another 1k. If there are overages for rehab that is coming out of pocket unless there is a contingency and then if there is when that runs out you are out of pocket. Plus figure needing 25k for a cushion. So this deal costs 125k. You're saying you don't even have the downpayment. I'd say you're playing with fire.
Not to mention you'd be working with draws and contractors for the first time as an investor with little to no knowledge base. That is dangerous for a first timer with no money.
It's not about getting deals done. It's about finding the right scenarios. Fundable. Affordable. Executable.90% of REI investors live outside their capital constraints. There's a word for that. It's called gambling.
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