How to Avoid The High Down Payment on Your Next Rental Property

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Episode #961
One of the biggest hurdles to rental property investing? High down payments. Most lenders want you to come to the table with twenty to thirty percent down, but with home prices averaging around $400,000, it might not be easy to come up with $80,000 to $120,000 on your next deal, especially with today’s high cost of living. So, how do you skirt the high down payment requirements while still locking up solid real estate deals? We’re showing you how in today’s Seeing Greene!
First, a Hawaii investor struggles to scale his real estate portfolio with the state’s significant down payment requirements. David and Rob give him some creative ways to still get deals done. A median-income-earning new investor wants to know whether to buy a new construction home or BRRRR his way to wealth. Then, we debate whether a high down payment with cash flow beats a low down payment with negative cash flow. Looking for a better interest rate on your next deal? We’ll share the seller finance strategies you can use to buy off-market properties, plus whether or not you can buy two houses at once with the same preapproval.
Want to ask David a question? If so, submit your question here (www.biggerpockets.com/david?u...) so David can answer it on the next episode of Seeing Greene. Hop on the BiggerPockets forums and ask other investors their take, or follow David on Instagram to see when he’s going live so you can jump on a live Q&A and get your question answered on the spot!
Support today's show sponsor, Rent to Retirement, by checking out their turnkey rental properties for sale: www.renttoretirement.com/
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Show notes at: link.chtbl.com/BPRE
00:00 Intro
01:07 How to Avoid High Down Payments
11:36 BRRRR or Buy a New Build?
20:35 Take Negative Cash Flow?
24:50 Comment Section Callout
27:36 Getting Seller Finance Deals
34:24 Buying Two Houses at Once?
36:53 Ask Us Your Question!

Опубликовано:

16 июл 2024

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Комментарии : 18

@brady_morgan Месяц назад

New construction is a big ask for new investors, but it is true that this can be a way to get a good deal without having to find a resale, if you GC the build yourself to save on the GC fee. I am planning on starting a channel soon to help investors learn how to GC a build. I believe that if more people are able to GC home builds, it will help alleviate the shortage of new construction in the long run. Problem is, there is a lot that someone needs to know before they become a GC, and not a lot of resources for that education outside of actually working in the industry for many years.

@JulianBurke Месяц назад

Sounds awesome - I just subscribed in anticipation

@tylerbrobst2716 Месяц назад

I love bigger pockets but there are only a few episodes on new construction. Makes me wonder if my strategy is not realistic. I plan on refinancing a duplex I have been working on when its complete and stripping 80% of the equity out of it. Ill only have approximately 200,000 invested into it but will be worth 300,000 (In midwest). Still 80% equity will be 240,000 that I will then put in a 4plex. Repeat, multiply

@brady_morgan Месяц назад

@@tylerbrobst2716 We are basically doing the same thing. Assuming your numbers are accurate, it makes sense to me. I think a lot of people are intimidated by the idea of new construction and probably feel it is a good way to get ripped off on a house, but I think that mostly comes from a lack of knowledge. I am hoping to help with that at least a little bit.

@JevonMusicGroup Месяц назад

The "due on sale" clause scares the crap out of me. In my mind, I have eliminated seller financing as a strategy... yet investors are still doing it (or at least talking about doing it). Am I missing something? Is there a way to mitigate that risk?

@winniethepoohandeeyore2 Месяц назад

Over 4 is considered commercial property. At least 20% down is required. Seller financing is also hard to find.

@neerajchaudhary1821 Месяц назад

David, you are rock-solid bro. Rob too, but I really connected with Rob's views.

@sergiolauramaldonado3098 Месяц назад

Great insights as always!!

@JevonMusicGroup Месяц назад

I'm in the process of finding a BRRRRimary residence... but also a live-in flip. Can you give that a name?

@mashuhurimfundishi5826 Месяц назад

Is it better to buy the land then build, or do land and build in an all in one? What are the benefits? Thanks!

@SuperSaiyanATX Месяц назад

I thought STR was banned in Hawaii unless you’re grandfathered in?

@stephaniepatterson3966 Месяц назад

It depends on which island. Most are strict on and have specific areas where STRs are allowed.

@SuperSaiyanATX Месяц назад

@@stephaniepatterson3966 ok. When I checked Oahu and the big island it was a no go.

@THENURSEBUDGETS Месяц назад

A Nurse here & is true, I’m all about working in the north [where we get paid more hourly]and investing in the South, where the houses are cheaper. I’m saving for a second house,I want to have an 6 months Emergency funds for reserve, & My focus is mid term rentals. how much money should I put down ?

@damonaniton Месяц назад

i am kind of glad you guys said this. is a level of negative monthly cashflow the ideal situation, no. but as you kind of pointed out. if a person actually has a large amount of disposable income it is not the worse scenario, considering you are still getting principle paydown. and there is room for some level of appreciation.