Down Payment Funding

What is the the better way to find the down payment of a rental property? Here are my options a little about my situation. First time investor,credit score around 750, Have around 50k reserves in various different accounts. Looking at properties sub 100k.

1)Use my own cash for the DP. I am open to this but really wanted to not tie up alot of my cash just starting out.
2)Use a seperate loan/line of credit to fund the DP.(i.e. cash off cc,small personal loan)I don’t want to do anything with my personal residence(LCO)

What do you guy think is the way to go in today market?Any other ideas you have would be great too.Thanks

Hello Elloyd,

My situation is very similar to yours, what I did was (and most HML will require this) I put down a certain amount of my own cash at closing, I got a HML for the purchase price plus repairs, once I was done with repairs, I refinanced at 80% ltv and got almost all my initial downpayment back (total cost of my cash was roughly 1,000$).

In today’s market most lenders (including hard money) would like to see you have some skin in the game. If you buy right you can put down 10-15% of your own money and then get them back when refi. But you have to buy low enough to be able to do this.

Good luck

I am looking at properties to Buy and Hold at this point with tennants already in place. Does that make any differnce?

You should still be able to follow the same principle, I think (personal opinion) that it is easier to buy low fix up and reappraise at higher value with vacant homes.

With tenants already in place it is hard to justify that you bought the house for x but you want to refi for X+Y% without having to much improvements to show for it.

Maybe the more seasoned veterans can shed some light

Save as much of your own cash as you can. Make sure you are able to refi after the rehab. You make your money when you buy (70% ARV - repairs is a good starting point)