I am looking into my first investment property and am having a hard time figuring out how to finance the deal. Since it’s an investment and a non owner occupied property I have been told the banks will only loan 80% LTV. What should I do about the other 20%? Borrowing from family members is out of the question. I have considered hard money lending but am not sure how to pay them back since they will want higher interest. Not sure if the monthly income saved will cover the expenses after six to 12 months. I could refinance but with the economy going the way it is who knows if the property will gain value or lose some more. Seller finance might be an option. Also thought about a business loan but will need to sell it to the bank. Any Suggestions?
No one will finance 100%. You will need 20% to 25% in the deal to get hard money to look at the deal.
Well I am waiting for a call back but I am curious to see if a hard money lender will pay the down payment. For this particular property 25K is the 20% down payment.
How much money are you putting in the deal? Who will pay closing cost? Who will pay appraisal fee?
It is highly unlikely you’ll be able to get into your first deal without actually being able to come up with that 20% down. You have no experience (yet) and banks generally aren’t just chomping at the bit to take a chance on a potential landlord. Once you get the ball rolling and get a few properties, financing becomes easier - speaking from my experiences. It’s just hard upfront. I started by taking money out from a credit card. There’s all kinds of ways. What can you sell? Can you work more or get an extra job?
Thanks for all the advice. I am currently a full time student with little time to work. Maybe when I am done I will be able to create more savings for a down payment. In the mean time I will continue to look for creative ways to finance.