I am preparing myself to acquire 2-4 properties in this upcoming year and I have come across a situation with financing (providing cash for the down payment). My mother and I both have $15k each to use towards the down payment, but does anybody know how we can move forward since both are in separate 401k accounts?
More info on the situation:
Currently, I am focusing on purchasing my very first investment property (single family residential house) that will cashflow, for a purchase price of $150k. I own 0 properties and have a credit score above 720.
A 20% down payment and closing costs will come out to around $30-35k.
If you’re buying the property below market value at a deep discount then you may want to find a lender that funds based upon the after repaired value. This will have higher cost upfront but it will get you in with less out of your pocket. More than likely that loan would be short term so you would need to make sure you can qualify for conventional financing to refinance that loan. When the refinance happens the lender will used the real value to determine the ltv as long as you are only paying off the purchase loan and not taking out any additional cash. It’s a 2 step process with 2 sets of cost but it service its purpose.
You can roll over the money into a self-directed IRA and direct the custodian to invest in the property. Unfortunately, you can’t manage the rental or do any work on it without violating IRA regulations.
Please share with us the numbers on that $150,000 house that will cash flow. Since it’s a SFR, remember that when it’s vacant, it’s 100% vacant. Let us take a look at your deal, maybe there’s something you overlooked.