New Invester ?

I would like to start investing in some rental property or even buy and flip a foreclosure. I have found many good deals over the last month or two but, my problem is that I don’t have 10% to put down on a property and the closing cost. I have enough for the closing costs and thought that I could do a zero down. However I have talked to several Mortgage companies and all say I must put 10% down. I even asked some relaters and they didn’t have any Ideas to help me out. I would appreciate any advice or Ideas to look into.
Rance Houston Texas

Hi Tollrae1,

I used to get really frustrated trying to find a lender that met my financial criteria, because I didn’t want to pay10-20% downpayment either. What you need to do is go to a mortgage broker that deals with RE investors like yourself. Tell them you want a “rehab” loan that will pay 65-80% of the ARV (after repair value) of a home and with no down payment. If you find a junky house that WOULD be worth $100,000 fully restored and you get it for $60,000
the most you could get for repairs would be roughly $20,000. See how it work. It’s really a numbers crunch. There are a lot of lenders out there, you just might have to do some searching. Look for some of my other posts on this issue, because I talk about it more in depth. Sorry, but I don’t know how to cut and paste. Good luck and happy holidays.

I have the same problem. Since I am not working right now and trying to get into investing the best I can get from a broker is a 95% loan (not to mention the only thing I own is my car). So, I called my bank and asked if I could get a line of credit or personal loan to cover the 5% and any repair costs. They were more than happy to help out, especially, if I listed it as a second mortgage. I have my letters of pre-approval and will be looking at least 2 properties this week. By the way, I am starting with townhouses and condos (to lease to tenant/buyers) since they cost less and the HOA takes care of the exterior maintenance. Even if I can’t get a tenant in right away, the mortgage payments are low enough I can afford to make them every month until I can start collecting rent.

A little off the original subject, but I’ve seen too many new investors get lured in by the prospect of a low mortgage payment without taking other costs into consideration. The mortgage payment may be low, but don’t forget taxes, insurance and HOA fees.

Depending on where you are located, taxes could be higher on non-owner occupied property, and that exterior maintenance from the HOA does not come free! You can get yourself into a negative cash flow situation very quickly. Also, some condo associations have rules about non-owner occupied properties. Make sure you ask the questions about fees and ability to rent out. You should make receipt and review of HOA rules a contingency in the contract. DOn’t take the agent’s or seller’s word for it. Before you buy make sure you do your homework on what rents are in the area.

Good Luck!