Capital is required for acquiring an investment property, and it is needed for both purchase itself and the down payment. Therefore, you need to acquire down payment money to get an investment property.
Down payments can be quite expensive. It could be from 5% to 25% or even 30% of the purchase price, which might be a lot for some sellers.
If you want to invest in real estate but are having issues raising capital, we advise you to hang tight. In this piece, we’ll show you four (4) easy steps to raise the down payment for an investment property.
Four Tips to Making a Down Payment on an Investment Property
1. Save Money
Most people understand that this is the best way to fund down payments. They, however, choose to ignore it. People have consistently been putting money away to fund their dreams for generations. You should do so too.
2. Borrow the Money
Another option is to borrow money from friends, relatives, or friends of friends. It is a pretty helpful strategy, but we advise you to ensure that the payment terms do not go out of reach.
3. Partner with Another Investor
Partnering with another investor willing to put up the down payment money in exchange for something is the easiest way to get a down payment. Perhaps it is a continuous piece of cash flow, appreciation, and maybe to loan the money repayment, including interest.
4. Invest with Your IRA
Do you know before that you can invest with your IRA? It is the easiest way and a lot simpler than people imagine. For example, if you had money in your IRA account, you would be able to buy properties in your IRA account. Then, if you have enough money saved up in your Individual Retirement Account, you can afford to make an outright payment on the investment property instead of a down payment.
Please reach out to us if you want to know more about an IRA account and how to structure it. Our team will guide you and supply you with all the necessary information.
Summary
Every successful real estate investor started from some small place. Unfortunately, not everyone can afford to make full payment on investment property, and the industry understands that. That is why we have banks and microfinance establishments to dole out loans to investors. You can also save up to fund your dreams of buying an investment property. Buying rental property with no money is not the easiest way to purchase real estate. But it can be worth it.