Building Wealth Through Real Estate Part 3
We have talked about the importance of investing in real estate for your future whether that is buying a home vs renting, adding rentals to your portfolio, or flipping houses. The next step to buying a home or buying investment property is coming up with the down payment which can be a huge chunk of money for a lot of people.
When I bought my first home, the down payment was around $13,000 (this was 5% of the purchase price). At the time, I did not have $13,000 in my savings so I had to think creatively in order to obtain the finances. I decided to ask a family member if they could gift me the down payment and I was able to buy the home. After a couple of years, I flipped this primary residence and gifted my family member back (even though they did not expect or require it). But while I was living in that home, I looked towards investing in a rental property as well. So, I took out a home equity line of credit and used it towards financing the investment property. But even with the home equity line, I still did not have enough money for the down payment, so I decided to ask a friend to invest in it as well. With a partner, I was able to afford the whole down payment and we split the costs of renting out the property. We sold that investment years down the road and both ended up making an excellent profit.
I like to tell these stories to show my clients that there are many ways to get creative with financing if you do not have cash laying around. Buying property with partners or people you trust is one excellent way to get started in investing.
If you would like more ideas on creative investing please contact me and we can discuss your options.