This week’s question comes from AJ through Ashley’s Instagram direct messages. AJ is asking a question many new investors have: If I borrow down payment money from friends or family, what’s the best way to pay back the down payment while cash flowing on the property?
For many rookie investors who don’t have large cash sums sitting around, much of their initial investment has to be done through borrowed money. This means not only getting a conventional loan from a bank but privately financing their down payment as well. But, before you start asking your grandma for some “seed funds”, make sure that your bank will allow you to borrow down payment money.
Here are some suggestions:
Double-check that your bank allows borrowed down payments, if not, try and receive a “gift” from a family member
Work out a payment plan with your private lender before closing on the deal
Pay back the down payment personally and count it as an initial investment in your CoC calculations
Offer equity or a delayed payout as a way for you to maximize cash flow in the deal
And more in the episode…
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