Jun 26, 2020
For most Real Estate Investors, coming up with the initial deposit that goes with the offer on a rental property is one of the greatest barriers in buying. And trust me, I've come across many investors who thought they needed hefty cash on hand for the earnest deposit.
For a larger building priced about million dollar or more, people think that they need to come up with at least $100,000 or more for the deposit. Usually, for any multi-family building, the deposit is 1% of the asking price of the property. But you can always negotiate that with the seller/realtor.
I've had put an offer with $1,000 deposit and got accepted in the past for the single family homes. So you don't always have to come up with the asking price for the deposit.
Now let's get to alternative ways you can find deposit for your first Multi-Family.
One of the most effective ways to make an offer on an investment property is to take out a home equity line of credit against your house. It's relatively affordable, flexible.
The other ways my students have been able to fund the deposits are from their savings, TFSAs, RRSPs or personal line of credit.
Your parents, siblings, friends and other extended family members that you can think of are always viable sources for your investments.If you've borrowed money from your relatives or friends then you can give them share in the property and in this way you can make it a fair deal for everyone.
And also let them know that if for any reason, you are not able to close the deal, you'll receive your deposit money back.
At some time in your real estate investing career, you'll run out of money to put down deposit for the deal. As you know there are costs involved closing the deal once your offer gets accepted. Costs like, environmental cost, building inspection report, financing costs, etc.
That's why I encourage people to take acquisition fees to cover up for the time and costs involved closing the deal.
Some of my students also ask for help from my private 90 Days to $5K Mastermind Facebook group in order to secure the deals.
As you can see Real Estate Investors have plenty of options to fund the deposit, all it takes is your DECISION whether you really want that deal or not.
I always say, Don't let MONEY, stop you from getting the deal.