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.