Today I want to talk about a few different ways to come up with a down payment that you may not have considered. We work with clients from all different walks of life – and while many have large savings accounts to pull from, I understand that’s not the case for everyone.
But just because you don’t have cash reserves available doesn’t mean that real estate investing is out of the question for you. It just means you have to work a little harder to get the ball rolling. If you’re looking to build your net worth through rental real estate but you’re not sure how to get started, here are five sneaky places you might find a down payment.
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- Retirement accounts. If you’re currently employed, you can take a loan from your 401k. It’s your money, and while some people might try to tell you otherwise, there’s nothing wrong with tapping into these funds to improve your financial situation. Another thing you might not have considered is old 401ks or IRAs from past jobs – a lot of times people forget about these old accounts – and rolling them over to a SDIRA is a great way to start investing. Get started by logging into your online portfolio, checking your statements, or calling your previous employers.
- Home equity. Do you own your primary residence? If so, consider tapping into your home’s equity. One of my favorite ways to do this is by utilizing a HELOC. A HELOC allows you to take out a line of credit based on the amount of equity in your home. I love this strategy, and I think it’s a really smart way to start buying performing assets. You can explore this option by chatting with banks to see what your options are. Tip: start with small, local banks and credit unions to find the best products and rates.
- Partnership. If you don’t quite have the funds you need to get started, teaming up with a partner can be an incredible way to do deals. Partnerships can give you access to knowledge and experience, funding, the ability to grow your portfolio, and more. Whatever your missing link is, you can find it by working with partners. I have an in-depth 22-minute video on working with partners that covers the main benefits of working with partners, how to find and vet partners, plus how to do your due diligence before getting started. A partnership needs to be mutually-beneficial for both (or all) parties, and you really have to cover all of your bases before diving in, so make sure you check out that video if you’re interested.
- Private money. I often get the feeling that private money intimidates new investors, but it shouldn’t! Private money can come from a whole host of different places: a wealthy & supportive aunt who is happy to help you, OR a friend who wants to make a better return than the crappy interest rate on their savings account. Private money can also come from professional lenders, but private money doesn’t have to be scary. In fact, it can be rather freeing since it’s not regulated by banks or the government. How do you get started? One of my favorite resources is Susan Lassiter Lyons’ book: Getting the Money.
- Referrals. If you’re wanting to invest specifically with my company, I have a secret loophole that we don’t talk about nearly enough. Did you know that we offer a referral program?
Here’s an overview of how it works:
-Refer someone to Morris Invest who ends up buying a property
-Receive $1,500 credit toward a new property (or closing costs) for you
-Repeat! – Use your credit immediately or stock up until you get an entire property for free!
Read the full rules & disclaimers plus fill out the referral form at morrisinvest.com/refer
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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