How to Secure a Down Payment for Your Real Estate Investment

Written by Posted On Thursday, 14 December 2017 02:42

Real estate is considered to be one of the best ways to grow your money, especially in the long run. Real estate properties appreciate over time (except of course when recessions occur), ensuring that your earnings will grow. Furthermore, when you lease out a real estate property, inflation is on your side. This means that while you are paying for a fixed amount for your real estate loan, you would be able to charge your lessee a higher rent. True enough, investing in real estate is a good idea.


However, not all of us can afford to buy real estate properties in cash. A huge lot of us would need financing like through banks. The normal process is that you would apply for a loan, once you get approved, you need to settle a down payment (usually 20%), and then you pay your loan every month until you complete the term.

If you really are considering investing in real estate and are looking for ways to how you can secure your down payment, then here are some ways how you can do that:


From your own cash

Should you have been diligent enough to save, then lucky you. It should be easy enough for you to pay the down payment in cash. And this is a good thing, as you will not have other expenses to think about like those incurred by those who need to loan their down payment.

If you have more than enough savings, you can actually pay higher than the down payment in order for you to have lower monthly amortization and lower interest charges.

Borrow from IRA

You can actually make use of your individual retirement account (IRA) or retirement savings to pay for down payment for a real estate property. There are generally three ways on how you can use your IRA to buy a real estate property:

  • Borrow from your retirement account
  • Withdraw from your IRA
  • Reduce your contributions to save for the down payment

Some financial advisers even encourage clients to borrow from their retirement savings. This is especially true when selling prices are low, and that the expecting benefits of the investment would be better than what your retirement savings could give you.

Borrow from other people’s IRA

You actually can borrow from the retirement savings of other people. It truly is possible but makes sure that the involved parties are fully aware of the terms and conditions of the lending so that there won’t be any problem.

Get a personal loan

Personal loans can be used for many reasons. For as long as your credit rating is good, you are likely to be approved for a personal loan. Using the proceeds of your personal loan, you would be able to pay for the down payment of the property you are looking to buy.

When you apply for a personal loan, be sure that you don’t borrow way more than needed to settle the down payment. Not only will loaning a huge amount be more difficult to get approval, but this would also mean higher interest charges. That being said, ensure that you only loan what is necessary to cover the down payment.

There are lending companies that offer personal loans. One example is They offer immediate assistance and they readily screen interested customers looking for loans. Look for the same lender near your place and ask for assistance.


Use your assets as collateral

Instead of having to pay down payment, you have the option to secure a loan with your other properties like your house or your car. Doing this not only increases the maximum loan amount you can get, but this also helps you not shell out for a down payment. Banks really just want to make sure the money they will lend will not turn to anything should you default your loan.

Using real estate investing partners

Partnering up with someone is also a good idea, especially when your partner with someone who has a lot of money. However, don’t get carried away as you only basically need to pay the down payment. Otherwise, you might end up only with a small portion of the fruits of your investment. It might even look like it’s not your investment at all if you rely too much on your partner. If you need to partner, make sure that you clear up that your partnership is only for the down payment.

If you really want to partner with someone you can do so with family members, friends, or individual or group investors. 

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