Strategies to Fund a Down Payment on a Rental Property | Morris Invest (2024)

If you’re researching strategies to fund a down payment on a rental property, know that many investors have been in the same situation. I know I have – spotting the perfect rental home with solid cash flow potential, but producing the down payment seemed impossible. When I faced this issue, I didn’t give up. I kept searching for an answer until I discovered ways to generate the money I needed to move forward.

With all this in mind, we’ll take a deep dive into three unique and often overlooked strategies you can use to generate cash for your next down payment on an investment property. Whether you’re just starting out or you’ve been around the block a few times, these unconventional funding tactics just may be what you need to finally take your real estate portfolio to the next level.

Strategies to Fund a Down Payment on a Rental Property

I selected three of the most unique strategies that our clients utilize to secure the funds for a down payment on an investment property. All three have been proven to yield fantastic results that let the investors we work with push forward on their dream of owning rental real estate that produces monthly income.

There’s no one-size-fits-all approach, so explore the funding options below to find the one that suits your situation best. Who knows, maybe all three will spark your interest and fit your criteria.

1. Utilize Fund & Grow to Obtain Unsecured Credit to Finance Your Down Payment

One creative strategy used to come up with the money needed for a down payment is to utilize Fund & Grow. They specialize in helping investors drum up cash to make a real estate deal happen; basically knocking down the roadblocks for those who have no money to work with. The team over at Fund & Grow works with individuals to help them get approved for unsecured business credit cards that have a 0% introductory offer.

Fund & Grow develops a personal plan based on your unique situation. The process involves not only finding business credit cards that you’ll get approved for, but also improving your credit score – a higher score can get you a larger amount of money. Once your credit cards are approved, you can buy a rental property with 0% interest and pay down the balance as much as possible before the introductory rate expires. At this point, you’ll own a cash flowing property with some equity built up, enabling you to refinance into a bank loan that offers a better rate.

I’ve personally used Fund & Grow a few times, and many of my clients have also used them to push a deal through. If you’d like to move forward with purchasing a profitable rental property but don’t have enough for the down payment, look into this company because they’ll work with you to make it happen. Also, since we were continually sending clients over to them, we worked out a deal where you’ll receive $500 off their sign-up – you can do this by visiting our Real Estate Funding page.

You can also learn more about this strategy to fund a down payment on a rental property by heading over to our personal

2. Save Money by Earning Passive Income Through Connect Invest

Just like Fund & Grow, this is a company we believe in and refer our clients to. Some of our team members are actually utilizing Connect Invest as well. And I have to admit, this method of saving is one of the more creative strategies to fund a down payment on a rental property.

So, who is Connect Invest? Well, they’re a company we recommend for those who wish to invest in real estate but don’t have all the funds to do so. They give our clients a way to start investing with as little as $500 without purchasing their own property. How it works is that you’re investing in a diversified portfolio of real estate projects, and this allows you to earn monthly returns that can add up to a down payment. How much you initially invest would determine how long it would take to earn enough to fund a deal.

Getting started is a super easy process; you just have to open an account to get the ball rolling. It’s important to note that only American citizens can use this method of investing. Connect Invest requires you to be at least 18 years old, a U.S. citizen, and have a U.S. social security number to open an account.

If you’d like to learn more about how the whole process works, then head over toConnect Invest’swebsite where you’ll find a short video on the topic.

3. Borrow From Your 401(k) to Make a Real Estate Deal Happen

If you have a 401(k) through a current employer, you’re typically not allowed to roll it over to a self directed IRA that allows for real estate investments. However, there’s a workaround that enables you to put your 401(k) to good use – you can borrow from it. You can borrow money from your account, like a loan to yourself. This loan is paid back automatically from your paycheck, usually over five years. The maximum amount you can borrow is typically $50,000 and this should be enough for a down payment on a rental property.

The terms require that you pay interest on the loan. But don’t worry, the interest you pay will go straight back into your 401(k) account. This means your retirement account balance will increase. Plus, this is a way for you to put in more money than the yearly limit.

We have worked with many investors who borrowed against their 401(k) to fund an investment purchase. This created a path for them to begin the process of building great wealth through a cash flowing property. Borrowing from your 401(k) is pretty easy – just head to the loan section of the 401(k) website linked to your account, and type in the amount you need.

Since our team has worked with investors who have used this strategy, feel free to schedule a complimentary phone call if you have questions or need help with the process of borrowing from your 401(k).

Also, if you’re concerned about taking money out of your 401(k) because you’ve always heard not to touch it since it’s your future retirement fund, you’ll want to read our article that challenges this idea – Reasons Why the 401(k) is a Bad Investment Vehicle to Retire On, or watch the following eye-opening video:

Power Resources for Real Estate Investors

• The Financial FreedomAcademy
• Freedom Number Cheat Sheet
• 90-Day Financial Empowerment Bootcamp

In addition to the above resources, you may want to pick up my book on Amazon –How to Pay Off Your Mortgage in 5 Years. It lays out an incredible plan for paying your mortgage off in five years instead of thirty.

Leverage These Strategies to Fund Your Next Rental Property Investment!

When these funding strategies are put to use, they present an incredible opportunity to make your dream of owning a lucrative rental property a reality. So don’t be afraid to step outside of the box and explore these alternative funding options. The team at Morris Invest is well versed on how to borrow against your 401(k), the ins and outs of Fund & Grow, as well as working with Connect Invest, so make sure to contact us if you have any questions.

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