How do people afford the down payment on their 1st rental property?

After maxing out my 401k and Roth IRA for many years, I’d like to diversify my investment portfolio and get into real estate by buying my 1st rental property. But since it seems like you need 20-25% down payment on an investment property, I’ll need to come up with a lot of cash to fund this. Last year I bought my primary home for around 300k and put 20% down, which ate into most of my liquid savings. It will take me a long time to save up that much again to buy a 2nd property. I have retirement savings (Roth contributions) I can dip into to make it work, but I’d prefer not to go that route. That being said, how does the average person afford to pay 25% down payments for their 1st rental? Do they usually take out a HELOC on their primary residence? Do they partner up with a friend or two and pool their money? Do they not max out their retirement funds and divert their savings to real estate? Especially seems even more crazy to hear people have 5 or 6 rental properties and it makes me wonder how they funded the down payments for all those let alone 1 property.

submitted by /u/rdc_5678
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After maxing out my 401k and Roth IRA for many years, I’d like to diversify my investment portfolio and get into real estate by buying my 1st rental property. But since it seems like you need 20-25% down payment on an investment property, I’ll need to come up with a lot of cash to fund this. Last year I bought my primary home for around 300k and put 20% down, which ate into most of my liquid savings. It will take me a long time to save up that much again to buy a 2nd property. I have retirement savings (Roth contributions) I can dip into to make it work, but I’d prefer not to go that route. That being said, how does the average person afford to pay 25% down payments for their 1st rental? Do they usually take out a HELOC on their primary residence? Do they partner up with a friend or two and pool their money? Do they not max out their retirement funds and divert their savings to real estate? Especially seems even more crazy to hear people have 5 or 6 rental properties and it makes me wonder how they funded the down payments for all those let alone 1 property. submitted by /u/rdc_5678 [link] [comments]

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