Creative Ideas to Get Money For Your First Turnkey Property Down Payment
Once you purchase your first turnkey property, you’re in the real estate game. You’ll begin receiving positive cash flow each month, deposited straight into your bank account. From there, it’s easier to envision your future as a successful real estate investor. It’s also easier after that to leverage your first turnkey property to buy more properties. But for many people, getting together a down payment of $20,000 or so feels like an insurmountable hurdle. If this sounds like you, you’re not alone. But it is possible to get the money you need to start investing in real estate. Here are some creative ideas to get the down payment for your first turnkey property:
Cash in a Whole Life Insurance Policy
Unlike term life insurance policies, whole life policies can be cashed in for their accumulated value. If you have a policy you’ve been sitting on for several years, you just might have enough accumulated value to get the money for a down payment on a turnkey property. Even better, cash out your whole life policy and replace it with a term life policy so your heirs are still protected.
Borrow Against Your 401(k)
If you have a substantial retirement account built up, you might be able to borrow enough to make a down payment on a turnkey property. The IRS allows you to borrow up to 50% of your balance. If you’re borrowing from a 401(k) you have five years to repay the loan. Speak to your employer retirement benefits representative and your CPA for details about your specific options.
Get Friends and Family to Pitch In
If you’re close with your friends and family, consider asking them to go in with you on the down payment. You can split the monthly cash returns or buy them out with an investment plus interest payment down the road. If you go this route, make the deal official so you protect your personal relationships with your group.
Get the Money From Mom and Dad
Parents can gift up to $15,000 cash to their children with no tax repercussions. If your parents don’t know this or haven’t done it, ask them if they would be willing to do that. It could be an advance on your inheritance if necessary. From there, you could implement some of the other ideas mentioned here to come up with the remaining $5,000 or so.
Take a Second Job
This option takes longer and is harder than the others, but it is a legitimate way to come up with down payment money for your first turnkey property. You don’t need to work too many hours to accumulate $20,000 over the course of a year. Once it’s accomplished, you’d have the pleasure of knowing you don’t owe anyone for it so you never have to pay it back.
Cash in Other Assets
If you have Bitcoin, Etherium or another virtual currency in a high balance account, consider cashing that in to get money for your turnkey property. You might also have other assets you can cash in, such as an assortment of collectibles you could auction on eBay, a website you can flip online, a second car or motorcycle you no longer need or something else. Those assets won’t be able to help you build financial independence like real estate can.
Please keep in mind that if you are going to be using conventional financing for your turnkey properties then you will need to season these funds in your bank account for 60 days. This means that if your parents gift you $15,000, you must leave those funds in your bank account for 60 days or more. Once those funds have been seasoned then you can begin the loan process.
You should try to do whatever you can do to gather up enough money for a down payment on your first turnkey property. The long-term tax advantages and monthly income will make it very worthwhile. For information about any of our turnkey rentals for sale, please contact us today.