How to Buy New Construction Properties With Low Money Down

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Real estate typically requires a significant upfront investment, but what if you could buy new construction rental properties with little to no money down? By leveraging builder incentives, portfolio loans, and creative financing strategies, investors can maximize their purchasing power, secure multiple properties, and generate cash flow with minimal upfront costs. 

Companies like Rent To Retirement are helping investors make this goal possible with turnkey new construction investments using these exact methods.

Leveraging Builder Incentives to Reduce Costs

One of the most significant advantages of buying new construction investment properties is the incentives builders offer investors. These incentives—often ranging from 5% to 10% (or even 20% in some cases) of the cost of the build—allow buyers to buy down interest rates, receive cash back, or reduce closing costs.

For example:

• A $300,000 home with a 10% builder incentive gives the investor $30,000 toward interest-rate buydowns, cash back, or closing costs.
• Many investors reinvest the cash-back option into purchasing more properties, scaling their portfolio faster.
• Since investors buying multiple properties generate more volume for builders, they often receive greater incentives than individual homebuyers.

Using Portfolio Loans for Low Down Payment Financing

Traditional investor loans often require a 20% down payment, which can quickly deplete available funds. However, local credit unions in most markets offer portfolio loan products with as little as 5% down. 

The issue is being able to take all the necessary steps to secure the best deals, including buying from builders in bulk for better pricing, connecting to credit unions with the best portfolio loans, and negotiating with lenders and insurance providers. Rent To Retirement is one of the specialists in providing all these benefits and more in their investment deals.  

Key benefits of portfolio loans:

• 5% down payment options, allowing investors to spread their capital across multiple properties.
• 30-year loan terms with 10-year and 15-year fixed-rate periods, ensuring long-term stability.

Comparing a Traditional Purchase vs. Leveraging 5% Down Portfolio Loans

We may have heard that you can only buy investment properties (or any property) with a 20% down payment. What if I told you that you can almost 4x your investment by working with the right company to get you a 5% down investment loan, or even better? 

Let’s say you have $100,000 to invest.

Option 1: Traditional investor loan (20% down)

• You purchase one $500,000 property.
• Your down payment is $100,000.
• Your monthly payment (6.5% interest, 30-year loan, $3,000 annual taxes, $1,500 insurance): $2,903.
• If the property rents for $3,200, your pre-expense cash flow is $297.

Option 2: Portfolio loan with 5% down & builder incentives

• You purchase four $500,000 properties instead of one.
• Each property requires only $25,000 down.
• Builder incentives (5%-10% cash back) could offset the down payment, allowing zero out-of-pocket costs or even getting paid at closing.
• If you negotiate a 5% interest rate buydown, your monthly payment per property (30-year loan, $3,000 annual taxes, $1,500 insurance) is $2,924.50.
• If each home rents for $3,200, your pre-expense cash flow is $275.50 per property.
• Total cash flow across four properties: $1,102 monthly—plus four appreciating assets instead of just one.

Why This Strategy Works

Investing in new construction homes offers significant advantages, particularly maintenance and long-term financial stability. Unlike older properties that require costly repairs and frequent upkeep, new builds come with modern construction standards and warranties, reducing unexpected expenses. This translates to lower capital expenditures (capex) and fewer headaches for investors, ensuring more predictable cash flow.

Additionally, owning multiple properties instead of just one helps mitigate risk. A diversified portfolio protects investors from localized market fluctuations and tenant turnover, stabilizing income streams. More properties also mean more significant appreciation potential as real estate values rise. With builders currently eager to offload surplus inventory, investors have a rare opportunity to negotiate better pricing, incentives, and financing terms, further enhancing their return on investment.

Scaling Your Portfolio Faster

By combining low down payment loans, builder incentives, and strategic financing, investors can multiply their buying power, secure cash flow, and grow their rental portfolios without depleting their savings.

If you’re ready to leverage today’s unique market conditions and buy new construction rental properties with little to no money down, now is the time to work with a company like Rent To Retirement. Builders’ incentives won’t last forever, and investors who move quickly will benefit the most.