How to Buy Multiple Rental Properties with Just 5% Down

What’s better than owning one rental property? Owning several properties! Whether your goal is to supplement (or replace) your W2 income or retire with real estate, we’re going to show you how to buy multiple rental properties with just 5% down, share the best loans for scaling your portfolio, and tell you everything you need to know before you buy. Keep reading!

Summary:

• Investors can use primary residence mortgages, DSCR loans, traditional investor loans, and blanket loans to buy multiple rental properties.

• Rent to Retirement’s 5%-down loan allows you to put low money down on multiple new construction turnkey rentals.

• When buying multiple properties, stick to your “buy box,” don’t overleverage yourself, and consider newer properties for fewer headaches.

Don’t Just Buy 1 Rental, Build a Portfolio!

A single rental property could give you a little cash flow each month, but it won’t allow you to quit your job any time soon. On the other hand, real estate investing at scale can give you reliable passive income, help you reach financial freedom, and even allow you to retire early. You might consider buying multiple rental properties to:

• Have more financial stability as your family grows 
• Get to retirement faster with consistent, passive monthly income 
• Create generational wealth you can pass down 
• Build your income streams so you can leave your job (if you see fit)

How Much Is an Investment Property Down Payment?

Your investment property down payment amount depends on the type of property you’re buying and how you plan to use it. Single-family homes typically require 15% down, while multifamily properties require 25% down. If you’re buying a large multifamily property with five or more units, you’ll need a commercial loan.

If you buy a small multifamily property (up to four units) and live in one of them, you can put as little as 3.5% down with an FHA loan or 5% with a Fannie Mae loan.

How to Buy Multiple Properties with 5% Down

Don’t have 15%-25% saved for each investment property? You may not need it! Rent to Retirement offers 5%-down loans on new construction turnkey rentals—brand new properties that have property management and tenants already in place.

What’s more? You can use it for up to five rentals at a time, making it one of the best loans for investment property. This allows you to not only get in the game faster but also build an entire real estate portfolio with much less money down than you would with traditional investor loans.

Interested in low-money-down investment properties in A-class areas?

4 Other Options for Financing Multiple Rental Properties

Using Rent to Retirement’s 5%-down loan isn’t the only way to purchase multiple rental properties. Here are a few other financing strategies you can use to scale fast!

1. Primary Residence Loans (House Hacking)

If you’re strapped for cash, you can get a primary residence loan, which allows you to purchase up to a four-unit property with less money down and a lower interest rate than most investor loans. The only catch? You need to live in one of the units for a minimum of one year, a strategy commonly referred to as “house hacking.”

Average Down Payment: 3.5% - 20%

Pros:

• Low money down
• Lower interest rate than investor loans 
• Can buy four units at once
• Can use other units’ rents to help you qualify

Cons:

• Must live in the property
• Must have high enough income to qualify
• Sharing space with tenants

2. DSCR Loans (Debt Service Coverage Ratio)

The DSCR loan is a powerful tool for investors looking to scale, as it evaluates a property’s income potential rather than the borrower’s personal finances. There’s no limit to how many properties you can get with a DSCR loan; just keep in mind that these loans often have higher interest rates and minimum down payment requirements!

Average Down Payment: 20% - 25%

Pros:

• Approved based on property’s performance
• Potentially no personal income verification
• No mortgage limits (usually 10 max for traditional mortgages)
• Can be used for residential and commercial

Cons:

• Higher interest rates
• Sizable down payments
• DSCR requirements (usually must be at least 1.25 DSCR for a bank to lend to you)

Get insider discounts on new-build rental properties at just 5% down! 

3. Traditional Investor Loans 

Traditional loans (or “conventional loans”) are used to finance all types of rental properties and are very common, allowing you to shop multiple lenders for the best terms and rates. While you can buy multiple properties with the same loan, you’re typically limited to ten mortgages, and new investors may only be approved for up to four properties.

Average Down Payment: 15% - 25% down 

Pros

• Many lenders offer them 
• Can use them on multiple investment property types
• Can qualify using actual and projected rental income

Cons

• Higher down payments 
• Higher credit score thresholds (620+)
• Many lenders limit you to 10 financed properties

4. Blanket Loans

A blanket loan allows you to package multiple investment properties under one mortgage. This can be a great option for experienced investors, especially those who want the option of selling property down the road, as you can part with one property in your portfolio without the entire loan coming due. However, due to the elevated risk for lenders, these loans typically have higher interest rate, credit score, and down payment requirements.

Average Down Payment: 25% - 40% 

Pros

• Combines multiple properties into one loan
• Cross-collateralization: strong-performing properties in the portfolio can secure financing for less profitable ones 
• Ideal for managing large portfolios

Cons

• Very high down payments 
• Lender can seize properties if the portfolio underperforms
• Balloon payments
• Higher interest rates
• Usually for seasoned investors only

What to Know BEFORE Buying Multiple Rental Properties

Just because you can buy multiple rental properties, it doesn’t mean you should. Here are a few crucial tips to keep in mind before you buy!

Build Your “Buy Box” and Stick to It!

Don’t buy properties just to buy properties, as the last thing you want is to be stuck with poor investments that are expensive or difficult to manage. Start by identifying your investing goals and then build your “buy box,” a list of strict criteria you want each of your properties to meet.

Don’t Overleverage Yourself

Especially in the case of DSCR loans, which are approved based on the property’s performance rather than your personal finances, make sure you can afford your mortgage payments. Additionally, you should always have reserves in case you need to cover a large expense or vacancy. Turnkey properties are professionally managed, meaning less tenant turnover and more monthly cash flow!

Interested in turnkey rental properties? 

Newer Properties Mean Fewer Headaches

Investors who want to scale quickly often make the mistake of buying the cheapest, oldest, or most run-down house in the area. This could cost you thousands of dollars in both maintenance and capital expenditures. Look at new build investments instead. These properties have much lower maintenance and repair costs, which means fewer headaches for you!

Buy Multiple Rentals with 5% Down Loans!

Want to build a rental property portfolio that helps you achieve financial freedom or retire early? Knowing how to finance multiple rental properties is by far the most common hurdle investors face.

The best way to get past this issue is to take advantage of low-money-down options, like Rent to Retirement’s 5%-down loans. You can use these to purchase up to five new construction turnkey rentals at a time!

How to Buy Multiple Rental Properties FAQs

Is It Smart to Have Multiple Rental Properties?

Yes, buying multiple rental properties can be a savvy move, especially if you’re investing in high-cash-flow or high-appreciation markets. Just be careful not to overleverage yourself or scale beyond what you can handle.

How Many Rental Property Mortgages Can You Have?

In theory, there is no limit to how many rental property mortgages you’re allowed, provided you can get approved for all of them. For Fannie Mae loans, specifically, you can have a maximum of 10 financed properties.

What Is the 1% Rule for Rental Properties?

The one-percent rule states that a rental property should be able to generate one percent of its purchase price in monthly rental income. Keep in mind that this is an outdated approach to analyzing rental properties—not only because it’s difficult to achieve in today’s market but also because it doesn’t account for things like expenses, appreciation, and rent growth.