The question I get more than any other isn't about finding deals. It's some version of this: "How do you keep buying when you have to put 25% down every time? Saving that up takes forever."
I used to believe the formula was: work, save everything, buy a rental, be broke for a while, repeat. It wasn't until my fourth purchase that it hit me. We were doing it wrong. Saving a fresh down payment for every deal was going to take decades, and I had bigger goals than that.
So my husband and I sat down and listed every resource we had access to. We were surprised how many ways there were to fund a deal that didn't involve our own savings. Today I have what I'd call unlimited funding sources. That doesn't mean unlimited money. It means that if I find a deal worth buying, I have a way to fund it, even if that means sharing a slice of the upside with someone else.
Here's the entire playbook.
There are only four ways to fund a deal
Strip away the jargon and every real estate purchase is financed one of four ways:
- Your own money. Fine to start, nearly impossible to scale on alone.
- Someone else's money, usually a private lender.
- A joint venture with one to five partners.
- A syndication, pooling many investors together.
Most people never get past option one, and that's exactly why they stall. The goal is to lean on the other three as early as you reasonably can.
The engine: recycling your capital with BRRRR
The single most important concept in scaling a portfolio is that you can get your money back out of a deal and use it again. That's the BRRRR strategy: buy, rehab, rent, refinance, repeat.
You buy a property below market value (usually because it needs work and won't qualify for a conventional loan yet), renovate to force the value up, rent it, then refinance at the new higher appraised value. If it appraises high enough, the refinance pays back most or all of what you put in, and you roll that same cash into the next one.
Let me show you a real one.
I bought a 1990 brick 6-unit for $415,000. A private lender funded $385,000 of it, so my only out-of-pocket was $30,000 at closing and $30,000 for renovations. I renovated three of the units and stabilized the building. Then I took it to a local bank to refinance. The new appraised value came in at $530,000, and they lent 80% of that, a $424,000 loan.
I paid off the $385,000 private loan, and put $39,000 back in my pocket. When the dust settled, I had just $21,000 of my own money left in a stabilized 6-unit that cash flows $1,600 a month. That's the whole game in one deal.
A few financing mechanics that matter on the refinance:
- If you paid cash, the delayed financing exemption lets you refinance right away, but it won't pay you back more than your purchase price plus costs.
- A rate-and-term refinance also lets you use the new value immediately (up to 80% LTV on single-family, 75% on 2 to 4 units), but again won't return extra cash.
- A cash-out refinance is the only one that can pay you back more than you put in, but it requires six months of ownership seasoning first, capped at 75% LTV on single-family and 70% on 2 to 4 units.
If you can convince a private or hard money lender to fund 100% of the purchase plus renovations, you skip the seasoning wait entirely and refinance at max LTV the moment the appraisal supports it.
Where the money comes from
Here are ten funding sources I keep in my back pocket. Three of them require that you already own property, which is the quiet reason the first deal is the hardest and every one after gets easier:
- Your own savings
- Owner-occupy for a lower down payment
- A HELOC on a property you already own
- A cash-out refinance on existing equity
- A 1031 exchange to roll gains forward tax-deferred
- Your retirement account
- The BRRRR recycle
- Private lenders
- Joint venture partners
- Raising capital through syndication
Private lenders
This is my go-to. A private lender is just an individual lending their own money, often cash that's sitting in a CD losing ground to inflation. One of my clients called his dad, who was thrilled to earn 6% as a private lender instead of watching his savings stagnate.
My typical pitch to a lender is simple: 8% interest on a 12 to 24 month term, no points, no prepayment penalty. They get a safe, passive, attractive return. I get fast, flexible money for a property a bank won't touch yet. Hard money lenders are the institutional version, more capital available but more fees, since they're a company with overhead. I treat both as a tool: expensive, but the opportunity cost of missing a great deal is higher. In one year I paid about $14,000 in hard money fees across two properties, and those deals were well worth it.
One warning: vet your lender hard. The biggest risk is a lender who changes terms at the last minute or can't actually close, which can cost you your earnest money. Ask other investors for referrals, and ask the lender direct questions about their criteria, rates, and how often they fail to close.
HELOCs
A home equity line of credit lets you put a property's stagnant equity to work without selling it. Equity sitting in a house earns you nothing. A HELOC turns it into ammunition.
The math banks use is roughly: value times 0.70, minus your first mortgage, equals what you can borrow (they'll go up to about 90% on a primary residence, 70% on a rental). My first HELOC was $54,500, and I immediately used it as the down payment on a triplex. That triplex still cash flowed $900 a month after both the mortgage and the HELOC payment. Today I hold lines on a few rentals giving me access to six figures at around 5.5%, ready to deploy the day a great deal shows up.
Two real risks: the rate is almost always variable, and the bank can freeze or cut the line at any time. That happened to a lot of qualified borrowers between 2009 and 2014. So I only use a HELOC on an acquisition when the property still cash flows after both the first mortgage and the line payment.
Joint ventures and syndication
When you're ready to use real outside capital, there are three structures: private lending (fixed return, no equity, no tax benefits to them), JV partnerships (partners put in money, play an active role, and share equity, cash flow, and tax benefits), and syndication (many passive investors share the upside without active involvement). I break down the difference between the last two in JV partnerships vs syndication.
A recent JV of mine: a 12-unit at $1,150,000, with an $862,500 loan and $335,000 needed for the total initial investment. I found the deal, ran the due diligence with DoorProfit, and secured the financing. My JV partner funded the entire $335,000 in exchange for 49% of the LLC. They got tax benefits, a strong return, and a bigger net worth. I got the building without draining my own reserves. Everybody won.
The mindset shift on raising money is the whole thing: you are not asking for a favor, you are offering an opportunity an investor actually wants. Many people don't trust the stock market and are hunting for tax-advantaged returns. Ask friends and family what their money currently earns, then aim to meet or beat it. Build a list of 100 people you know, put them in a simple CRM, and send a monthly update on what you're working on. The capital follows the track record.
Getting past the bank's gatekeeping
Even with creative funding, conventional loans are the cheapest money you'll ever get on 1 to 4 units: low rates, low down, 30-year fixed. So you want to use those slots wisely. A few of the hardest-won lessons from 13-plus years of doing this:
- Use an investor-focused lender, not a big bank or credit union. Most loan officers have never structured a non-owner-occupied loan and will choke on your second or third one. Find someone who specializes, and stick with them for the long haul so your file is already built.
- Know the 10-loan rule. You can hold up to ten conventional mortgages per person. Financing separately, a married couple can reach twenty, which at fourplexes is up to eighty units.
- Guard your DTI. Debt-to-income is the most common reason investors get stuck. New rental income helps you (lenders count 75% of rents), but a pricey car payment or a 15-year mortgage on your primary can sink you. Avoid the 15-year trap; if you want to pay down faster, just apply extra cash flow to principal instead.
- Have your CPA draft your return and your lender review it before you file. A great CPA saves you tax and keeps you loan-qualified. I've seen an investor with an 800 credit score and over $1M in the bank get denied because their returns showed the business "losing money" from write-offs.
- Keep reserves. Past four loans, many lenders want six months of payments per property in the bank.
When you've maxed your conventional slots, or you don't fit the box, move to DSCR (asset-based) lenders. These qualify the property, not you. They look at whether the property's net operating income covers the payment, ignoring your personal DTI entirely. In some cases you can qualify with no job and no personal income. For properties over four units or larger portfolios, portfolio and commercial loans (made to your LLC, and not counted against your conventional limit) take over, typically with 5-year fixed terms and 25-year amortization.
For the deal analysis side of all this, the fast and simple way to analyze multi-family deals walks through running the numbers before you fund anything. And if you're financing in markets you don't live in, pair this with the out-of-state investing guide.
The honest part
My first three deals were bad. They went underwater and cash-flow negative within months, thanks to 2008. I held on, improved operations, and eventually sold into a recovered market for a real profit. The lesson wasn't "time it better." It was "just get started." You probably won't hit a home run on your first one. You'll create momentum and gain experience, and that experience is what makes every future deal fundable.
Financing isn't about what you can afford. It's about who you can partner with and how fast you can recycle a dollar. The investors who scale aren't the ones with the most cash. They're the ones who stopped treating their own savings as the only fuel in the tank.
So before you pass on the next deal because you "don't have the down payment," ask a better question: which of these ten sources could fund it, and who do I know that would rather earn 8% than watch their money sit?
This article is educational and reflects my own experience. It isn't legal, tax, or financial advice. Loan guidelines vary by lender and your situation is unique, so consult a qualified CPA, attorney, or lender before acting.
