50 Ways to Get Financing for Real Estate Investing: How to Find Money to Buy Investment Properties

One of the biggest reasons people never start investing in real estate is simple: they believe they do not have enough money.

But what if not having a pile of cash in your bank account is not actually the problem?

Real estate investors have access to an enormous number of financing options, including investment property loans, DSCR loans, private money, commercial real estate loans, portfolio loans, business financing, creative financing, seller financing, and partnerships.

The key is learning how to recognize which financing tool fits which real estate deal.

Think of real estate financing like a contractor’s tool belt.

A contractor does not carry only a hammer because every job is different, and real estate investors should not rely on only one type of loan because every property and every situation is different.

This article covers the final 16 financing strategies from my three-part series on 50 different ways to finance real estate investing, including several strategies that can help investors buy rental properties without relying entirely on their own cash.

The Biggest Problem Is Usually Not Finding Money

When people tell me they cannot invest in real estate because they do not have enough money, I understand why they feel that way.

Buying a rental property requires money for the down payment, closing costs, repairs, reserves, financing costs, and sometimes the initial operating expenses.

But there is a difference between not having cash and not having access to capital.

That distinction can completely change the way you look at real estate investing.

Instead of asking, “How much money do I have?” start asking, “What sources of capital could fund this particular deal?”

That might be a bank loan, a DSCR loan, private money, a partner, equity in another property, a business loan, a portfolio loan, or one of the other financing strategies discussed below.

The objective is not to borrow money just because you can.

The objective is to find financing that allows you to acquire a property that makes financial sense after accounting for the purchase price, financing costs, repairs, vacancy, management, maintenance, taxes, insurance, and other expenses.

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Real Estate Financing Should Start With the Deal

A financing strategy should never make a bad real estate deal look good.

The property should make sense first, and the financing should be used as a tool to acquire it.

This is one reason I believe real estate investors need to learn how to analyze properties before they start worrying about which loan they are going to use.

You need to know what the property is expected to produce, what your total costs will be, how much money you need to bring to closing, and how the financing affects your cash flow.

That is also why I created Income Builder, a real estate investing software platform designed to help investors analyze deals and manage their investment properties.

You can also learn more about my free real estate investing course if you want to learn the overall process of building a real estate investing business.

1. DSCR Loans

A Debt Service Coverage Ratio loan, commonly called a DSCR loan, is one of the most useful financing options for rental property investors.

The basic idea is that the lender focuses heavily on the property’s ability to support the debt rather than relying entirely on your personal employment income.

This can be particularly useful for real estate investors who are self-employed, own multiple properties, or do not have traditional W-2 employment.

Instead of the lender asking only whether your job income can support the mortgage, the property itself becomes a major part of the qualification process.

For a rental property investor, that can be extremely valuable because the goal is for the property’s rental income to support the property’s expenses and debt.

DSCR financing can also help investors scale because it gives you another potential financing channel beyond conventional owner-occupied mortgages.

In the episode, I discussed using Conventus as one lender option for DSCR financing and mentioned that I was personally using them for rental properties at the time of recording.

Always compare current interest rates, points, closing costs, prepayment penalties, reserves, loan-to-value requirements, and other terms before choosing a lender.

2. The BRRRR Method

The BRRRR method stands for Buy, Rehab, Rent, Refinance, and Repeat.

This strategy can allow an investor to recycle capital from one rental property into the next investment property.

Here is the basic concept.

You purchase a property that needs improvement, complete the necessary renovations, rent the property, refinance based on the property’s improved value and qualifying factors, and potentially recover some or all of the original capital.

I used a version of this strategy early in my real estate investing career, including using approximately $17,000 to purchase and improve a property and then recycling capital as I continued investing.

The important part is understanding that the refinance is not guaranteed.

You have to account for the property’s appraised value, loan-to-value requirements, lender guidelines, closing costs, interest rates, rental income, seasoning requirements, and the actual amount of equity created by the renovation.

The BRRRR strategy can become especially interesting when combined with other financing sources such as a home equity line of credit, private money, or short-term financing.

3. Portfolio Loans

A portfolio loan can allow multiple investment properties to be financed under a single loan structure instead of requiring an entirely separate loan for every property.

This can simplify financing when an investor is purchasing several properties at the same time.

For example, an investor might purchase three single-family rental properties from another investor and finance the properties together.

Bundling properties can potentially reduce duplicated loan costs and paperwork, although the exact benefits depend on the lender and loan structure.

Portfolio loans are also worth discussing with community banks and regional lenders because some institutions retain loans in their own portfolios rather than selling every loan into the secondary market.

4. Commercial Real Estate Loans

Once an investor begins moving beyond a handful of single-family properties, commercial real estate financing can become an important part of the financing toolbox.

Commercial loans can be used for larger properties, multifamily buildings, apartment complexes, mixed-use properties, and other commercial real estate depending on the lender and property.

The underwriting process can be very different from a standard residential mortgage.

The lender may examine the property’s income, expenses, debt service coverage, operating history, borrower experience, business plan, property condition, and other factors.

Commercial financing can also provide more flexibility for investors purchasing larger apartment communities.

When you move into large multifamily investing, the amount of capital required can become substantial, which makes commercial loans and equity partnerships important tools.

5. Stack Multiple Financing Strategies Together

One of the most powerful concepts in creative real estate financing is that you do not necessarily have to use only one financing source.

You can potentially combine multiple sources of capital to complete a transaction.

For example, an investor could potentially use private money or another short-term source for the initial capital and then refinance into a longer-term rental property loan after the property meets the lender’s requirements.

You could also combine a partner’s capital with a traditional investment property loan.

The possibilities depend on the lender, the property, the borrower’s qualifications, the legal structure, and the terms of each financing agreement.

This is why I like the tool-belt analogy.

You do not need one magical financing strategy that works for every property.

You need enough knowledge to recognize which combination of tools makes sense for the deal in front of you.

6. Bridge Loans

A bridge loan is short-term financing designed to help bridge the gap between one financing event and another.

For a real estate investor, this might mean using short-term financing to acquire a property while waiting for a longer-term financing solution, a refinance, or another transaction to occur.

Bridge loans can be useful because real estate transactions do not always happen on the same timeline.

However, short-term financing can be considerably more expensive than long-term financing, so the exit strategy needs to be clear before taking the loan.

You should know how the loan will be repaid before you borrow the money.

7. SBA Loans

Business owners may also encounter Small Business Administration financing as another potential source of capital.

The SBA’s 7(a) program can be used for certain purposes involving the acquisition, refinancing, or improvement of real estate and buildings, subject to eligibility and program requirements. The SBA’s 7(a) loan information explains the current program requirements and permitted uses.

There are important limitations, however, and investors should not assume that an SBA loan can simply be used to purchase passive rental real estate.

For example, SBA’s current 504 program specifically states that it cannot be used for speculation or investment in rental real estate. Read the SBA’s current 504 loan requirements before considering this strategy.

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The lesson is that business financing can be useful, but the exact business, property, occupancy, and use of proceeds matter.

8. Local Bank Portfolio Loans

Do not overlook your local community bank.

One of the most valuable relationships a real estate investor can develop is with a lender who understands the investor’s business, track record, properties, and goals.

A local bank may have portfolio lending programs that are different from the standardized products offered by large national institutions.

The more successful transactions you complete, the more useful your track record can become when you return to the lender for additional financing.

This does not mean a bank will automatically approve future loans.

It means you have the opportunity to develop a lending relationship rather than treating every financing transaction as a completely new relationship.

When talking with local banks, ask specifically about investor loans, portfolio loans, multifamily loans, commercial real estate financing, construction financing, and other programs for real estate investors.

9. Blanket Loans

A blanket loan is another way to finance multiple properties under one loan structure.

Instead of having a completely separate mortgage for every property, multiple properties can serve as collateral for a single financing arrangement, depending on the lender and loan terms.

One potential benefit is flexibility when properties can be released individually from the loan under a release provision.

That means an investor may be able to sell one property without necessarily selling every property tied to the financing.

The exact release terms are extremely important, so read the loan documents carefully before assuming you can sell individual properties.

10. Transactional Funding

Transactional funding is extremely short-term financing designed for transactions where the investor needs money to complete a purchase and another transaction is expected to occur quickly.

This type of financing is more commonly associated with wholesale transactions and other very short-term real estate strategies.

For a buy-and-hold investor, it may have fewer applications than traditional rental property financing, but it can still be another tool to understand.

The important thing is knowing exactly how the transaction works and where the money comes from to repay the financing.

11. Merchant Cash Advances

A merchant cash advance is another business financing option, although this is one I would approach with significant caution because the cost of capital can be high.

The basic concept is that a financing company provides money to a business in exchange for repayment tied to future business revenue or receivables.

For an established business with predictable revenue, this can create access to capital quickly.

But fast access to money does not automatically mean the financing is inexpensive.

If you are considering using business financing to fund a real estate investment, you need to calculate the true cost of the capital and determine whether the property can support that cost.

Never assume that because money is available it should be borrowed.

12. Real Estate Syndication

Real estate syndication is one of the strategies that can open the door to much larger properties.

Instead of one investor supplying all the money for a large apartment complex, multiple investors can contribute capital to the same investment.

The investors become partners in the investment structure according to the legal documents governing the deal.

For example, imagine an apartment complex costs $35 million and the deal requires $10 million of equity.

One person may not want or be able to contribute the entire $10 million.

A syndication can bring together multiple investors to provide the equity needed to complete the acquisition.

This is fundamentally different from simply getting another mortgage.

The debt finances part of the property, while investor equity supplies the remaining capital required by the transaction.

Real estate syndication also introduces securities laws, disclosure requirements, operating agreements, investor communications, and other legal considerations.

Anyone raising money from other investors should work with qualified legal and tax professionals to structure the offering properly.

13. Real Estate Crowdfunding Platforms

Real estate crowdfunding platforms provide another method for connecting investors with real estate opportunities.

Instead of one person supplying all the capital, many investors may contribute smaller amounts through an online platform.

For investors who want exposure to real estate without personally finding, financing, and managing an entire property, these platforms can provide another avenue.

For property sponsors, crowdfunding can potentially provide access to a larger pool of investors.

However, platform fees, investment structure, liquidity, sponsor experience, property risk, and the specific terms of each investment need to be evaluated carefully.

14. Non-QM Bank Statement Loans

Non-QM bank statement loans can be another potential financing option for self-employed borrowers whose income is difficult to evaluate using traditional underwriting.

Instead of relying exclusively on traditional income documentation, some bank statement programs use deposits shown on personal or business bank statements as part of the income qualification process.

This can be particularly relevant for business owners because business owners may have complicated income structures that do not look the same as a traditional W-2 employee’s paycheck.

However, these loans can have different rates, fees, reserve requirements, documentation requirements, and underwriting standards.

You should compare the complete cost of the loan rather than focusing only on the advertised interest rate.

The Consumer Financial Protection Bureau recommends comparing loan offers and examining the loan amount, interest rate, payment, and other costs when evaluating mortgage financing. The CFPB’s guide to comparing loan estimates is a useful resource.

15. 1031 Exchanges

A 1031 exchange is not technically a loan, but it can be an extremely important part of a real estate investor’s capital strategy.

Section 1031 can allow qualifying investors to defer recognition of gain when business or investment real property is exchanged for qualifying like-kind real property.

The IRS explains that Section 1031 applies to qualifying real property held for business or investment purposes and that the rules are subject to specific requirements. Read the IRS guidance on like-kind exchanges.

This can be powerful because an investor may be able to sell one investment property and redeploy capital into another investment property without immediately recognizing the entire gain, provided the transaction qualifies and the applicable rules are followed.

For example, an investor might own a rental property that has appreciated substantially.

Rather than simply selling it, paying applicable taxes, and investing whatever remains, the investor could investigate whether a properly structured 1031 exchange could allow the capital to move into another qualifying investment property.

But there is a major distinction between tax deferral and tax elimination.

A 1031 exchange generally defers recognition of qualifying gain rather than simply making the gain disappear.

The IRS also makes clear that real property held primarily for sale does not qualify for Section 1031 treatment in the same way as qualifying investment or business property.

This is an area where you should work with a qualified tax professional and a qualified intermediary before selling a property.

16. Opportunity Zone Funds

Opportunity Zones are another tax-advantaged investment structure that can potentially be relevant when an investor has eligible gains to reinvest.

The IRS describes Opportunity Zones as an economic development tool designed to encourage investment in designated communities through Qualified Opportunity Funds and related tax benefits. See the IRS Opportunity Zones information.

There are specific requirements governing eligible gains, Qualified Opportunity Funds, qualifying investments, and timing.

Opportunity Zone rules have also changed over time, so investors should rely on current IRS and Treasury guidance rather than old articles or outdated videos.

The IRS currently provides information about Opportunity Zone changes and transitional guidance, including developments affecting future designations and investments.

Why Real Estate Investors Need Multiple Financing Options

The biggest lesson from all of these strategies is that there is no single “real estate investment loan” that solves every financing problem.

Different properties require different financing.

A single-family rental might work with a DSCR loan.

A property that needs substantial renovation might require short-term financing followed by a refinance.

Several properties might be candidates for portfolio or blanket financing.

A larger apartment complex may require commercial debt combined with equity from multiple investors.

A property owned by an investor with substantial equity might create an opportunity to use that equity as part of a broader capital strategy.

The investor who understands all of these financing options has more tools available when evaluating a deal.

Do Not Confuse Access to Money With a Good Investment

This is one of the most important points in real estate investing.

Just because someone will lend you money does not mean you should borrow it.

Expensive money can destroy an otherwise good investment.

A loan with a high interest rate, high points, short maturity, large balloon payment, or expensive fees can dramatically change the economics of a rental property.

That is why you should calculate the deal using the actual financing terms instead of using optimistic assumptions.

When comparing financing, look beyond the interest rate.

Compare the down payment, loan amount, points, origination fees, appraisal costs, closing costs, reserves, amortization period, maturity date, prepayment penalties, balloon payment, and any other lender requirements.

The CFPB recommends comparing multiple loan offers and looking at both the interest rate and the overall cost of the loan. Its mortgage-shopping guide provides a framework for comparing lenders and loan terms.

Build Your Real Estate Financing Tool Belt

If you want to become a successful real estate investor, you do not need to memorize every financing strategy on day one.

You do need to understand that they exist.

Your financing tool belt might eventually include conventional investment property loans, DSCR loans, portfolio loans, blanket loans, commercial loans, bridge loans, private money, hard money, seller financing, home equity, business financing, syndication, crowdfunding, 1031 exchanges, and other strategies.

The more properties you buy, the more valuable it becomes to have relationships with multiple types of lenders.

Do not wait until you have a property under contract to start building those relationships.

Talk to lenders before you need the money.

Ask them what types of properties they finance, how many properties they will finance, their maximum loan-to-value ratios, minimum credit requirements, reserve requirements, seasoning rules, prepayment penalties, and typical closing timelines.

Then keep those contacts organized.

Analyze the Property Before You Choose the Loan

The financing strategy should come after the property analysis.

You should know the expected rent, operating expenses, debt service, cash flow, cash-on-cash return, required capital, and potential risks before committing to the financing.

This is why having a fast way to analyze investment properties can be so valuable.

Income Builder was created to help real estate investors analyze deals and manage their investment portfolios in one system.

You can create a free account and use the platform to analyze potential investment properties before moving deeper into the financing process.

The goal is simple: find the deal first, determine whether the numbers work, and then figure out which financing tool can acquire the property while preserving the economics of the investment.

How to Find Money for Real Estate Investing

If you are just starting, do not begin by asking how you can borrow millions of dollars.

Start by building your real estate investing business and learning how to find properties that actually make sense.

Then build relationships with lenders, real estate professionals, property managers, contractors, insurance agents, accountants, attorneys, and other professionals who can help you execute transactions correctly.

At the same time, begin learning how different types of financing work.

When you understand the numbers, you can walk into a lender conversation knowing exactly what you need and why you need it.

You can also learn more about real estate investing through the free Master Passive Income real estate investing course.

Final Thoughts on Real Estate Financing

There are far more ways to finance real estate than simply walking into a bank and asking for a mortgage.

DSCR loans, BRRRR financing, portfolio loans, commercial real estate loans, bridge loans, SBA financing, local bank loans, blanket loans, transactional funding, business financing, syndication, crowdfunding, bank statement loans, 1031 exchanges, and Opportunity Zones are all different tools that may have a place in an investor’s overall strategy.

The important part is not finding the most complicated financing strategy.

The important part is understanding enough about real estate financing to recognize the right tool for the right situation.

And remember this: borrowing money is not the goal.

The goal is to acquire assets that produce income, build equity, and move you toward financial independence.

Before you take out any real estate loan, understand exactly how much the financing will cost, how the property will repay the debt, what happens if rents are lower than expected, what happens if expenses increase, and what your exit strategy is.

Then make sure you have the right professionals involved for legal, tax, lending, and investment decisions.

If you want to continue learning how to build a real estate investing business, visit Master Passive Income for additional real estate investing education and resources.

If you are looking for a faster way to analyze investment properties, check out Income Builder and start analyzing your next potential deal.

And if you want to learn more about financing specifically, go back through all three parts of the 50 real estate financing strategies series because the individual tools become much more powerful when you understand how they can work together.

Important Disclaimer

The financing strategies discussed in this article are educational information and are not legal, tax, financial, or lending advice.

Loan availability, interest rates, fees, qualification requirements, tax treatment, securities requirements, and other terms can change and vary by borrower, property, lender, jurisdiction, and transaction.

Always perform your own due diligence and consult appropriately licensed professionals before making a real estate investment, borrowing money, structuring an investment partnership, conducting a 1031 exchange, or using a tax-advantaged investment strategy.

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