The Ultimate List of Ways to Finance Buy & Hold Property

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Last week, I made the case that buy and hold real estate is the best investment around.

Unfortunately, like all good things, there’s always a catch. Buying real estate and holding it requires money, and if you don’t start with much, that can be a great challenge. Luckily, there are many methods to overcome such a problem. However, first it’s important to understand the most important principle of buy and hold.

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The Prerequisite for Buy and Hold

In the famous Stanford marshmallow experiment, children were given the choice between eating one marshmallow or waiting about 15 minutes with said marshmallow staring them right in the face, in which case they would get two. Most kids yielded to temptation and ate the marshmallow well before the 15 minutes were up.

The researchers then kept track of the children and found that those who had waited for the second marshmallow had substantially better life outcomes.

The ability to delay gratification is paramount to success. Buy and hold is the second marshmallow. Buy and hold is the ultimate get rich slow scheme. Most buy and hold investors live substantially below their means for many years before building enough equity and/or enough cash flow to fully enjoy the fruits of their labor.

Once that principle is established, you can incorporate any of the following methods into growing your real estate empire.

Methods for Financing Buy and Hold Properties

Save and Hold

It’s absolutely possible for people with decent jobs to simply live below their means and invest in real estate on the side. The advantage to this is that it’s much easier to get bank loans when you can show W2 income, and a job also provides a consistent source of income, even if a particular investment falters.

Related: Top 10 Reasons to Buy and Hold Real Estate

However, it’s also much more challenging to find good deals when you are tied down with a job, and, of course, you are stuck with the job. This is a fairly passive approach to real estate investment, but it can still be very effective.

FHA Loans

FHA loans are a great place to begin for the “Save and Hold” investor. FHA will finance 96.5% of the price of deal at very low interest rates for a homeowner’s property.

The great part is that you can finance up to a fourplex. So why not buy a fourplex, live in one unit and rent out the other three?

Flip and Hold

This is probably the safest, most effective way to get into buy and hold. For investors who are flipping, why not hold every 2nd or 3rd deal instead of flipping it?

For example, use the profit from the first flip to live off of and the profit from the second flip for the down payment on a property to hold. Then rinse and repeat.

Creative Financing

When a seller is motivated, there is often an opportunity to get into a property for little to no money down. For example, if the seller has some equity, then they can loan you the money to buy their house from them. Or they can loan a second to you behind a bank loan or another private loan to cover the down payment.

Another option is to buy the property subject to the existing financing. This transfers the deed to you, but leaves the seller on the original mortgage. Be forewarned: this does trigger the “due on sale” clause of a normal bank loan, so the bank could potentially foreclose. And furthermore, it will take a lot of motivation — and plenty of rapport — to convince a seller to do these types of deals, but they’re done all the time.

(For more on the subject of creative financing, check out Brandon Turner’s new book The Book on Investing in Real Estate with No or Low Money Down)

Angel Investors

It may feel awkward to ask family or friends for money (as an investment or otherwise), but you shouldn’t pass up a major opportunity just because it’s awkward. After all, I went into business with my father and my brother. Family and friends can be a great source of capital as either partners or lenders.

And yes, you will want to be extra careful with their money. But then again, you should be extra careful with any investor’s money.

Private Lenders

Bank loans won’t cover the full cost of an acquisition, and hard money loans are too expensive for the buy and hold strategy, but luckily, there is a third way. The method we’ve used the most is to fully finance properties (purchase and rehab) with a trust deed from a private lender — usually someone we know or have networked with — at 9 percent interest only.

Properties won’t cash flow in all markets at 9%, but in working class areas, especially in Southern and Midwestern markets, as well as smaller towns, they often do. It will take a lot of rapport building to convince someone to lend 100% to you. Therefore, it’s certainly helpful to have some deals under your belt to show them, but it is not mandatory.

And remember, you never know who has money. Tell people what you do and what you offer often, and if they show interest, invite them to lunch or a casual meeting. Make a business plan and a packet of case studies (if you have them) to show any potential lender. We’ve found that once people trust us, they are quite willing to swap the 0.2 percent return they are getting in a CD for the 9 percent we offer.

Related: Keys to Long Term Success in Buy and Hold Real Estate

And if you are buying at the same discounts you do when flipping, you should be able to refinance the whole loan (or at least most of it) with a traditional bank in a year or so after the property has “seasoned” (the bank will refinance it based on appraised value instead of what you have into it). By buying it at a discount, you also protect the lender because you still have a substantial equity cushion even though they have fully financed the property.


Instead of finding several private lenders, you can find one person with a lot of money and partner with them. They bring the money, you do the work — and you split the equity in some way that you both find agreeable. This is one of the most effective ways to buy and hold, although again, it will probably take a track record in real estate to convince such a person to partner with you.

Partners can also be done on a one by one basis, but I would hesitate to recommend this approach. Every new partnership needs to be accounted for separately, which can make for an accounting nightmare. More importantly, each partner has a controlling stake in their property, which can lead to all sorts of arguments and disagreements. And this problem will just multiply if you have many such partnerships.

Still, the approach can make sense early on with a few properties if you cannot convince such people to lend instead of partner.


Don’t let the excuse of not having enough money right now stop you. It may take time, but there are plenty of ways to get started in buy and hold. Whatever method you choose, buy and hold can grow your wealth exponentially, so get started as soon as possible.

What’s your favorite way to finance buy and holds? What would you add to my list?

Leave me a comment below!

About Author

Andrew Syrios

Andrew Syrios has been investing in real estate for over a decade and is a partner with Stewardship Investments, LLC along with his brother Phillip and father Bill. Stewardship Investments focuses on the BRRRR strategy—buying, rehabbing and renting out houses and apartments throughout the Kansas City area. Today, they have over 300 properties and just under 500 units. Stewardship Properties on the whole has just under 1,000 units in six states. Andrew received a Bachelor's degree in Business Administration from the University of Oregon with honors and his Masters in Entrepreneurial Real Estate from the University of Missouri in Kansas City. He has also obtained his CCIM designation (Certified Commercial Investment Member). Andrew has been a writer for BiggerPockets on real estate and business management since 2015. He has also contributed to Think Realty Magazine, REI Club, Elite Daily, Thought Catalog, The Data Driven Investor and Alley Watch.


  1. Call me an amateur real estate investor, but I have established a common but nifty system for adding to my real estate portfolio, assuming you own just your primary residence. A HELOC is high risk high reward for the average American. As a former loan originator I have seen consumers use a HELOC to save $1,000s in credit card and other installment debt by consolidating. Then I have seen them rack up debt again but stuck with no place or room to pay it down.

    A year ago I opened a $25,000 HELOC on my primary to purchase an investment SFD. I immediately cashed the first months rent and pocketed $550 a month. I have two other rentals that cash flow about $800 in total, so I apply the $1,350 of total cash flow to my HELOC each month. Back out a few expenses and a temporary vacancy, and I can still pay back my initial loan in less than two years. Repeat!

    Ideally with each property I acquire (including upgrading my primary every 5 years or so) I save for the next one faster than I did before. My goal is to cash flow enough to buy a property once a year without using my day job money.

    Good luck to all.

      • Do you have a primary residence with equity? Most banks offer a line of credit up to 90% loan to value for an interest only payment. After 10 years you must start paying down the balance, but can enjoy freedom and flexibility until then. Ideally you pay back your down payment over a short period of time and can use this process 4-5 times before it becomes fully amortized.

        • Aalap Sharma

          Hey thanks for the article I would like to know a bit more detail. So here is an example.
          Estm Value of Home = $1000,000
          Loan Value = 600,000
          Heloc = 300,000 ? Am I doing this right ?

          So let’s say I buy a rental in cheaper place in all cash ie (300k) which gets me a rent of , say 1600 a month. Would a lot of that money be going todays maintenance and the payment towards HELOC ?

          I understand that after the HELOC is paid off one would have 2 properties but that would take time. What am I missing here?

  2. Frankie Woods

    What a great breakdown Andrew! I love seeing the different methods out there to fund deals. I’m getting close to my limit on loans and funds to account for the 25% down, so it’s good to see what is available to me when I “peak”! I think reaching your current limit is a good thing. It makes you think and gets you out of your comfort zone. Awesome!

  3. Jim Adams

    Great article
    It really has got me thinking… In addition to having ways to ” Get Rich Quick” in Real Estate- I have to make a conscious effort in implementing a strategy to gain a “Get Rich Slow” system. Your article just put more tools in my toolbox. Thanks!

    • Andrew Syrios

      There are other reasons a seller might want to owner carry. Perhaps the property isn’t performing (say it’s an apartment) very well and it will be tough for a buyer to get a loan on it. Or perhaps, like in the late 70’s and early 80’s, the interest rates are so high, seller financing is important to sell. Or perhaps it’s just a way to get a better price or actually get the deal done in a slow market or one’s where banks aren’t lending. Finally, if the seller doesn’t have a good place to put the money, they may actually like putting it to use and getting a return on it.

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