These Are My Favorite Ways to Finance Multifamily Investments

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More and more real estate investors are discovering the advantages of multifamily property investing. The one thing that holds most back is how to fund these larger real estate acquisitions. Fortunately, there’s more than one way of financing multifamily deals. Here are three of my personal favorites.

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Seller Financing

Seller financing is often available on commercial properties. Partly due to the higher purchase amounts — but also due to the available buyer pool. It also often just makes sense for the sellers. It helps them lower potential taxes and gives them the passive income they really want — from an asset they are already familiar with.

Related: Why the Wealthy Put Their Money Into Multifamily & Commercial Real Estate

Seller financing is great for funding these deals because you don’t have to jump through the hoops upfront with a lender. You can also spread out your capital on more deals and gain the slack to get older buildings performing before applying for more attractive long-term financing.

The one downside is having to deal with uncertainty over whether the seller can, and will, hold up their end — and the uncertainty of where the market will be when it comes time to refinance. On my first deal like this, I put down $200,000, and the seller provided a $700,000 loan. The remaining funds (to address building upgrades) were raised from investor partners. An update on that project can be found here. The $700,000 loan has a balloon payment in three years, at which point we’ll go with our regional bank or obtain a small balance loan from Freddie Mac.

Regional Banks

Small regional and local banks can be great options, too. They are often willing to give better rates and terms because they are very familiar with the area and want to invest locally. That can mean longer amortization schedules, higher LTVs, and less paperwork to go through. They can get aggressive on their terms in attempt to compete with agency and bigger bank lenders. 

Try building relationships with these local bank managers. Putting your cash on deposit (which you will likely need to do to get a loan) with them can also help in securing the best terms or obtaining an additional line of credit for repairs and emergencies.

These institutions may also be easier to work and negotiate with in the future, in the event you ever run into problems.

Related: Multifamily Myths: Why Newbies Think Multifamily is Easy to Buy & Finance


Real estate partnerships have been around for thousands of years. New methods of crowdfunding real estate deals just take this to a new level, with more reach and efficiency. Crowdfunding in essence is the practice of funding a project or venture by raising many small amounts of capital from a large number of people. 

Individual investors can launch their own crowdfunding campaigns to raise the money for their multifamily investment deals, or they can participate in offerings others are running. You can fundraise the entire amount needed for acquisitions, repairs, and holding costs until performing — or just a part of it in combination with the other options above. Crowdfunding can be used for both debt and equity financing.

The one thing investors need to understand about this strategy before rushing to launch their own fundraising campaigns is that it can require a significant investment in setup, paperwork, legal work, and promotion to make it work. 


If you’ve been looking for a way to take advantage of the opportunities and benefits of multifamily investing, these financing options can help. You can use them to fund your own deals by yourself or participate in crowdfunding opportunities and simultaneously diversify into more investments. These options have worked for me and remain my personal favorites.

What are your favorite ways to finance multifamily deals?

Share them below!

About Author

Sterling White

With just under a decade of experience in the real estate industry, Sterling currently manages over $10MM in capital, which is deployed across a $26MM real estate portfolio made up of multifamily apartments and single-family homes. Through the company he co-founded, Holdfolio, he owns just under 400 units. Sterling was featured on the BiggerPockets Podcast and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single-family investing and apartment investing to wholesaling and scaling a business.

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