Tips for scaling small multifamily when you’re tight on liquidity?

Question

For those building a multifamily portfolio: what’s your strategy for acquiring 2–4 deals per year when you don’t want to tie up all your cash in each one? Have you used higher leverage (bridge, DSCR), or partnered on deals to stay liquid? I’m curious how people are stacking projects while staying safe.

Evan Polaski · Answer

@Kyle O'Brien, first: are you actually finding 2-4 GOOD deals per year?  Often times, people are more focused on growth for growth's sake, rather than just doing good deals.  Not to say 2-4 properties is an aggressive growth target, but it always gives me pause when acquisition count is the primary driver.

I think partnering is the more conservative option.  If the deals go great, having equity partners certainly costs YOU more, but it can give you more flexibility when things don't go exactly as planned, assuming your investors actually know the risks they are taking.

Alternatively, leverage yourself to the moon.  High risk, high reward.  Like Deon noted, go for the highest LTV bank loan, then stack on a bridge loan at 10+% (if you can find someone to take a second) and then pull in the seller financing (if you are lucky enough to find someone that is open to seller financing).  This can make you look like a hero, if it all works out exactly as planned.  But typically the first stumble (insurance going up 15% in one year, or one eviction) and the cards all crumble.

Or, the most conservative way, you buy your next deal when you are able to take it down yourself.  Save money from deal one, plus personal savings, and buy the second.  Now save all the money from deals one and two, with some personal savings and buy a third.  While this won't get you featured on podcasts, because it shows patience and consistency, versus "get it NOW", the landlords that I know that have done it this way have never lost a property, lost investor money, and have more time available to them to lead the life they want.

Deon White · Answer

Personally we try to structure offers with a bank loan first (70%ish), seller note second (20%ish) and then raise equity for the remaining down payment / reserves / rehab.

Definitely need to figure out how much equity the sellers have before suggesting something like this but it greatly reduces cash needed up front. Definitly a strategy worth looking into.

Side note @Kyle O'Brien I'd also recommend setting the balloon note as long as possible (3+ years minimum but depends on the deal).

If you ever want to talk through how we submit offers i'm always available.

Denise Supplee · Answer

Hi @Kyle O'Brien, great to meet you on BP! This is definitely something we've had to balance ourselves. We've seen people approach this a few ways: some use DSCR or interest-only bridge loans to minimize upfront capital, while others partner or co-invest to spread out the cash requirement and risk. Personally, I co-manage a co-investing club where members pool funds to invest in deals together, which allows us to stay diversified and liquid without taking on full responsibility for each project.

Yashira Sanchez · Answer

Hi Kyle,

This is a common bottleneck for a lot of multifamily operators I work with. Most people focus on financing, but often the real limiter is bandwidth—getting bogged down with admin, reporting, or project follow-up instead of working on new deals.

I’ve seen operators free up a lot of capacity by delegating the bookkeeping, chasing vendors, and prepping investor reports to remote support staff or assistants. Even just shifting those routine tasks can make it much easier to stay active on acquisitions and not lose momentum.

Curious what others here are doing to keep their pipeline full without burning out.

— Yashira

Micah White · Answer

Great question, Kyle! I have found that raising private money has been helpful in scaling my business when liquidity is tight. I have also utilized the owner-occupied 5% down house hack strategy to get into deals when money is tight as well.

Markus Shobe · Answer

A lot of my clients partner with other investors. It will give you more flexibility if things do not go well.

Aaron Zimmerman · Answer

I would recommend partnering and to not over leverage yourself. If you're tight on cash and buying a 5+ multifamily, the value is based off NOI. Let's say you get hit with higher than expected taxes and insurance as well as lower rent growth than expected, you're going to be a tight spot when you refinance after 5 years.

The worst thing you can do for yourself is run out of cash. That's one of the only ways to lose in real estate over the long term.

Tips for scaling small multifamily when you’re tight on liquidity?

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