100% Financing Options — Too Good to Be True or Smart Leverage?

Question

I’ve seen a lot of conversations lately around 100% financing — especially in creative deal structures and investor-focused loans.

What’s your take? Is it smart leverage for experienced investors, or a risk that should only be used selectively?
Would love to hear how others are using leverage responsibly in this higher-rate environment.

Elealeh Fulmaran · Answer

100% financing isn’t good or bad by itself; it’s about control and downside. I’ll use it only when three boxes are checked: the cash flow covers debt with margin today, I have multiple exits pre-wired (sell, wholetail, refi to DSCR/seller-finance), and the timeline is short with known scope. Keep leverage tied to stabilized, boring assets or hybrid BRRRRs, not heavy rehabs. Structure reserves outside the deal, lock fixed terms, and bake in longer holds and cost overruns. If any of that breaks, lower leverage or walk. Smart leverage buys time and options; dumb leverage buys pressure.

Quinton Brown · Answer

Totally get the appeal, but 100% financing always feels risky to me—if you’ve got no skin in the game, the lender or investor’s taking on all the risk. That usually shows up in the terms, and not in a good way.

Stuart Udis · Answer

Loan to value is relevant. 100% financing on a 50% LTV property is different than 100% financing on a 80% LTV property. Cost of capital across the capital stack also has to be considered. Debt is generally the most affordable capital, so it makes sense to use the leverage but do so responsibly.

Jules Aton · Answer

As a seasoned investor with capital cushion using it as true leverage would appeal to me if the rates were lower than they are now. I'm not a fan of putting more down in an effort to convince self there is cash flow when in fact it is your own money anyway. For the average homeowner who seeks this due to a lack of funds it is likely a bad idea because they often make emotional purchases and attempt to sell, move on a whim without understanding that appreciation is usually a long game.

Scott Anthony · Answer

@Elealeh Fulmaran

Smart cookie! You're a great resource on BP. Hopefully people will listen. Could save you in the long run.

Thank you!

Marcus Auerbach · Answer

For many it's the only option to grow a portfolio faster, but I don't know any lender who would do 100% financing for a new investor. 100% of purchaseprice is okay, as long as it's not 100% of market value.

Real estate investing is all about equity. Your cash flow will always be around 5-7% of equity, so you have to find a way to grow equity. You can let the market appreciate over time, force it by rehab or use down payment - usually a combination of all of them, but with 0% equity I don't even know if I'd call that an investment.

For a portfolio 50% to 75% is sensibel leverage, if you fall below that you are leaving money and opportunity on the table, if you go above you are redlineing on the risk scale, thats not sustainable for long.

David Krulac · Answer

When I started the first 11 properties were bought with 100% financing, because I didn't have money.  It was off necessity if I wanted to grow.  At one period of time afterwards, I purchased 100 properties in a row with 0% financing and 100% cash.  This year the ratio was 43% financed and 57% cash.

100% Financing Options — Too Good to Be True or Smart Leverage?

Most Popular Reply