I am looking for some help. I am looking to purchase a STR in Nashville Tennessee. I have run the numbers and it looks like a great property. I am wanting to move forward but I only have enough for about 10% down payment. The Property is listed for 699K and it has been on the market for 5 months already. The property is in in an LLC, for those that know Nashville STR market and it is an active listing so the purchase would include the LLC and the actual property. it also has a property manager in place so it would be buy and immediate cash flow and future bookings.
My question is what is the best avenue to push forward. I have tried most of the ways I know to raise funds (family, friends, private lending, etc.) I have also inquired about seller financing and they were not interesting in that.
I am a landlord of one property already for 3 years. it is a long term rental. but I am looking to acquire a second property. if anyone can offer advice or help I would appreciate it.
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
1y
@Stefen Huskinson NEVER buy an LLC that owns the real estate you are actually purchasing!
You can get title insurance to cover unknown liability issues on the actual real estate, but you CANNOT get any simialr insurance to make sure there are no "unknown" liability issues related to the LLC itself.
If you did a DSCR loan, you would set up your own LLC to buy ONLY the real estate FROM the LLC that owns it.
Lender · Denver, CO · Member since 2022 · 467 posts · 230 votes
1y
Great question, Stefen — and congrats on already owning a rental and looking to level up with an STR in a competitive market like Nashville.
You’re doing a lot right already — running the numbers, checking for seller financing, and evaluating cash flow and property management in place. That’s all smart investor due diligence.
Here are a few financing strategies you might consider to bridge that 10%–20% gap:
Look into a DSCR Loan with 10% Down Options
Most DSCR (Debt-Service Coverage Ratio) loans require 20–25% down, but some non-QM lenders offer creative structures — like cross-collateralization or blended equity across properties — that might help reduce your cash needed at closing. It depends heavily on the lender, the property cash flow, and your credit profile.
Some DSCR lenders allow using equity in another property (like your rental) as part of the collateral stack, which could free up cash or reduce your down payment.
Bring in a Capital Partner or Equity Split
You mentioned private lending hasn't worked out, but have you tried structuring a JV (joint venture) or equity partnership? Someone puts in the down payment; you run the deal and operations.
HELOC or Cash-Out Refi on Existing Property
Since you've owned your rental for 3+ years, there may be untapped equity there. Could a cash-out refinance or a HELOC help you extract enough to bridge that down payment?
Assume LLC Purchase with Creative Structuring
Because the property is held in an LLC, you might have more flexibility with how the transaction is structured. Sometimes buyers will do a membership interest transfer rather than a traditional title transfer — and some private lenders or hard money lenders are more flexible with that setup.
Not all lenders like lending to LLCs on entity purchases — but some do if the property cash flows well. It’s a niche, but it’s out there.
If you’d like, I’m happy to dig deeper into which strategies might fit your credit, income, and goals — just shoot me a message anytime. Keep pushing forward — you’re asking all the right questions.
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
1y
@Stefen Huskinson NEVER buy an LLC that owns the real estate you are actually purchasing!
You can get title insurance to cover unknown liability issues on the actual real estate, but you CANNOT get any simialr insurance to make sure there are no "unknown" liability issues related to the LLC itself.
If you did a DSCR loan, you would set up your own LLC to buy ONLY the real estate FROM the LLC that owns it.
Hey Stefen — sounds like you’ve found a solid opportunity, especially with the property already cash flowing and bookings in place.
Since seller financing is off the table and you’ve tapped your immediate network, you might explore:
Equity partners — bring in someone who can cover the gap in exchange for a percentage of ownership or cash flow.
Gap funding from private lenders — even if traditional routes didn’t work, there are investors who specifically fund short-term gaps for STRs with proven income.
HELOC or cash-out refi on your existing property (if there's enough equity) to bridge the down payment.
STR-specific lenders — some offer second home or DSCR loans that might allow for a lower down payment, especially if you can show strong projected income.
You’re already thinking creatively — just keep building out the capital stack. Deals like this are doable with the right puzzle pieces!
Specialist · NJ · Member since 2022 · 1k+ posts · 649 votes
1y
699k, you are going into a DSCR? If you put 20% down that's 140k right there. Then figure 15k - 20k closing costs for a house of this value. 160k. And now you'll need to show 9 payments in reserves that's another 35k - 50k you'll need to show. Plus incidentals. You need 200k+ for this transaction.
The biggest mistake by far I have seen people make, is that they buy houses they can not afford or they move too quick and get into 3,4,5 projects right away. If you burn all your cash up, it's a recipe for disaster. I have seen people go into default over buying over their head.
With 70k in liquidity. You should be buying at 125k or less. I know it's not sexy, but you can fix it up and have a 300k+ house getting 2500/month in rent.
When you start over your head, before you know how to swim, you drown.
Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
1y
There arent any realistic options for only putting 10% down on something like this. You need more capital. The only path forward that's realistic is bringing in an equity partner; just be mindful of securities laws. Otherwise, youre undercapitalized, which is a recipe for disaster in a high-risk, highly volatile business like STRs.
Seller-financing would be the only other option, but you mentioned that youve already tried this.
Could you master lease the STR and then operate it to build up capital?
I am looking for some help. I am looking to purchase a STR in Nashville Tennessee. I have run the numbers and it looks like a great property. I am wanting to move forward but I only have enough for about 10% down payment. The Property is listed for 699K and it has been on the market for 5 months already. The property is in in an LLC, for those that know Nashville STR market and it is an active listing so the purchase would include the LLC and the actual property. it also has a property manager in place so it would be buy and immediate cash flow and future bookings.
My question is what is the best avenue to push forward. I have tried most of the ways I know to raise funds (family, friends, private lending, etc.) I have also inquired about seller financing and they were not interesting in that.
I am a landlord of one property already for 3 years. it is a long term rental. but I am looking to acquire a second property. if anyone can offer advice or help I would appreciate it.
Thanks
If you can't afford the down payment, you will not succeed at the STR. It takes money to run a STR, and plenty of it.
is this a good deal? You say you have "run the numbers" but what due diligence did you do to verify those numbers? You mention nothing about if you have experience. Is real estate or STR new for you.
As @Drew Sygit says buying an LLC means buying all the past liabilities with it. How does 5 months on the market compare with other listings. If others have stayed away for 5 months than maybe it is not as good a deal as you think.
Do you have reserves in addition to the 10% down? If you are buying with all your available funds that is high risk.
Hey Stefen — as a private lender, I've seen similar STR deals get done by bringing in a capital partner for the down payment in exchange for equity or a preferred return. Since the deal already cash flows, that could be attractive to the right partner. If the numbers really work, structure and creativity can often fill the funding gap. Happy to take a look if you want a second set of eyes!
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