All Forum Posts by: James Stout

I’ve had a lot of newer investors ask me the same thing. The truth is:

• 100% hard money financing does exist, but it's usually capped at ~70–75% of ARV. In other words, the lender is still protected by the equity cushion. If purchase + rehab fit under that ceiling, you might technically see "no money down" — but you'll still need cash for closing costs, interest payments, and often a portion of rehab before reimbursement.

• Beginners: lenders almost always want to see some skin in the game. The easiest way I explain it is — if you have zero dollars invested, it’s too easy to walk away when things get hard. That’s why 100% deals are rare for first-timers.

• Alternatives: joint ventures, seller seconds, or cross-collateralization with another property can fill the gap. Those structures take relationships and careful paperwork, but they're often more realistic than expecting a true 100% LTV loan as your first deal.

Bottom line — if you’ve got a great deal, money will find it. But going in expecting “100% financing, no experience, no cash” usually sets up disappointment. A little capital reserves go a long way in making sure you can ride out bumps and actually finish the project.

Josh — welcome to the world of rental investing. You’re getting good advice here:

• Conventional loans: 25% down on a non-owner multifamily is the norm, mainly because the agencies want to see you have meaningful equity at risk.

• DSCR loans: You’ll sometimes see 20% down, and in rare cases 15%, but the trade-off is higher rates/fees. As a first-time investor, most lenders will want to see you closer to 20%+ unless you’ve got excellent credit and strong reserves.

• Hard money: That’s really a different tool — short-term, high-cost, and best used for properties needing rehab where you can add value quickly. It’s not a fit if the goal is just lowering the down payment on a turnkey rental.

One alternative a lot of newer investors use is to buy a property as a primary residence (duplex, triplex, etc.) and “house hack.” That’s where you can get in with 3.5–5% down and still start building rental experience. Otherwise, 20–25% equity is the reality for long-term rental financing.

The key is making sure the deal itself is strong — solid cash flow covers a lot of sins, and if the property works at 25% down, you’ll be in a much safer position starting out.

Ellisa — great topic. I’ve been watching a couple things stand out this year:

• Speed & certainty matter more than price. Investors will often take a slightly higher rate or points if they know the lender can close cleanly in 5–10 days. Having docs and title relationships lined up ahead of time is key.

• Second trust deeds on investment property are becoming more common. With higher rates, borrowers don’t want to disturb their first mortgage, so there’s demand for high-equity 2nds.

• Relationships beat advertising. The strongest deal flow tends to come from consistent communication with a small circle of flippers, probate attorneys, and wholesalers who know you’ll actually fund.

• Challenges: Regulatory creep and borrower expectations. Everyone wants “bank rates with hard money speed” — not realistic. Clear boundaries in your loan programs help.

Curious what you’re seeing on your side in Maryland — are flippers there pushing for higher leverage, or staying conservative?

Erik – great breakdown. I see the same themes on my end. The bait-and-switch in particular has cost more than a few investors time and money. I always remind borrowers that in business-purpose lending, disclosure rules aren’t the same as consumer mortgages — which makes transparency and written clarity with your lender that much more important.

Luke, your point is well taken. The appraisal and 1007 analysis do matter, but a borrower should still know exactly how fees and points are structured up front. Even if the final rate can’t be locked on day one, there’s no reason for surprises at closing.

layton – congrats on the new baby. You’re bumping into the “small balance commercial” gap. A lot of banks don’t like the $250–500k space because the underwriting cost is the same as a $2M deal but with a fraction of the revenue. That’s why you’re getting hard-money style quotes on a stabilized property.

One workaround is to approach it as a private bridge rather than a bank refi. Private lenders who like stabilized assets will sometimes play in that $250k range if the LTV is conservative (say 60–65%) and title is clean. Terms are case-by-case, but the smoother the collateral and paperwork, the more likely you can shave the rate and fees down.

Ellisa – good question. I’ve found the lender/investor relationship is usually transactional, but there’s a nuance. Most lenders don’t actively hand out deal flow, but the ones who’ve been around long enough often know who’s serious, who’s in over their head, and where projects are getting stuck. That information isn’t always shared directly, but if you build trust, sometimes opportunities slip your way.

Alexander — an eviction is an eviction. Even if the sons were the problem, mom was the responsible party on paper and didn’t prevent it. Offering double deposit doesn’t erase that history (and in CT you’re capped on deposits anyway). You’ve already seen how this family handles responsibility. My take: thank the good tenants for vouching, but keep your screening consistent and move on. It’s cheaper to sit vacant a bit than go through another eviction

Carlos — seasoned landlords here have all been through some version of this. The mistake was handing over keys without first month’s rent — that’s where your leverage was lost. At this point, best move is exactly what you did: get a cancellation in writing, return keys, and document condition with photos/video for both code enforcement and your own protection. Clean the unit, swap a few easy items (screens, showerhead, mildew spot), and relist. Much cheaper than fighting with tenants who already showed you they’ll weaponize complaints.”

Nice work, Dakota — turning a live-in into a profitable flip is one of the best ways to get started. Sounds like you pulled a lot of equity out while clearing debt, which sets you up strong for the next move. The contractor lesson is a big one; protecting quality control early saves a lot of margin later

Nice first deal, Christina — solid spread between all-in and ARV. Terms are a little pricey, but that's normal starting out. If you can keep your days on market short like you mentioned, looks like a strong win.