Ah, multifamily properties… I love getting them under contract!

Maybe you do, too.

If so, it’s a great way to participate in real estate investing. Once you have your systems in place your profits can be really good.

But how do you finance your properties?

That’s exactly what I talk to you about in this short video:

Let me break the 3 funding strategies down for you…

Now that you’ve decided that you like the idea of investing in multifamily properties, let me help you get clear on how you will fund your deals.

I’m sharing this information with you so you can get un-stuck and start moving forward!

Here are the 3 top ways to pay for your multifamily properties:

1.- Cash

In this case, I’m talking about YOUR cash. Let’s say you have saved up a big chunk of money in your savings account or retirement account. Excellent. If you have $/€100,000, $/€200,000, $/€400,000 or more, that’s wonderful. Use it to buy the property or to put a sufficient deposit down on a larger multifamily property. Use your money to buy a fixer-upper and rehab it so it is more rentable at higher rents.

If it is a smaller property, chances are good that you can pay for it in full (if you have saved $/€500,000) if you choose the right market. That’s one reason I buy properties in Charlotte, NC. I can actually afford the entire property without taking out a big loan. I bought my first couple of properties with my own money. After that I turned to other forms of financing.

2.- Traditional Lender

This will be your bank or other financial institution. In this situation, you will choose between a fixed-rate or variable-rate loan. You will negotiate the term by which you will pay the bank back. That can be 15 years, 30 years and sometimes 40 years. This loan is similar to a home loan you would take out to buy your primary residence. There are differences, because the multifamily property is different than a single-family property and there are a few rules that apply to your business (of real estate investing) that you’ll have to learn. Plus, the bank won’t typically be open to funding more than a couple of your deals. They look at you as a greater risk the more loans you take out. Let’s face it, they are right. Even when you can show your financials and projections regarding rents, monthly expenses and profits, the bank will likely balk when you ask for a third loan.

3.- Non-Traditional Lender

This is the strategy that I use most often today. Of course I’m talking about using a private lender or, better yet, having the seller agree to fund your deal! The latter is my favorite way to get properties under contract. You might think the seller won’t find the benefit in carrying the private loan, but there are so many reasons they will that you should approach sellers about working with you. It all starts with a series of conversations. In those conversations you want to get to the root of how much money the seller needs to move on in their lives… which, many times you’ll find, isn’t the full asking price, I promise!

Once you have learned exactly how much money the seller NEEDS (not wants) up front, you can then negotiate the deal. Believe me, everything is negotiable!  – Tweet   I’ll talk about that in a minute. Right now, let me tell you about private lenders. These are just people who have the money you need and who are willing to loan it to you for a period of time at a specific rate of interest. The rate is based on the deal, how much profit you can make on the property by renting it out over time and other factors. If it’s a short-term loan, you may pay even more than 10%. That’s called a hard money loan. But for longer terms, I hope you can find a single digit number that works for you. That’s a whole other article. (Maybe I will write that next.)

More about seller negotiations…

Like I said above, everything in a deal is negotiable.

If you want the appliances and furnishings, ask for it. If you need the landscaping to be done prior to purchase, ask for it. If you need upgrades before purchase, ask for them.

These are not the focus of your negotiations with sellers, however. Your number-one priority should be in asking them to carry all or part of the financing. Some refer to this as “creative acquisition,” but in all honesty it should be called “common-sense acquisition.”

The idea of asking sellers to carry the financing spooks some real estate entrepreneurs, but it shouldn’t. You are simply having conversations.

 A lot of times, the seller will say no AT FIRST. That doesn’t mean you stop talking to them.  – Tweet   You need to walk sellers through the benefits of working directly with you, for example, the tax benefits can be huge. Instead of paying a big sum in their capital gains tax, they can delay the process or not pay nearly as much over time, because the deal is structured as payments over time vs. their receiving one big lump sum (like in traditional financing). Mind you, I am not a tax professional, so you should chat with your tax person about the benefits so you can be clear.

The bottom line is that when the seller realizes that selling traditionally isn’t really an option or that selling traditionally will take too much time when they really want out of the property, suddenly they warm to the idea of carrying some or all of the deal.

That recently happened to me in a recent multifamily purchase that I made on a property just outside Charlotte. At first the sellers (an elderly husband and wife pair) weren’t open to the idea of carrying any part of the financing. That didn’t stop me from proceeding. I made the offer and moved into the due diligence process.

During the due diligence process I asked for a lot of proof as to the viability and profitability of the property. That is when the sellers realized they would have to be more flexible. They couldn’t show their financials well enough to get the deal closed. I would have walked away even though I knew it was a great property that could catapult my income into the bracket. If they weren’t willing to carry part of the deal, I was out, because I knew their financials would have to be cleaned up and all-new processes put in place for collecting and tracking rents and expenses.

Plus, when the sellers realized that I was in no hurry to close and that I was willing to work with them more personally, they softened. It was not an overnight process, but we got there eventually and now they are carrying part of the deal. I’m happy; they are happy. They get to move on with their lives and enjoy their sunset years in comfort. I get a killer property and they have even offered to advise me, which is special to me! I am looking forward to owning this multifamily property. There is massive room for expansion over time. Yes, I will have a learning curve, but I am not in this thing alone. I have a team; I’ll have property management in place.

Regarding negotiations with a seller and getting them to agree to a carry-back (seller finance) on your deal, there’s one thing you will learn. Real estate investing is about building relationships.

For example, I built a relationship of trust with these sellers over time. Once they were comfortable with who I am as an investor and saw that I wasn’t out to “get” them, they wanted to work with me. They asked me lots of questions. I answered. There were a lot of questions I had for them. They answered.

In the end, we negotiated FAIR TERMS for both sides of the deal and we both walk away satisfied that it will work out well.

I’m very grateful when this arrangement happens. It really doesn’t get better than that in my world!


Now that you understand the 3 main ways to pay for your multifamily properties, I have a question for you.

Which of these funding strategies do you find most beneficial… and which do you think you will use?

Let me know in the comments under my video or just contact me with your answer here:



You can also check out my latest podcasts and collaborations here keeponcashflow.com/podcasts/