So you’re ready to buy your first single-family rental or flip—but there’s just one problem: How do you finance it?
This is one of the biggest roadblocks for new investors. Good news? You’ve got options. And with the right strategy, you can get into your first deal without needing a pile of cash in the bank.
At 608B Capital, we’ve funded and executed deals in just about every way you can imagine—from traditional loans to hard money to retirement accounts. There’s no “one size fits all,” but there is a right fit depending on your goals, timeline, and resources.Here’s a breakdown of seven smart ways to finance your first single-family investment property—plus the pros and cons of each:
1. Buy With Cash
Best for: Investors with liquid capital looking for speed and simplicity
Buying with cash gives you maximum control, zero monthly payments, and faster closings. Sellers love it. No banks, no underwriting headaches. You get the strongest negotiating position and keep 100% of the profits.
Pros:
- Fast closing
- No interest or loan fees
- Easier negotiations
Cons:
- Ties up capital you could use for multiple deals
- Limits your returns (no leverage = lower ROI)
💡 Pro Tip: If you’ve got $200K to invest, don’t blow it all on one deal. Leverage allows you to do more with less.
2. Use a Home Equity Line of Credit (HELOC)
Best for: Homeowners with equity looking to tap into existing assets
A HELOC allows you to borrow against your primary residence to fund a deal. It’s revolving credit, meaning you can use it, pay it back, and reuse it. Great for down payments or even full purchases in some markets.
Pros:
- Flexible access to capital
- Lower interest rates than other loan types
- Only pay interest on what you use
Cons:
- Puts your primary residence at risk
- Rates are often variable
- Approval based on credit and equity
🧠 Think Like an Investor: Your home’s equity isn’t just sitting there—it’s a potential funding source for your first deal.
3. Traditional Bank Loan
Best for: Long-term rental holds and investors with strong credit/income
Conventional financing gives you 15–30-year fixed terms and low interest rates, which are great for long-term cash flow plays. Expect 20–25% down for investment properties, and a thorough approval process.
Pros:
- Low interest rates
- Long-term fixed payments
- Ideal for buy-and-hold strategies
Cons:
- Slower closing process
- Strict underwriting requirements
- May count against your DTI (debt-to-income) ratio
💰 Down Payment Hack: Use a HELOC, hard money, or private lender for the down payment—then refinance into a bank loan once the property is stabilized.
4. Hard Money Loan
Best for: Flips or BRRRR deals where speed and leverage matter most
Hard money lenders (like 608B Capital) offer short-term financing based on the value of the asset, not just your income or credit. These loans are fast, flexible, and perfect for distressed properties banks won’t touch.
Pros:
- Fast approval and funding (often under a week)
- Based on deal, not borrower
- Ideal for rehab-heavy projects
Cons:
- Higher interest rates and fees
- Shorter terms (typically 6–12 months)
- Must have a solid exit plan (flip, refinance, etc.)
🔥 Pro Tip: This is how most flippers get started—short-term pain for long-term gain, especially if you’re light on capital.
5. Private Money
Best for: Investors who have friends, family, or networks willing to invest passively
Private money is when you borrow from an individual—not an institution. This could be a friend, coworker, or local investor looking for better returns than they’d get from a savings account or the stock market.
Pros:
- Flexible terms
- Negotiated rates and repayment
- Builds long-term investing relationships
Cons:
- Requires trust and transparency
- Can get messy without clear paperwork
- You’re responsible for protecting their capital
🤝 Tip: Treat private money like gold. Communicate clearly, document everything, and protect your investor’s interests as if they were your own.
6. Use a Self-Directed Retirement Account (SDIRA)
Best for: Investors with retirement savings they want to put to work in real estate
With a self-directed IRA or 401(k), you can invest in real estate tax-deferred or tax-free. These accounts allow you to lend money or buy property—but there are rules, so you’ll want a custodian to help.
Pros:
- Tax advantages (deferred or Roth)
- Invest retirement funds without early withdrawal penalties
- Great for passive income or lending
Cons:
- Complex rules and restrictions
- Can’t personally benefit (e.g. live in or work on the property)
- Requires a custodian and careful planning
📈 Smart Move: Lend money from your SDIRA to other investors to grow your account passively—and build experience while you learn the game.
7. Creative Financing (Seller Financing, Partnerships, Subject-To, etc.)
Best for: Investors who are creative, persistent, and willing to think outside the box
Not every deal needs to be traditional. Motivated sellers may offer financing. You can take over existing loans. Or partner with someone who brings the money while you bring the hustle.
Pros:
- Low or no money down
- Flexible terms
- Great for off-market or distressed deals
Cons:
- More negotiation required
- Legal complexity
- Not every seller will go for it
🧩 Bottom Line: If the deal is good enough, money will find it. Be creative and persistent—financing solutions are everywhere.
Final Thoughts: The Deal Dictates the Strategy
There’s no “best” way to fund your first single-family real estate deal—there’s only the best way for you and your specific opportunity. Start by getting educated, running your numbers, and connecting with people who’ve done it before.At 608B Capital, we specialize in helping new and experienced investors fund deals quickly and efficiently through hard money loans and creative solutions. If you’re ready to take the next step, we’re here to help you make it happen.