"Common" way to structure a deal? My DP + Private Money + Conventional Loan

Hello, thanks for the responses ahead of time.

Just doing some brainstorming on potential future deals, as I’d like to get the most property that my money can buy. My strategy: Buy and Hold.

For example, say there’s a strong cash flowing multi-unit for $750k, let’s assume all financials work out after my due diligence, my credit score is 820, I have no other debt. 25% down will be required for a conventional loan, so $187,500 (adding closing cost money) - making the total around $200k.

I, personally, have $100k cash (with another $50k in reserve monies)…

  • Would it be common to put down my $100k, get a hard money/private money loan for the additional $100k and then get a conventional bank loan for the remaining balance? As between my money and PM, I would have the 25% down payment a bank would require.


  • would it make more sense to not do the conventional loan right away, invest my $100k, and use private money for the whole balance. Then refinance with conventional loan X amount of months afterwards, thus paying off my private money lender?

I assume either would work considering I would clearly have “skin in the game” -

Lastly, I could (if I didn’t want to go a bit bigger, with better reward), get into a $400k multi family, which would be $100k down payment and I wouldn’t need to go the private money route at all.

Any thoughts? Recommendations? Thanks!!

I don’t know anyone doing conventional loans on multi-unit. If you have the down payment without borrowing then that is the best route.

That’s interesting, so are most investors purchasing properties via private money, hard money or paying cash?

Using my example, $400k purchase, $100k down - how is the remaining ($300k) of the balance being funded then?


A conventional loan is for a 4 unit or smaller. It sounds that you would need a commercial loan for the property you describe. FWIW, I would not be trying to buy “the most property your money can buy”. I would look for one that is profitable or can be repositioned to be profitable. You should read: David Lindahl’s Commercial Real Estate 101. It will give you the basics of REI for commercial properties. You should be aware of cap rates, cash on cash return, and return on equity figures to start. Best of luck.


JP - thanks for the book recommendation. I’ve certainly been reviewing cap rates, financials, etc obviously I still have some more learning to do w/ my terminology…

I’ll certainly take a look at that book recommendation, thanks for that.

I’m thinking that best bet would be to bring my 25% (not do an additional PM Loan to help cover the DP) and try to get a commercial loan for the remaining balance.

  • I will certainly make sure that the financials all work out and the property is cash flowing. I’m not overly risky to begin with, so doing my due diligence to ensure it is a sound investment will be important and something I will do before making any sort of purchase. I certainly want to learn all I can and make sure I don’t make a bad decision that will end my investing career before it really starts.

Thanks again!

Good luck

Seems to me like your biting more than you can chew, I have $450k saved and I’m worried about buying a 100k house!

Nice, $450k saved is a nice chunk of change. Take $250k, use it for a DP and jump in the waters already!

Either that, go and buy that $100k house, cash, and take a line of credit against it - reinvest that equity and use for another DP.

You’re in a darn good situation, but without any risk there’s no reward!

Good luck!!

  • calculated risk that is. Don’t just go in and wield the axe without planning and thinking.

Figured I should throw that in there as well!