If you’re sitting on a good deal and no idea how to pay for it, welcome to the club every investor started in. I’ve been doing this north of 20 years here in the Pittsburgh area — flips, rentals, acting as my own GC — and the single biggest thing that stops people from getting started isn’t finding the deal. It’s funding it. So let’s talk about what actually works, not the guru fantasy version.
Cash is king, but most people don’t start there. If you’ve got the cash, you’ve got speed and negotiating power — sellers love a clean close with no financing contingency. But tying up all your liquidity in one property is how people get stuck. Even when I can pay cash, I’m thinking about what that money can’t do while it’s locked in a project.
Conventional financing is the cheapest money you’ll find. If you’re buying a rental and you qualify, a conventional or DSCR loan is hard to beat on rate. The catch is speed and condition — banks don’t want to lend on a property that needs a new roof and has no kitchen. That’s why conventional works great for stabilized rentals and terribly for distressed flips.
Hard money is built for flips. Hard money lenders fund based on the deal, not just your W-2. They’ll lend on the after-repair value, often covering a chunk of the rehab. Rates are ugly — think double digits plus points — but if you’re in and out in five months, the cost of capital is just a line item. The math only works if your numbers are tight and your timeline is real. Slow rehab kills hard money deals.
Private money is the quiet weapon. This is money from people you know — someone with cash sitting in a savings account earning nothing who’d rather earn 8-10% backed by real estate. Your first private lender is usually someone who’s watched you work and trusts you. Treat that money like it’s sacred, because it is.
House hacking with an FHA loan is genuinely one of the best entry points. Buy a two-to-four unit, live in one, rent the others, and you can get in with a low down payment. Your tenants cover most of your mortgage while you learn the business from the inside.
The HELOC play — pulling equity out of your primary home to fund a down payment or a quick cash deal — works but cuts both ways. You’re betting your house on a deal. Make sure the deal deserves that bet.
The honest truth: most people fund their first deal with some Frankenstein combination of these — hard money plus a little private money plus their own cash for the gap. Pick the deal first, then build the funding stack around it. Don’t go looking for a deal that fits a loan product.