Investing in real estate takes capital.
Investing in real estate can be one of the most powerful ways to build long-term wealth and passive income—but it often takes money to make money. Many first-time investors begin by using their own savings to purchase their first one or two properties. This works for a while. Maybe you buy a single-family home with cash or put a sizable down payment on a duplex.
But soon, reality kicks in. You run out of capital. That’s when you’re faced with a decision:
Do I stop investing altogether—or figure out how to buy more real estate without relying solely on my own money?
The good news? You have options. Whether you’re an experienced investor or just getting started in North Texas, there are several proven ways to finance your next real estate deal—even if your cash reserves are low.
Let’s explore four of the most common and effective strategies used by investors across the country and right here in North Texas.
1. Traditional Bank Loans and Lending Institutions
Let’s start with the most common route: borrowing money from a bank, credit union, or mortgage lender.
If you have:
- A solid credit score
- Documented income
- Enough money for a down payment
…then banks are still one of the most affordable and straightforward sources of real estate financing.
Benefits:
- Competitive interest rates
- Fixed repayment terms
- Long amortization periods (15–30 years)
Drawbacks:
However, this route has its limitations. Once you accumulate a few properties, your debt-to-income ratio may exceed what banks are comfortable with. Lenders get more cautious with each new property you finance. This is especially true if you’re self-employed or your rental income doesn’t yet cover your full living expenses.
When banks stop saying yes, don’t give up. That’s when most successful investors pivot to more flexible financing strategies.
2. Self-Financing with Equity or Credit
One of the smartest and most scalable financing tools is leveraging the properties you already own.
If you currently own a rental property—or even your primary residence—you may be sitting on untapped capital.
Here’s how you can use it:
- Cash-out refinancing: Replace your current mortgage with a new one at a higher loan amount, and take the difference as cash.
- Home equity line of credit (HELOC): Get a revolving line of credit based on your home’s current equity.
- Cross-collateralization: Use the equity in one property as the down payment or security for the next.
Why This Works:
You’re not borrowing based on your income or job history—you’re borrowing based on the value you already own.
Important Note:
This strategy only works if your cash flow remains positive after refinancing. Don’t over-leverage yourself. Always analyze your debt servicing costs relative to the rent you expect to bring in.
Done correctly, this method can help you scale your portfolio rapidly—without needing outside investors or lenders.
3. Private Money Lenders
This is where things get exciting. Private lending is the secret weapon of many real estate investors.
A private money lender is someone—often another investor, a retiree, or a business contact—who has capital they want to put to work but doesn’t want the headaches of owning property.
Instead of placing their money in the stock market or letting it sit in a low-yield savings account, they lend it to you at a mutually agreed interest rate.
Here’s How It Works:
- You present the investment deal
- They lend the funds
- You agree to pay back the loan with interest (often within 6–36 months)
- The property acts as collateral
Why Private Lenders Love This:
- They get predictable returns (often 6%–12% or more)
- Their loan is secured by real estate
- They avoid dealing with tenants, toilets, and turnover
If you can build a reputation for integrity and successful deal-making, private lenders can become your go-to source of capital for future deals.
📞 If you’re a private lender in North Texas looking to earn strong returns on your capital without doing the heavy lifting, contact us today. We work with investors who need funding for deals now.
4. Seller Financing (Also Known as Owner Financing)
This is one of the most underutilized but powerful ways to acquire real estate—especially in today’s tight lending environment.
What is Seller Financing?
Instead of getting a loan from a bank, you pay the seller directly over time. In other words, the seller becomes the bank.
You and the seller agree to:
- A purchase price
- A down payment
- An interest rate
- A monthly payment schedule
- The duration of the loan (commonly 3–10 years with a balloon)
Why Sellers Agree to This:
- They receive monthly income
- They can defer capital gains taxes
- They don’t have to manage tenants anymore
- If the buyer defaults, they keep the property and the payments
This is especially common with landlords who are retiring or burned-out investors who just want out.
While recent regulations (like the Dodd-Frank Act) have made seller financing slightly more complex in some cases, it is still 100% legal and viable, particularly for non-owner-occupied investment property transactions.
You’d be surprised how many sellers are open to this once you ask—especially if the property has been sitting on the market for a while.
Which Financing Strategy is Right for You?
Let’s recap the four primary ways to finance your next real estate investment in North Texas:
- Traditional Bank Loans – Great for beginners with strong credit.
- Self-Financing – Use your existing equity to grow your portfolio.
- Private Lending – Flexible, relationship-based capital for quick deals.
- Seller Financing – Creative structure with motivated sellers.
As you gain experience, you’ll likely use a combination of these strategies, depending on the deal and the market conditions.
Want Help Finding Deals or Capital in North Texas?
Whether you’re a first-time investor or a seasoned pro, financing doesn’t have to be a barrier. At Lonestar Partners, we work with motivated buyers, sellers, and lenders every day to match great deals with the right financing.
👉 Ready to invest?
Call us at 469-689-4663 to discuss what you’re looking for and how we can help.
Don’t let limited cash stop you.
The best deals often go to the most creative buyers—those who understand how to leverage other people’s money (OPM) to build wealth, one property at a time.