Creative Financing Solutions for BRRRR Real Estate Investing


Boom-bust housing cycles are not as rare as we perceive them to be. According to the National Bureau of Economic Research, there have been 28 boom-bust cycles since 1929. During a bust, non-performing assets or NPAs shoot up, and credit dries up.

In simple terms, banks have less money to lend.

If you are a real estate investor relying solely on traditional real estate financing, your ability to conduct business will be seriously hampered in such situations. Thankfully, we have some creative real estate financing solutions at our disposal today.

In today’s blog post, we discuss four such mechanisms that can help a BRRRR (Buy, Rehab, Rent, Refinance, Repeat) investor tide over such difficult times.

So, let’s take it from the top.

Creative Financing Solutions for Real Estate Investing


1. Seller Financing

This is one of the most popular financing tools for folks who are looking to make a foray into real estate investing with no or little money down. When you resort to seller financing, you are essentially cutting out the middleman, and buying the property directly from the seller. The seller acts as the bank – you sign a promissory note with them and you pay them a mortgage instead of to the bank.

A promissory note is a legally binding document that contains all the particulars of a seller financing including the repayment schedule. A five-year payment plan with a balloon payment towards the end is the most common arrangement.


  • Using this creative financing tool has many benefits. The most obvious one, of course, is that the buyer can go ahead with their investment plans even if they do not have funds set aside for the down payment.
  • Another significant advantage is that the buyer can save on traditional bank closing costs, which often range from 2%-5% of the purchase price.
  • From the seller’s perspective, this financing mechanism will make it easier to make a sale in difficult market conditions. The seller can also transfer the promissory note to another investor, albeit at a discounted rate, and immediately cash out. Sounds too good to be true?
  • Another big benefit for sellers is avoiding the big tax hit that comes in the form of capital gains tax if they sell a property. In this financing arrangement, this impact is quite a bit less as the seller will be collecting monthly payments instead of realizing a big capital gain event from the sale.
  • Before we get too far ahead, let us look at some of the cons of this creative financing solution.


  • As a buyer, you will lose your entire investment if you fail to adhere to the repayment schedule just as you would with a traditional mortgage. In this scenario, the seller might have to go through a foreclosure which could be a cumbersome and lengthy process.
  • If the seller has an existing mortgage, he/she will need approval from the lender if the terms of his or her loan prevent this type of transaction.
  • Because this process is less structured than a traditional loan, you will need the help of attorneys and knowledgeable professionals to make sure all documentation is in order. Set aside a budget of $1,000-$1,500 before going ahead with this option.


If you are a real estate investor planning on going the BRRRR route, a HELOC is another creative financing solution that you can consider. HELOC or a “Home Equity Line of Credit” functions like a credit card.

You can avail yourself of this line of credit if you have some equity built into your current residence. Some lenders are also willing to issue HELOCs on investments properties. This is something for you to consider to do more BRRRRs.

Much like a home loan, your lender will also vet your income and employment history when you apply for a HELOC and submit you through its underwriting process.

Let’s say that your home is worth $500,000. And, let’s presume the built-in equity is $250,000. Depending on your income and credit history, your lender might be willing to extend a line of credit that amounts to 80% of your built-in-equity. This means that you can borrow up to $200,000 using a HELOC in this scenario. Some lenders are also willing to issue HELOCs on investments properties. This is something for you to consider to do more BRRRRs.

The loan payment structure for a HELOC is different from a typical mortgage as well. Loan payment commences with a “Draw Period” followed by a “Repayment Period”. During the draw period, you are required to make interest payments only. Whereas, during the repayment period, you will have to pay off the principal as well as the interest.

While some lenders might insist on full repayment at the end of the draw period, others are more lenient in this regard. Typically, payments during the repayment period are roughly twice that of the draw period. Make sure you go through the fine print and ask the right questions before signing on the dotted line.


Pros of a HELOC

  • Might come in handy during a quick-cash-needed scenario
  • Interest rates and closing costs are smaller in comparison to a traditional loan and interest rates are often less than alternative hard money and private loan options

Cons of a HELOC

  • You might lose your home if you fail to make payments
  • You might be tempted to make frivolous purchases
  • Interest rates are adjustable and prone to fluctuation

3. Home Depot Project Loan for Rehab

Rehabbing a property is central to the success of a BRRRR project. Needless to say, you must execute a rehab properly AND within budget.

Home Depot offers a Project Loan card that can help you finance a renovation project with an upper limit of $55,000.

These are the particulars of the Home Depot Project Loan:

  • You can get a co-applicant if you don’t qualify in your sole capacity
  • You have a 6-month window to make purchases. This card can be used to make purchases from the Home Depot Stores or website
  • 7.99% APR
  • Interest-Only Payments for the first six months
  • Balance to be paid off in 84 equal monthly installments over 7 years

Is a Home Depot Project Loan a Good Option For You?

At 7.99% APR, the Home Depot Project Loan is not exactly cheap. If you avail your entire credit limit of $55,000, you will end up paying $17,000 over and above your borrowed amount at the end of 7 years.

However, a Home Depot Project Loan is still cheaper than a hard money loan. Many BRRRR investors use hard money loans to fund their construction costs. These loans are more expensive in comparison to the Home Depot option. They typically charge interest ranging from 8%-12%.

You can call Home Depot at 1-866-875-5488 or Apply HERE.

Alternatively, you can also check out Lowe’s Building and Loan Program. This loan is available for the course of the construction, and is closed at completion.


4. Real Estate Crowdfunding

Real estate crowdfunding can be a great option for seasoned real estate investors who are looking to raise larger sums of money for multiple offerings using the BRRRR strategy and to “syndicate” offerings with other investors. Our team of attorneys would be happy to provide you with more detailed information on this process if this is something you are considering. Real estate crowdfunding has really taken off as participation has been opened up to non-accredited investors under Regulation D 506(b) and with the ease on marketing restrictions to accredited investors under Regulation D 506(c) of the US Securities laws.

Before you take this route to your next BRRRR, be cognizant of all the expenses that you will have to incur in order to make a Regulation D compliant offering on a crowdfunding platform or otherwise. These are some of the expenses that you need to account for:

  • Securities Attorney Fees
  • Crowdsourcing Platform Fees
  • Website Development
  • Other Marketing and Promotional expenses

Pro Tip – A maximum of 35 non-accredited investors are allowed in a Regulation D 506(b) offering. If you go above this limit, you will be violating SEC rules. Contact us to learn more.

Realtymogul and Fundrise are two of the biggest crowdsourcing platforms today. The minimum investment limit on Realtymogul is $5,000. Whereas, investors can get started on Fundrise for as little as $500.



The real estate market is notorious for its peaks and valleys and is always subject to the appetite of lenders. Investors need to rely on multiple financing tools to deal with this volatility and ensure consistent returns and access to capital for new projects and investments.

We hope this guide helped you gain a good understanding of some of the different options that you, as a BRRRR investor, have at your disposal. Watch this space for more updates!  If you want to read more about financing your next deal, we have some more great content for you in this blog: “Different Ways to Finance Your Next BRRRR“.  


Excited about BRRRR Investing? Get a free trial and lifetime access in just a few clicks to our Deal Analysis and Legal Solution to do more BRRRRs than ever before! Learn more.

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