Why I Made This Video
I’ve been in the game for over 20 years, and I’ve closed more than 3,500 transactions. I’ve seen markets go up, crash, recover, and then go crazy again. Through all of it, one thing has never changed: investors succeed or fail not because of the property, but because of the financing behind it.
Think of financing like the fuel in your car. The wrong fuel, and the engine sputters. The right fuel, and you’re flying down the highway. In real estate, we have three “fuel types” that every investor should understand: Bridge Notes, DSCR loans, and Private Lending.
Each one has its place. Each one has its risks. And if you don’t match the right loan with the right strategy, you’re going to have problems.
So let’s break it down together, and I’ll sprinkle in a few war stories so you can learn from my mistakes without making them yourself.
Bridge Notes – The Flipper’s Best Friend
Let’s start with bridge notes. If you’ve ever flipped a property, you know time is your enemy. You’re not holding the property forever—you’re fixing it, staging it, and selling it as fast as you can.
That’s where bridge notes shine.
Key Features of Bridge Notes:
-
Short-term loans – usually 12 months or less
-
High interest rates – typically 10–12%
-
High leverage – up to 90% financing if you’ve got experience
-
Repair coverage – in some cases, lenders also cover rehab costs
Now, some people panic when they see a 12% interest rate. But here’s the thing: you’re not holding that rate for 30 years. You’re holding it for maybe 6 months while you rehab and sell. The difference in interest is pennies compared to the profit you’re aiming for on the flip.
Example from My Career
I once flipped a property in Tampa with a bridge note at 11%. My students at Property Profit Academy asked, “Jorge, why would you pay so much interest?” My answer: “Because I made $65,000 on the deal, and the loan only cost me $4,500 in interest. You do the math.”
The mistake new flippers make is thinking like homeowners instead of investors. Homeowners want the lowest possible rate for the next 30 years. Flippers just need the cash to close, rehab, and exit.
When to Use Bridge Notes:
-
Flips
-
Short-term holds
-
Projects where repairs are heavy and time is critical
If flipping is war, then a bridge note is your tank. It’s heavy, it’s loud, it burns fuel fast—but it gets the job done.
DSCR Loans – The Landlord’s Long-Term Play
Next up: DSCR loans. These are my personal favorite because, well, I’m a landlord at heart.
DSCR stands for Debt Service Coverage Ratio. Fancy words, but the concept is simple: as long as your property’s rent covers the mortgage and expenses, you’re approved. The bank doesn’t care about your W-2, your tax returns, or even how much you made last year. They care about the property.
Key Features of DSCR Loans:
-
Approval based on the property’s income, not yours
-
Down payment – typically 20%
-
Rates – around 7–8% (much lower than hard money)
-
Term – 20 to 30 years
-
Fixed payments – predictable, long-term liability
This is huge because most investors don’t want their personal finances tied up in every deal. With DSCR, the property qualifies itself.
Example from My Career
I had a 4-unit rental in St. Pete that was generating $4,200 a month. The DSCR requirement was that the rent had to cover 1.25x the mortgage. The mortgage was $2,800. The numbers worked, so the loan was approved. Nobody asked me for pay stubs. Nobody grilled me about tax returns. The property spoke for itself.
That loan allowed me to scale. And scaling is the name of the game. You can flip a few houses for quick cash, but if you want true wealth, you need rentals. DSCR loans are the bridge that gets you there.
When to Use DSCR Loans:
-
Rentals
-
Long-term holds
-
Portfolio building
Think of DSCR loans like marriage. You’re locking in, long-term, for better or worse. But the beauty is that rents usually go up while your payment stays the same. That’s the kind of relationship you want.
Private Lending – The Rookie Investor’s Jumpstart
Now let’s talk about private lending. This is where many investors start, especially if they don’t have income, credit, or experience.
Private lending means you’re borrowing from an individual, not a bank. It could be a wealthy investor, a friend, or even someone from your local real estate meetup who prefers lending over managing tenants.
Key Features of Private Lending:
-
High flexibility – terms are negotiated, not standardized
-
Financing – sometimes up to 100%
-
Rates – very high (lender is taking big risks)
-
Term – usually short, until you can refinance into something better
The beauty here is that private lenders often believe in you as much as the property. If they trust your hustle, they’ll back your deals.
Example from My Career
Early in my journey, I had no credit, no cash, and no track record. But I had one thing: a plan. I convinced a private lender to give me 100% financing on a small rental because I walked him through the numbers and showed him how he’d get paid back.
We closed the deal, I followed through, and that lender has done dozens of deals with me since. Today, I have private lenders who’ll fund me without me putting a single penny down. But that came from years of building trust.
When to Use Private Lending:
-
When you’re just starting out
-
When traditional banks won’t touch you
-
When you want speed and flexibility over paperwork
Private lending is like training wheels on a bike. It feels wobbly at first, but it gets you moving. Eventually, you upgrade to DSCR or other stable financing.
Putting It All Together – The Domino Wealth Method
Here’s how I tell my students to think about it:
-
Start with private lending if you don’t have money, credit, or experience.
-
Graduate to bridge notes when you’re flipping and need speed.
-
Lock into DSCR loans once you have stable rentals.
This is what I call the Domino Wealth Method. You knock down the first domino with private money, then you keep knocking them down until you have a portfolio backed by DSCR loans. That’s how you go from broke and ambitious to financially free.
Common Investor Mistakes with Loans
Let me save you from some pain:
-
Mistake #1: Obsessing over rates on short-term loans. Stop worrying if it’s 10% or 12%. If you’re flipping, the holding period is short. Focus on the deal profit.
-
Mistake #2: Treating DSCR like personal loans. Don’t lie about income. You don’t need to! The property qualifies itself.
-
Mistake #3: Burning bridges with private lenders. Deliver on your promises. If you don’t, you’ll lose their trust forever.
Practical Takeaways
-
Match the loan to the strategy. Flips need bridge notes. Rentals need DSCR. Beginners often need private lending.
-
Don’t let high interest rates scare you off if the deal makes sense.
-
Relationships with lenders are worth gold. Protect them.
-
Think long-term: the goal isn’t just one deal. It’s building momentum.
Final Thoughts
If you’re serious about investing, you need to master these three loan types. They’re tools in your toolbox. The mistake most investors make is swinging a hammer at every problem. Not every deal is a nail. Sometimes you need a drill, sometimes you need a saw.
Bridge notes, DSCR, and private lending—that’s your toolkit. Learn it. Use it. Build your wealth.
Closing
Keep it consistent, stay patient, stay true—if I did it, so can you. This is Jorge Vazquez, CEO of Graystone Investment Group and all our amazing companies, and Coach at Property Profit Academy. Thanks for tuning in—until the next article, take care and keep building!
👉 Want to connect with me? Book a time here: https://graystoneig.com/ceo
Book an Expert
New investor? Start with Jorge.
Jorge Vazquez – CEO & Investment Strategist at Graystone. Let’s make your portfolio stronger, steadier, and more profitable.
Deals? Book with Cody.
Meet Cody Bergstrom, Your Expert in Finding Deals Let’s find an off-market deal that actually works for you.
Need financing? Book with Lisa.
Meet Lisa Kaye Price, the LendingGig Top ML Let’s figure out the smartest way to fund your next deal.
Looking for PM? Book with Jay
Jay Michalec – COO & Property Management Expert at Graystone. Let’s make your rentals easier, calmer, and more profitable.
