When I first stepped into the world of real estate investing, I quickly learned that funding is everything. If you don’t have the right financing strategy, even the best deals can slip through your fingers. Among the many loan types I’ve studied and used, 100 buy and hold loans have proven to be a powerful tool for long-term property investment. In this article, I’ll break down what these loans are, how they work, how to use them wisely, and why they’re especially relevant for U.S. investors navigating today’s real estate market.
What Are 100 Buy and Hold Loans?
100 buy and hold loans refer to financing structures that allow real estate investors to purchase and hold rental properties long term—often with up to 100% financing. In simple terms, you’re able to buy a property and potentially cover closing costs and rehab costs with little to no money down, provided the deal meets the lender’s criteria.
This type of loan is often structured by private lenders, portfolio lenders, or non-QM (non-qualified mortgage) institutions that understand the needs of real estate investors. These are not your typical 30-year owner-occupied loans backed by Fannie Mae or Freddie Mac. These loans are designed for investment purposes, with the intent to rent out the property and build wealth through cash flow and appreciation.
The 100% Financing Myth—Explained
Let me be clear: 100% financing doesn’t mean you can walk into any deal with no money and get approved. It means that if the property appraises well, and the deal makes financial sense, a lender may be willing to finance the entire acquisition cost based on the After Repair Value (ARV) or Loan-to-Value (LTV) ratio.
Let’s break this down with an example.
Example: 100% Financing Based on ARV
- Purchase Price: $100,000
- Rehab Costs: $25,000
- Total Cost: $125,000
- After Repair Value (ARV): $170,000
- Lender Offers: 75% of ARV
Since the total cost is $125,000 and the lender is willing to finance $127,500, you’ve effectively secured 100% financing.
This kind of deal is rare but achievable with the right property and strong underwriting.
Who Offers 100 Buy and Hold Loans?
These loans are typically not available through conventional banks. Instead, you’ll find them through:
| Lender Type | Description |
|---|---|
| Private Money Lenders | Individuals or groups who fund deals based on relationships and asset value |
| Portfolio Lenders | Local or regional banks that hold loans in-house |
| DSCR Lenders | Debt-Service Coverage Ratio lenders focusing on rental income |
| Non-QM Lenders | Lenders offering non-traditional underwriting criteria |
Each lender type has its own underwriting standards, interest rates, and risk tolerance. I’ve worked with several DSCR lenders who didn’t care about my W2 income but focused on the property’s cash flow instead.
Core Elements of Buy and Hold Loan Underwriting
Understanding what lenders look for helps you improve your chances of approval. Here’s what I’ve found matters most:
- Property Value and Appraisal
- Lenders focus heavily on ARV or current market value.
- Some require third-party appraisals or BPOs (Broker Price Opinions).
- Rental Income (DSCR-Based)
- For DSCR loans, the focus is on rental income vs. debt payments.
- A Debt Service Coverage Ratio of at least 1.2 is usually required.
- Borrower’s Experience
- While not always required, experienced investors get better terms.
- A track record of successful projects builds lender confidence.
- Credit Score
- Most lenders want a FICO score above 660–680.
- Better credit means lower interest and fewer fees.
Buy and Hold Loan Structures
There are different ways lenders package 100 buy and hold loans. I’ll cover the main ones I’ve used:
1. ARV-Based Loans
These are used when purchasing undervalued properties that require rehab. The lender bases the loan on the future value after rehab.
| Component | Amount |
|---|---|
| Purchase Price | $80,000 |
| Rehab Cost | $20,000 |
| ARV | $140,000 |
| 75% ARV Loan | $105,000 |
Since total cost is $100,000 and the loan is $105,000, this is effectively 100% financing.
2. BRRRR Refinance Loans
Buy, Rehab, Rent, Refinance, Repeat (BRRRR) allows investors to pull out equity after a rehab. Here’s how it works:
- Buy undervalued property.
- Rehab it to increase value.
- Rent it to establish income.
- Refinance it at higher value.
- Pull out capital to reinvest.
Let’s calculate the cash-out potential.
Equity\ Extracted = (New\ Appraised\ Value \times LTV) - Loan\ Balance Equity\ Extracted = (150,000 \times 0.75) - 90,000 = 112,500 - 90,000 = 22,500You can now use that $22,500 as a down payment on your next deal.
Key Loan Terms to Know
Here’s a summary table with common loan terms across 100 buy and hold loans:
| Term | Typical Range |
|---|---|
| Interest Rate | 6.5% – 10% |
| Loan Term | 30 years (fixed or ARM) |
| Amortization | 30 years |
| Prepayment Penalty | 3–5 years (declining or flat) |
| DSCR Requirement | 1.1 – 1.25 |
| LTV or ARV Threshold | 70% – 80% |
| Minimum Credit Score | 660–700 |
| Origination Fees | 1% – 3% |
The Appeal of Buy and Hold Loans
When I think about why these loans make sense, it comes down to leverage and long-term wealth. With the right property, I can:
- Acquire it with minimal cash outlay.
- Build equity over time.
- Generate monthly rental income.
- Refinance or sell later at a profit.
In a low-inventory, high-interest rate environment like 2025, locking in 30-year debt at a decent rate can be a strategic win. With inflation, the real value of that debt declines over time, but your rent checks often go up.
Case Study: Real-World 100% Financing Example
Here’s an example from my own portfolio:
- City: Cincinnati, Ohio
- Purchase Price: $90,000
- Rehab Cost: $15,000
- ARV: $140,000
- Lender Offered: 75% ARV
- Loan Amount: $105,000
- Total Project Cost: $105,000
After renting the property for $1,300/month, the expenses (mortgage, taxes, insurance) were about $950/month.
Monthly\ Cash\ Flow = 1300 - 950 = 350That’s a $4,200 annual return on zero money invested. The cash-on-cash return here is technically infinite.
Risks and Red Flags
Like all things in investing, this isn’t a free lunch. Here are the main risks I look out for:
- Overleveraging: Just because you can borrow doesn’t mean you should.
- Vacancy Risk: If the property sits empty, you still owe the mortgage.
- Underestimating Rehab: Cost overruns kill cash flow.
- Market Corrections: Property values can drop, limiting your refinance potential.
Historical Performance of Buy and Hold Strategies
Historically, real estate has proven to be a strong long-term investment. According to the Federal Reserve, the average annual home appreciation in the U.S. over the last 50 years is around 4.3%.
Here’s a table comparing asset performance:
| Asset Class | 20-Year Average Return | Volatility |
|---|---|---|
| U.S. Stocks | 9.5% | High |
| Bonds | 5.3% | Low |
| Real Estate | 8.7% | Moderate |
(Source: NCREIF, Freddie Mac, Vanguard)
Buy and hold real estate sits comfortably in the middle—strong returns with moderate volatility, especially when leveraged.
Tax Benefits of Buy and Hold Loans
One of the reasons I favor buy and hold over flips is the tax treatment.
- Depreciation: You can deduct property depreciation from your income.
- Mortgage Interest Deduction: Interest paid on investment loans is deductible.
- 1031 Exchange: Defers taxes when exchanging properties.
- Long-Term Capital Gains: Held over a year, profits are taxed at a lower rate.
These benefits compound your returns over time in a way that short-term strategies just can’t match.
When to Use 100 Buy and Hold Loans
I use this strategy when:
- The market offers discounted properties with solid upside.
- I want to build passive income instead of chasing active flips.
- I’m confident in the property’s cash flow and long-term demand.
- I have multiple deals and want to scale without using all my capital.
Final Thoughts
100 buy and hold loans aren’t for every investor or every property. But for those of us who understand their mechanics and use them responsibly, they offer a powerful path to financial independence. I’ve used them to build a portfolio that pays me month after month, regardless of what the stock market is doing.
The key is to underwrite your deals carefully, understand your risk tolerance, and work with lenders who know what they’re doing. If you do that, you can leverage other people’s money to build your own long-term wealth—one property at a time.
In a world where uncertainty seems to rule, cash-flowing real estate backed by smart financing continues to offer both stability and upside. That’s why I keep using 100 buy and hold loans—and why I believe they’ll remain a cornerstone of my investment strategy for years to come.
