How do private lenders work?

[Ezra Soto]

Need some advice. I am in the middle of a cash out refi on my investment property to invest in a duplex. The problem I'm having is that the banks want 25%  and that will take all my cash  and I would like to keep some cash for emergency funds. I think 20% down would be perfect. I think I seen some private lenders do 20% down. Need some guidance. 

[Will Barnard]

Private lenders will likely be at higher rates than a conventional mortgage which will eat into your cash flow. That said, having adequate reserves is a must so perhaps you can find some other sources of funds to make up for the shortfall. Lines of credit could be an option, but be cautious as to not overleverage yourself, in a downturn or if anything major goes wrong, you are placing yourself at much higher risk factors.