Private Money or Traditional Lender?

[Connor Loyd]

A business partner and i have been eyeing getting started in real estate investing for at-least the last year. We finally started our LLC and nailed down a plan. We are looking to buy, lightly update cosmetic items and rent the houses out. The area of St Petersburg has had rapid rent growth and homes near the urban core rent very quickly.

We are now talking to private money lenders and traditional lenders. We were little surprised when the first hard money lender said we would still need to bring somewhere around 25% to the table, they would be willing to pay for the renovation but would also be charging a 1% a month interest rate until we refinanced. With having to bring such a large amount to the table it almost seems the traditional lender is a better avenue, especially if we would be bringing the same amount down and could avoid the high interest rate/refinance costs. We have the capital to do this but it would dramatically lower the amount of homes we were thinking we could buy in our first year. 

So my question is, is it normal for private lenders to require you to bring this much to closing? We also looked into interest only loans, which would allow us to cash flow very easily. Are there any company out there that offers interest only loans and doesn't require  20%+ down? Or what other ways are there to purchase rental properties that we are missing? 

Anything helps, thanks!