It merely means you will likely have a difficult time refinancing the property to a traditional lending source.

With the high interest rates it hard to get much to cash flow with the traditional 30% down. 

On the other hand, if you're aiming for long-term rental properties, getting prequalified with a lender specializing in traditional loans or DSCR (Debt Service Coverage Ratio) loans is key.

It seems like location would be especially critical with pad-split (and similar systems), but I’d love to hear your thoughts on what to watch out for in terms of zoning, safety, or demand.Also, I’ve traditionally rented out units the regular way, so I’m curious how screening tenants works for you with the pad-split (and similar) model.

It’s a great way to grow faster.HELOC or Equity Tapping: If you have equity in another property, using a HELOC or cash-out refinance could help cover the down payment without affecting your DTI as much.Seller Financing or Creative Deals: Look for sellers willing to finance directly, which bypasses traditional mortgage qualification hurdles.Scaling quickly often involves combining strategies—play around with what works best for your goals.

I’d love to take advantage of a “traditional” mortgage (or even FHA?)

If you are self employed with no full time employees then you should consider a Solo 401k for your traditional funds and no UBIT on leveraged real estate. 

Traditional mortgage?

I’m currently evaluating whether to go with a Fund Model instead of a traditional JV for an upcoming multifamily project, I will be working as a developer looking to do work with a more experienced developer on a larger scale multi-family opportunity.

I am the first in my family to do REI and my goal is to break the tradition of working for a salary for 40+ yrs only to retire on what I hope will be enough to start living freely.