The only down side with conventional is 3% max seller credit vs 6%.

Private lending is a passive, high yielding investment, that needs the tax shelter provided by an IRA.The potential down-side would be encountered if your deal required additional funding and your "private lender" would want to supplement personal funds to those of the IRA. 

performing notes generally are more constant than rentals IE you don't have a vacancy and you have no fix up costs.. so if you have the turn over which each rental will have over time.. your notes are still chugging away.and there are no loads with notes IE no management fees etc etc.. so you diversify.. now downside to notes of course is no leverage.. but also no mortgage or long term contingent liability .. you own the note 100% .... and if your buying in a market with historic non appreciation then notes are equal as they don't appreciate.. you don't get tax write offs but the write offs on a 60 to 80k rental are nominal anyway.lots of my clients over the years as they age roll out of landlording into note collecting its another degree of passive.. and done right pretty cool..

There really isn't any downside to it.  

The downside being the appreciation doesn't seem as aggressive as most want, but that is less important to me. 

I would reach out to an investor friendly lender, because there are some downsides of using it on your first home purchase, when you are thinking about buying another close by in the near future and using the rental income from that home to help qualify for the next. 

The only downside - it must be disclosed to the next buyer what was done - and the warranty is transferable to them.

California has some major downsides (mainly being very tenant-friendly) but property taxes are very low. 

We focus on acquiring loans originated pre-2018 which protects on some downside risk pertaining to market correction as our loan to value is under 50%.Leverage is of course the best method to avoid downside risk as well as a diverse portfolio.

Hey all, what might the potential downsides be if I use my cash value life insurance as well as a HELOC on an existing rental property to create a form of infinite banking for additional properties?