What is Gator Lending: A Simple Guide to Creative Financing in Real Estate

Gator lending is providing an alternative for real estate investors who are fed up with traditional lending becoming more inaccessible and stressful.

Since Pace Morby introduced the concept to the real estate world many years ago, investors have increasingly looked into what gator lending is and how they can use it to close more deals faster.

Today the inaccessibility of traditional lending (stringent requirements, long process, etc.) has led to a greater interest in and search for creative financing in the real estate world.

Gator lending is one of the solutions that have come from this search. To some, gator lending can be reduced to earnest money deposit (EMD) financing while others use it as a synonym for transactional funding.

But whatever the scope of the definition, gator lending has opened new ways of thinking about real estate financing outside the traditional banking system.

In this article, we will consider what gator lending is all about and how it can benefit you as a CRE investor. We’ll cover the following:

  1. What is gator lending? An Introduction
  2. How does the gator lending method work?
  3. How CRE investors can succeed with gator lending
  4. Gator lending and earnest money financing

[Do you want to build your CRE portfolio but are being held back by earnest money requirements? Sign up for Duckfund to access low-cost and quick earnest money anytime you want without any credit report.]

1. What is gator lending? An Introduction

Gator lending or what has now been called the gator method is associated with Pace Morby, a popular real estate investor and online personality.

Defining what gator lending is all about is hard because Pace himself has introduced many iterations of it. He was already talking about Gator 4.0 in 2023.

Instead of pinning down a particular definition, it is better to consider the various ways in which people (and Pace himself) use the term. This will provide a more comprehensive understanding of what gator lending is all about.

So, what is gator lending in real estate?

For some, gator lending is about providing finance for real estate buyers who don’t have the cash they need to make earnest money deposits. Pace mentioned this himself in describing the origin of the gator method.

Other real estate investors use the concept as a synonym for transactional funding (same-day or flash funding). Basically, transactional funding occurs when a real estate investor (wholesaler) borrows money from an individual or company (non traditional) to acquire a property that will be sold in just a few days (double closing).

what is gator lending

Source: Real Estate Skills

Since the property is bought to be quickly resold, the loan can be repaid in just a few days (or even the same day in most cases). Best practice requires that the real estate investor already has a buyer who is ready to pay.

Pace Morby’s gator method is however more extensive than this.

He tends to emphasize concepts such as community building, education, and mentorship (his own community is called Subto). “The Gator Method emphasizes the power of networking and building relationships in the real estate industry,” he says.

what is gator lending

Creative financing requires a community of people who know and trust each other. Where such a community exists, it is easier to get financing for various purposes at good financing terms.

Consequently, gator lending can go beyond short-term lending like EMD financing and transactional funding.

Members of the same community can form partnerships to purchase properties, pull funds together for one-off real estate deals, and embrace even more long-term financing options. For example, Pace talked about a loan he made that is giving him monthly return plus a 30% equity in the property.

Pulling everything together, the gater method or gator lending is flexible. In fact, its flexibility is its attraction. Instead of traditional loans that have limited and rigid structures, gator lending allows borrowers and lenders to work out terms that are mutually beneficial.

2. How does the gator lending method work?

The question, “what is the gator lending method” is hard to answer since defining the concept involves quite a bit of wiggle room.

Yet, while there might be diversity in the details, there are still some general forms in which gator lending takes. Let’s illustrate with some examples.

Example 1

Say A and B belong to the same real estate community. A has just identified a distressed property that he can quickly snatch up and improve with $20,000. He also remembered that C, another investor of the community, once talked about looking for a CRE property in the area.

After reaching out to the seller, A discovers he will need $200,000 to complete the purchase. He then reached out to C who agreed to pay $250,000 for the property.

A does not have $200,000 for the property or $20,000 for renovations. Suppose that B is a gator lender, A can reach out to him/her to get a loan of $220,000. A can then buy the property and begin the renovation process.

Since the property is now in his name, he can then sell to C (and receive payments) upon agreement that the renovation will be quickly completed. With the $250,000 in his account, A can then repay the loan plus interest. The amount that remains is his profit.  

What we have described is the basic structure of transactional funding. We have left out details like the interest rate on the loan from B to A because such details will be agreed by the parties in each transaction.

Example 2

Suppose James is a real estate investor who has eyes on a CRE property. The property is in a choice location that will provide good rental income. Everything needed to close the property is $1,000,000 but James only has half of the amount.

James then reaches out to John, a gator lender he once connected with at a real estate networking event. Unlike most, John has a long-term horizon so he is willing to supply half of the money for a 50% equity in the property.

In some cases, we can replace John with a creative financing company that pulls funds from a number of gator lenders to provide financing for real estate investors. Said differently, there is also a flexibility in answering the question, “what is a gator lender.”

Example 3

What if James was a CRE flipper rather than a buy-and-hold investor. In that case, gator lending can take the form of a short-term loan. However, in this case, we are not looking at a same-day (or few days) transactional funding; instead, the company providing part of the finance is expecting the money back in say 6 months with an agreed interest rate.

Once James flips the property successfully, he can repay the loan with interest and make his profit.

Example 4

This is the typical EMD financing deal. Investor X has eyes on a competitive property but she needs to pay earnest money to get a foot in the door. For some reason, she doesn’t have the cash to pay.

Investor X can reach out to a earnest money financing company like Duckfund (a gator lender in this situation) and get the needed funds within 48 hours without any credit report for a small financing fee.

3. How CRE investors can succeed with gator lending

Every CRE investor, irrespective of investment strategy, needs to pay earnest money before they can inspect and negotiate properties of interest.

However, there are times when investors are temporarily illiquid and they can't pull together the cash needed to pay EMD.

In those moments, gator lending can help. As we have mentioned, companies like Duckfund provide EMD financing for multiple deals.

CRE flippers who work in markets where real estate wholesaling via contract assignment is not allowed can also use gator lending to access the cash they need to purchase the property and then sell it to the new buyer for profits.

Even long-term investors can form partnerships with gator lenders to purchase properties they can't buy on their own. Again, this form of funding tends to be flexible as partners can work out the terms of the deal in a way that is beneficial to all parties.

4. Gator lending and earnest money financing

Earnest money deposit financing still remains one of the core aspects of gator lending.

All types of real estate transactions across the US now require EMD. Consequently, CRE investors need to pay it to show seriousness and even gain competitive advantage over rival potential buyers (especially in very competitive markets).

As a creative financing company, Duckfund was one of the first fintechs to recognize the opportunity in earnest money financing especially as investors got frustrated with traditional lending.

Since inception, its goal has been to ensure that investors can build a portfolio of CRE properties without being held back by earnest money requirements. Said differently, its goal is that investors can sign now and pay later.

Duckfund’s application process takes just 2 minutes (no credit report required) and funds will be available within 48 hours. Also, Duckfund uses a system that makes the process as efficient as possible.

Once your application is successful, they will open an LLC that will sign the purchase contract with the seller (with the necessary contingencies included). The LLC will also be responsible for transferring the earnest money to the escrow. (Financing fee is paid upfront).

If you want to continue with the deal, then you will need to pay back the earnest money for a 100% stake in the LLC. And if you don’t want to continue (based on reasons already part of the contingencies in the purchase contract), the purchase contract will be terminated and no further action will be required.

More importantly, Duckfund provides earnest money requirement for multiple market deals at once. In this way, you can build a profitable portfolio of CRE from anywhere in the US.

[Do you want to purchase a property but don’t have the earnest money to pay? Sign up to Duckfund for low-cost, accessible, and quick earnest money financing so you can sign now and pay later.]


  • As traditional lending becomes more inaccessible, real estate investors are turning to creative financing of which gator lending is a crucial part.
  • Defining gator lending is hard since it is used to describe different things, from earnest money deposit financing, transactional funding, and sourcing funds from private lenders.
  • Gator lending is a good way to make money from the world of real estate when you don’t have your own money. It’s also a nice way to make money if you have funds but not the time and skills to locate, evaluate, purchase, and sell properties.
  • EMD financing is a key component of gator lending that will become even more important in the future.  
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