Aug 28 ā¢ General discussion
š¦Financing Options for Real Estate Investing
One of the biggest questions I get is: āHow do I finance my first (or next) deal?ā
Here are 3 common financing options to consider:
š Fix & Flip Loans
ā¢ Best for: Investors doing renovations with the intent to sell quickly
ā¢ Loan amount: Usually covers purchase + rehab costs
ā¢ Terms: Short-term (6ā18 months), higher interest rates (8ā12%+), points up front
ā¢ Example: Buy a distressed property for $120K, borrow rehab funds of $40K, then sell for $220K. The loan is paid back at closing.
š¦ DSCR Loans (Debt Service Coverage Ratio)
ā¢ Best for: Long-term rentals or Airbnbs
ā¢ How it works: Approval is based on the propertyās rental income covering the mortgage, not your personal income
ā¢ Terms: 30-year fixed, interest rates typically 7ā9%ā¢ Example: Buy a duplex where rents total $2,000/mo. If your mortgage is $1,400/mo, you qualify because rent > debt
š° Conventional Loans
ā¢ Best for: Investors with good credit, steady W2 or self-employed income, and wanting lower rates
ā¢ Terms: 15ā30 year fixed, lowest interest rates, down payment often 15ā25% for investment property
ā¢ Example: Buy a single-family rental at $200K with 20% down ($40K). Lock in a 30-year mortgage at ~6%
ā
Key takeaway: Each strategy fits a different investing style. If youāre flipping, fix & flip loans give speed. If youāre building rental cash flow, DSCR loans let the property qualify itself. If you want long-term stability and the lowest rate, conventional is the way to go.
Looking to move forward with financing? Comment below & we'll schedule a call to talk more about the best options for you! - chat soonš«”
What is your biggest struggle with financing right now?
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š¦Financing Options for Real Estate Investing
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