Financing Your First Investment Property


Property investment is generally considered the safest and easiest kind of investment. But if you’re doing your first deal, it’s often one of the hardest kinds since you’re still learning how the real estate investment process works.

Navigating the ins and outs of real estate investing, particularly the traditional financing can be overwhelming and difficult. Here are various ways you can find the finances to make investing really possible.

1. Know Your Credit Profile

Do a thorough check on your credit profile to know where your credit stands. Any disputes and mistakes need to be taken care of. Free copies of credit reports can be obtained from the three main credit bureaus — Experian, Equifax and Trans Union —visit to learn more.  This will give you an idea of the terms on which you qualify for a loan. Always contact an expert before taking any action on what you learn.

If you fail to qualify for a loan, it’s best to hold on for the time being and try to improve your credit score.

2. Think Outside The Box

You can invest in real estate without buying a new property: upgrade the property you already own. There are also other, less traditional financing options open to you, like home equity lines of credit. Financing is also possible through private loans from lending sites like and, which connect investors and individual lenders. But do thorough research before turning to the riskier sources of cash, and remember that a good credit history is required to meet certain criteria.

3. Decide What You Want To Buy

If you have a full understanding of your credit score and the criteria for a loan, it’s time to narrow down your search. There are different types of investments, like buying a rehab property, pre-construction, or a rental. Whichever approach you decide to take, make sure you understand the numbers, including the cost of financing, the down payment, possible adviser fees, important repairs, and tax obligations. Consult a tax adviser about how you plan to use the property if you have any questions.

4. Paperwork

Be prepared to provide copies of recent financial documents including two months of bank statements. If you’re self-employed, a letter from your CPA is required, as are a statement of investment, retirement accounts, payslips, driver’s license, Social Security Card, and papers about other important financial events like dealing bankruptcy or getting a divorce.

5. Down Payment

It is important to have a down payment. The more you can invest, the better your odds are of securing a good interest rate on the property loan. You may use savings for the down payment or obtain an FHA 203K loan. This allows you to finance up to $35,000 into your mortgage for repairs, upgrades, and other home improvements.

If you have a self-directed IRA or a 401k, you may be able to use that money for an investment property. Consult a financial adviser, however, so that you don’t lose out with taxes and penalties.


All you need to keep in mind is:

Do not wait too long when it comes down to decision time.

Be cautious!

Learn all you can before taking the leap.

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