How To Finance Your Next Rental Property In The US

Conventional investment property loans:

These loans typically require a 15-25% down payment and have higher interest rates compared to primary residence loans. Lenders will look at your credit score, debt-to-income ratio, and the property's potential rental income.

House hacking:

This involves buying a multi-unit property (e.g., duplex, triplex, or quadplex), living in one unit, and renting out the other units. This can help you qualify for a primary residence loan with a lower down payment.

Rent out your current home:

If you already own a home, you can rent it out while purchasing or renting another property as your primary residence. This allows you to use a primary residence loan for the new property.

Use the BRRRR method:

This stands for Buy, Rehab, Rent, Refinance, Repeat. You would use a purchase-rehab loan to buy a property, renovate it, rent it out, then refinance it into a new mortgage. This allows you to access the property's equity without putting additional money down.

Hard money loans:

These are short-term, high-interest loans that can be used to purchase investment properties quickly. They are often used for fix-and-flip projects.

When considering financing options, it's important to compare interest rates, down payment requirements, and overall costs to find the best fit for your investment goals and financial situation. Consulting with a financial advisor or mortgage lender can help you determine the most suitable financing strategy.