Real Estate Investing &
Investment Property Loans

What Is Real Estate Investing?

Real Estate Investing Real estate investing involves purchasing an investment property to generate profit. An investment property is real estate that isn't a primary or secondary residence. It's a piece of property that will not be occupied by the owner. Instead, the property is purchased in order to generate a profit, either through rental income, a future sale, or both. A home buyer may be interested in investing in real estate due to potential tax benefits or the opportunity to build up an investment portfolio.

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An investment property can be a long-term commitment or a short-term endeavor, such as "house flipping", where a home is purchased, renovated, and then sold at a profit. Regardless of the specifics, the needs of real estate investors are different from the needs of a typical home buyer, so working with a lender who understands your goals is beneficial.

Why Get an Investment Property Loan?

Whether a borrower plans to purchase a single-family home, townhouse, condominium, or multi-family dwelling, there are different requirements to secure a loan on an investment property versus obtaining a mortgage for residential purposes. Since investment properties inherently carry more risk, the financing guidelines are different from traditional loans - they also offer additional benefits:

  • Rental opportunity: Renting out your property to tenants creates additional cash flow. Consider purchasing properties near downtown areas, vacation spots or college campuses as these are popular among renters.
  • Increased cash flow: Your investment property can provide income to offset your expenses. You may even profit from your rental property!
  • Potential tax benefits: There can be many tax advantages to owning rental properties, such as deductions for mortgage interest, property and real estate taxes. Be sure to consult a tax adviser. 
  • Build your investment portfolio: You can diversify your portfolio by owning an investment property.


Real Estate Investing: Types of Properties

If you’re considering real estate investing and an investment property loan, here are a few different property types and the pros and cons for purchasing and maintaining them:



  • Beach or ski rentals can yield the equivalent of a month’s long-term rent in a week.
  • Vacation rental services can supplement and even a few nights a month can add up to the mortgage being covered
  • You can use when you wish


  • Popular areas can be very expensive
  • Frequent turnover means you need to be an active landlord
  • More tenants heighten risk for damage
  • May sit vacant off season



  • Almost always a demand
  • High rents because college-owned competition charges top dollar
  • Rental market is calculated with each individual tenant’s share compared against dorm or college-owned apartment rates (as opposed to one rate for entire property)
  • The area markets itself
  • You can have property do double duty if you buy where your children plan to attend school
  • Rent short term during summer or off season for orientation, summer school, sports competitions, etc.


  • Frequent turnover; 8 – 9-month leases standard
  • Risk of damage, noise complaints, repairs, tenant conflicts
  • “Off season” may cause vacancies, but high rents during year should compensate



  • Steady tenants, sometimes for years, allow you to know and trust who is caring for your home and build equity
  • Low turnover can help you anticipate repairs (tenants have proven they won’t damage property, but regular upkeep will still be necessary)
  • It can be a “passive investment.” If management company is utilized, it can handle all leasing, tenant interactions and repairs.
  • Track market and sell when it’s most advantageous


  • Monthly rents won’t be as high as vacation or college rentals
  • It’s a recommended business practice that rents for long-term tenants should cover your mortgage, repairs, and other expenses including HOA. A landlord who doesn’t maintain property or raises rents at every opportunity will get a bad reputation in the region.



  • Decent money can be made in a short amount of time
  • If you can sell fast enough, you may only have one or two mortgage payments
  • High level of personal satisfaction and creative release involved with rehabbing a house


  • It’s a lot of work and there can be unforeseen, costly expenses and repairs
  • If you can’t sell quickly, you risk your profit and may have to pay mortgage longer than anticipated
  • You should know the market, area, and home repair very well to succeed

It’s still a great time to get into the real estate investing realm. The returns can be significant and the experience, rewarding.

Talk to us about a cash out refinance on your current home to buy an investment property. 

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