We’ve reviewed our emails, previous articles and client questions and we’ve compiled five of the most common questions new real estate investors ask. And in not any particular order, here they are:


How much of a down payment will I need?  When financing a 1-4 unit rental property, you can expect to put down a minimum of 20% of the sales price and you can get a slightly lower rate with a 25% down payment.

What about interest rates for investor properties? Interest rates for rental properties are higher but not by very much. You can expect to have an interest rate about 0.25% higher than one for a similar, owner-occupied property.

What’s the difference between a vacation home, a second home and an investment property? There are lower down payment requirements for a vacation or second home and interest rates are a bit better but that’s about it. Banks consider a property an investment property if the unit is rented our more than two weeks per year.

Can I use the rental income to help me qualify? Not for your first purchase but for subsequent acquisitions. Lenders want to see a track record of being a landlord for at least two years. After that period has passed, you can then use the rental income from the unit to offset part or all of the mortgage payment.

Who pays the utility bills? That’s completely up to you. Who is responsible for which utility, water or cable will be spelled out in your lease agreement but you get to decide.

How do I know if it will cash flow or not? Your real estate agent can help with that. If the property is currently rented, the amount of monthly rent will be listed in the multiple listing service and your bank can calculate your mortgage payment along with estimated taxes and insurance.