Buying your first rental property can get rather exciting for most. Scary for some but the ride can be rather wild. First there’s the decision to become a real estate investor in the first place. Starting out, there are so many things to consider including being able to qualify for the loan toloan process becoming a landlord.

Once it’s been decided to take the plunge the novice investors search for a bank and apply for a preapproval. The loan officer will ask for no shortage of documentation including loan disclosures, acknowledgements and tax returns. It’s a lot to gather and it’s likely they’ll never provide any single entity with so much paperwork.

Next is actually shopping for a home with a preapproval letter in hand. Knowing that you’re already approved and all that is needed is to fill in the spot where the property address goes. Once a property is identified there’s some back-and-forth between the seller and buyer when finally a price is agreed upon and the contract is executed. Then it all gets very, very quiet. Or at least it seems that way.

After a sales contract has been signed and a completed loan application is on file, there is very little for the borrower to do at this stage. But that doesn’t mean there’s nothing going on. Quite the contrary. The lender immediately contacts all relevant third parties to provide needed documents in order to issue a loan approval. Property appraisal, title insurance, escrow, survey, abstract, legal, income verification and other services are alerted with an order to complete the loan file. During this collection process the underwriter has yet to even see the loan.

Once the loan has been fully documented only then is the loan submitted to the person approving the loan. Once approved the closing papers are ordered. This process takes anywhere from two to three weeks. Your work is done ahead of time. The lender’s work only starts once a contract arrives.