Buying Your First Investment Property

Build the operating budget before the offer

Estimate market rent using comparable properties and support it with the documentation the lender will require. Subtract property taxes, insurance, association fees, management, maintenance and vacancy from your own cash-flow plan.

Run a lower-rent and higher-expense case. A property that only works at perfect occupancy leaves little room for repairs or a tenant change.

Check the first-time-investor rules

The standard DSCR first-time-investor exception requires a minimum 700 credit score, DSCR greater than 1.00, one unit, at least 36 months since a covered credit event and ownership of a primary residence. First-time homebuyers are not eligible for that exception.

Loans under $150,000 require at least 1.25 DSCR under the full guidelines. The 5–8 unit / mixed-use program requires experience and does not accept first-time investors. A conventional or borrower-income program may offer a different route.

Separate cash to close from cash to operate

Budget down payment, closing costs, lender-required reserves and a property operating cushion. These are different uses of cash. A lender’s minimum reserves are not a forecast of how much a repair will cost.

Get insurance and tax estimates specific to the property. Do not assume the seller’s existing costs will continue after closing.

Move from a plan to a property review

An early loan discussion can establish the eligible property size and documentation path before you sign a contract.

• Choose long-term or short-term rental use and verify local feasibility.
• Prepare income or rent documents and your housing history.
• Confirm property condition, title and any association restrictions.
• Compare the complete payment and cash required, then define your management plan.