Episode #6: Five Ways To Finance Your First Investment Property

Thanks for tuning in to episode 6 of From the Nest Podcast!


1. Conventional Loan:

This is probably the most obvious option when getting started in real estate investing, however, you may have limited buying power depending on your debt to income ratio.

For us, because we went from a household with two W-2 based incomes in Denver down to a household with one W-2 income in Ohio, we are more limited with our buying power when it comes to conventional loans and need to get a little creative as we purchase more and more properties.

2. Refinancing your home:

  • Cash Out Refinance - Refinancing your home but pulling cash out to make improvements on the home or invest in other properties

  • HELOC - “home equity line of credit” It is a loan set up as a line of credit for some maximum draw, rather than for a fixed dollar amount - so you have up to a certain amount to withdraw but do not have to do it all at once.

  • BRRRR Method: “Buy, Rehab, Rent, Refinance, Repeat” Essentially you're buying the property, you rehab them, you get them rent ready, you rent them out, you put your property management in place, and then you do a refinance after you hold the property for six months

3. Self Directed IRA:

Some financial institutions allow you to give a loan to yourself utilizing your 401K funds and paying it back with interest. We utilized this tool when purchasing our second home and we needed some more cash for the down payment.

4. House Hacking:

This tool is essentially a way to get scrappy and make some extra cash to start investing! In our second home we had a renter live with us for the full two years that we were in the home and it helped pay for the mortgage. We are also currently living at my in-laws home to allow us to qualify for more conventional loans.

5. Private Lenders:

This is when you borrow from lenders that are not a financial institution, usually friends and family. We are looking into this for future investments as we build our portfolio.

Chris and Lindsey’s Tips Of The Week:

Chris: When you are painting a house whose previous homeowners were smokers, make sure you do an initial coat of Kilz to cover the seal the smoke damage and allow for the regular paint to adhere to the surface. When Kilz is not applied it can be hard for the regular paint to attach to the surface and can often bleed through the paint.

Lindsey: Three great online tools that we utilize are:

  • Thumbtack: For finding contractors, house cleaners, garden pruners, etc.

  • Turbotenant: For screening and finding tenants for your income property

  • Redfin: For finding comps on properties

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