Real estate investing simply means purchasing property with the intention of generating income over time. While that definition is broad, today’s investors typically choose one of several tried-and-true approaches.

Long-term rentals

This is the most traditional form of real estate investing. You buy a home, condo, or multi-family property, then rent it out to tenants on a yearly lease. The goal is to create consistent monthly income while the property potentially appreciates in value.

Short-term or vacation rentals

Thanks to vacation rental websites, short-term rentals have become a popular way to leverage a property. Short-term rentals also provide more flexibility for investors who are only looking to rent out the property seasonally. While the rental income on vacation properties can be inconsistent, it gives owners the freedom to enjoy the property themselves.

Fix-and-flip properties

Some investors focus on buying undervalued homes that they can renovate and sell for a profit. While house flipping can generate faster returns, it also comes with the risks and costs of renovating. But for investors who aren’t looking to manage a rental property over time, this may be a closer fit for your needs.

House hacking

House hacking allows new investors to ease into the process. You buy a multi-unit property, such a as a duplex, and live in one unit while you rent out the others. This rental income can help offset your monthly mortgage payments. House hacking makes it easier to enter the market with lower down payment requirements than a pure investment property.

Real estate investing is accessible to many types of buyers, but it requires thoughtful planning. Before making an offer on a property, consider the following questions.

Your credit score, DTI and investment property options

Mortgage lenders often review your credit score and, in many cases, your debt-to-income (DTI) ratio to evaluate your ability to manage additional payments.

However, not all investor loans rely on personal DTI. Some options, such as Debt Service Coverage Ratio (DSCR) loans, focus primarily on the property’s ability to generate rental income rather than the borrower’s personal debts. In these cases, strengthening your credit profile or choosing the right loan structure may be more important than reducing personal debt.

Down payment expectations

Investment properties typically require larger down payments than your primary home. For example, a conventional loan may require 15–25% down depending on the property type. Understanding these requirements early helps you budget effectively.

Risk tolerance

All investments carry risk, and real estate is no exception. Markets change, repairs arise and vacancies happen. Knowing how much unpredictability you can handle will help you choose the right investment.

A mortgage expert can show you how different financing options affect your monthly payment, savings and total cash needed. This gives you a clearer picture of what fits your financial comfort zone

Financing an investment property looks different from financing a primary home. Choosing the right mortgage loan product can significantly shape your strategy. Here are several common options available to today’s investors.

Conventional investment property loans

Conventional loans are the most widely used loans for both single-family and small multi-unit investment properties. Key features include:

• Down payments starting around 15–25%
• Ability to use projected rental income (in some cases) to help qualify
• Fixed and adjustable-rate options
• This path is popular for long-term rentals

DSCR loans are Non-QM loans<https://crosscountrymortgage.com/mortgage/loans/non-qm/> that focus on the property’s expected rental income rather than the borrower’s personal income. These loans cater to real estate investors who want flexible qualification options or who own multiple properties.

DSCR loans are often used for:

• Rental properties (long-term)
• Short-term rentals (with proper documentation)
• Investors focused on portfolio growth

Approval relies a lot on rental income covering the mortgage payment. DSCR loans can be a good choice for investors who want an easier qualification process.

These short-term financing solutions are designed for purchases that involve renovation and resale. They typically offer:

• Short loan terms
• Faster closings
• Funding towards both purchase and rehab costs
• Borrowers should have a clear plan and timeline for renovations. This is important for both new and experienced flippers.

Bridge loans

For investors who need to purchase a property before selling another, bridge loans provide temporary financing. They offer flexibility during transitions, allowing buyers to act quickly in competitive markets.

Not every new investor starts with a large down payment or a multi-property portfolio. In fact, many successful investors begin with smaller, manageable strategies that build a foundation for long-term growth.

House hacking for lower entry costs

By buying a property with up to four units and living in one, buyers can get lower down payments and better terms. Over time, this strategy can create equity and reduce personal housing expenses — setting the stage for future investments.

Buying a small multi-unit property

Two- to four-unit properties allow you to:

• Generate rental income from multiple tenants
• Spread out vacancy risk
• Build investment experience in a manageable way
• These properties often appeal to first-time landlords who want a balance of income potential and hands-on involvement.

Starting with a vacation rental

If you like a certain place or travel often, a vacation rental can be both personal and a good investment. Some investors begin here because they can use the home part-time while earning income during peak travel seasons.

Budgeting is one of the most important parts of real estate investing. A good budget helps you get ready for expected costs and the surprises that come with owning property.

Here are key expenses to consider:

Mortgage payment

Your loan officer can help estimate monthly payments based on different loan products, down payments and rate structures.

Property taxes and insurance

Investment properties sometimes have higher insurance costs than primary residences. Your insurance partner can help estimate appropriate coverage.

Repairs and maintenance

Routine maintenance, unexpected repairs and long-term updates all require planning. Many investors set aside a percentage of rental income each month for this category.

Vacancy allowance

Even in strong markets, vacancies happen. Building a cushion into your budget ensures you can manage short periods without rental income.

Utilities and services

For some rentals, owners may cover utilities, landscaping, trash service, or other recurring costs.

Property management

If you prefer passive investing or don’t live near your rental, a property manager can handle leasing, maintenance coordination and tenant communication. Their fee is typically a percentage of the monthly rent.

Budgeting effectively helps investors understand what the property can sustain financially and what level of cash flow aligns with their goals — without assuming guaranteed profits or appreciation.

Real estate investing offers countless opportunities. While every strategy comes with its own considerations, today’s market still provides accessible pathways for beginners who want to build wealth over time.

With thoughtful planning, clear budgeting and the support of knowledgeable mortgage professionals, you can take your first step into real estate investing with confidence. Whether you’re exploring your very first property or planning for long-term portfolio growth, we’re here to help you understand your options and make decisions that support your financial future.