Investor's Guide to Financing Rental Property
Is this rental worth financing — DSCR, reserves, and honest cash-flow math. A free, plain-English guide from Paul Francisco, with checklists, a Texas page and official resources.
Let’s make this simple.
Start with your why. We never promise returns. We help you run honest numbers — including when the deal doesn’t cash flow and you should walk.
~Paul
Paul Francisco · NMLS #1878399
Worried about it? Going to love it?
What you might be worried about
- Bad tenants
- Negative cash flow
- Vacancy
- Big repairs
What you’re going to love
- Building for your kids
- Future income plan
- Learning as you grow
- Using equity carefully
Does this rental deserve a loan?
Investment property is still long-term. Stress-test vacancy and repairs. If the deal only works on perfect rent forever, it doesn’t work.
When you should NOT buy this one
- Cash flow negative after vacancy, management, taxes, insurance, and maintenance.
- No reserves for a vacant month or a HVAC surprise.
- You’re counting on rapid appreciation to bail out a bad payment.
- House-hacking without honestly living in a unit when the program requires occupancy.
When it CAN make sense
- Numbers work with conservative rent and vacancy.
- Financing path fits: conventional investment, DSCR (qualifies mainly on rent vs. payment), or owner-occupied 2–4 unit where allowed.
- You want to be a landlord (or will pay management).
- Reserves meet lender and sleep-at-night tests.
Worked example (example numbers only)
Example only. Rent $2,000; PITI $1,650; management 8%; vacancy allowance 5%; maintenance $150 → thin but possibly workable with reserves.
Rent $1,700 with same costs → walk or renegotiate — don’t hope appreciation saves you.
Questions to ask yourself
- What’s my vacancy and repair plan?
- Do I want to be a landlord?
- Am I buying cash flow or just a story?
- How does this fit a 5–10 year map?
Questions to ask your loan officer
- Down payment and reserves on this property type?
- DSCR vs conventional — which fits?
- How is rental income counted?
- Can I house-hack a 2–4 with VA/FHA if I live in one unit?
- What would make you decline this deal?
Every step, in the order it happens
- GoalsWhat should this property do?
- Financing pathConventional, DSCR, or live-in unit.
- Run numbers + reservesRent, PITI, vacancy, repairs, management.
- Offer, inspect, closeThen lease up legally.
Your questions, answered
Down payment on rentals?
Usually more than primary homes — depends on loan/property.
What is DSCR?
Loan qualifying mainly on rent vs. payment, not personal income.
Rental income to qualify?
Often with leases or rent schedules — rules vary.
2–4 unit with VA/FHA?
If you live in one unit and meet rules.
Keep home, buy another?
Often; rental income + reserves matter.
LLC or personal name?
CPA/attorney question — loan rules differ.
Taxes?
IRS Pub 527; not tax advice.
Checklists and worksheets you’ll actually use
Rental worksheet
- Expected rent
- PITI
- Vacancy
- Repairs/capex
- Management
- Cash flow
Docs
- Tax returns
- Leases if any
- Reserves statements
- REO schedule
- Entity docs if LLC
Think long term
- 5/10/20-year map
- How each property fits
- Reserves as you scale
- Exit plans
No one can promise what a home will be worth later, so we plan for a few different paths.
We earn your trust before we ever ask for documents. After your consultation with Paul, you will upload these securely through Arive, our loan operating system. Please do not send documents by email or through a web form.
If you’re buying in Texas
- Fair housing when you rent.
- No homestead on a rental.
- Landlord insurance ≠ homeowners — ask a licensed agent.
Plain-English words used in this guide
DSCR
Debt service coverage ratio — rent compared with the property’s debt payment.
Cash flow
Rent left after operating costs and the mortgage.
Cap rate
Net operating income ÷ value — a rough yield snapshot, not a promise.
PITI
Principal, interest, taxes, insurance.
Reserves
Cash set aside for vacancy and repairs.
House hacking
Living in one unit of a multi-unit while renting others.
Equity
Value minus loans.
Appraisal
Opinion of value (and rent schedules when used).
LTV
Loan vs. value.
Closing costs
Fees to close.
Official government resources
We only link to official government sites here, so you know the information is straight from the source.
Rental property
- IRS Pub 527: Residential rental propertyhttps://www.irs.gov/publications/p527
- HUD: Buying a homehttps://www.hud.gov/topics/buying_a_home
Buying
- CFPB: Buying a househttps://www.consumerfinance.gov/owning-a-home/
- CFPB: The home buying processhttps://www.consumerfinance.gov/owning-a-home/process/
Texas
- Texas Dept. of Insurance: Consumer helphttps://www.tdi.texas.gov/consumer/
- Texas Comptroller: Property tax exemptionshttps://comptroller.texas.gov/taxes/property-tax/exemptions/
Want Paul to walk you through it?
Call or text me anytime. No pressure, just straight answers about your options. Thank you so much! 💙
Paul Francisco, Mortgage Advisor · NMLS #1878399 · Go Rascal Inc., NMLS #2072896