Starting point for planning a real estate investment strategy - start with lender?

Question

Like almost everyone else I'm sure, my situation is complicated. Good amount of equity in one investment property, some limited money in stocks, a small business currently in the red every month, almost no other income right now but 870 credit rating, fairly decent amount of cash. Would like to start searching for investment properties that cash flow as soon as practical.

So my question, are there lenders out there who could look at my situation without having a specific property in mind, and share their advice and maybe present some scenarios for what financing for a 4-10 unit property might look like, where to best source down payment/rehab money, and whether I would qualify? And if so would talking to a lender be a logical first step in moving forward? Or is this more the domain of a financial advisor, or just another experienced investor? Or perhaps I'm looking for a shortcut that doesn't really exist, where the correct path is just to start making connections and talking to as many people as possible...

Note I'm in CA but looking to invest out-of-state.

Dan Robles · Answer

Hey Mark - You’re definitely on the right track. Before you start searching for 5+ unit properties, the first step is getting pre-qualified. A CRE loan broker (like me) should be able to handle that for you at no cost — it’ll give you a clear idea of the deal size you should be targeting.

As others mentioned, most CRE loans are DSCR-based unless the property is owner-occupied (which probably isn’t your case). That said, it’s always smart to do a global underwriting so you’re well-prepared when presenting to lenders.

Once you’re pre-qualified, you can reach out to a CRE broker — they’ll take you much more seriously. Happy to connect you with one if you’d like.

Antonio Grzeca · Answer

Good Morning Mark! Your situation actually fits the profile of many successful investors getting started or scaling up. Since you already have equity, strong credit, and available cash, I’d definitely recommend exploring a DSCR (Debt Service Coverage Ratio) loan.

These loans are specifically designed for investors and don’t require personal income verification and instead, they’re based on the cash flow of the property itself. That makes them perfect for someone in your position, especially since your business is currently operating at a loss.

Yes, talking to a lender experienced with DSCR loans is a logical and smart first step. It’ll help you see exactly what you can qualify for before you start putting offers together. Feel free to reach out. I'd be happy to help! Have an amazing day and much luck on your investment journey!

Jason Wray · Answer

Mark,

Great question, and Yes, it is very wise to discuss the hypothetical's and scenarios up front prior to shopping and into a contract.  As a Banker I advise the best thing to do for everyone new or seasoned is to "Do the Math" as we say on the Finance/Mortgage side.  Run the numbers in advance to avoid most of the unforeseen issues.

The Banker/Loan officer's job is to help navigate you as the buyer/client to steer away from bad deals.  While also utilizing our internal software to help evaluate property value, rents, rent style (STR, MTR, LTR) check the cash flow ratios, plus the ARV potential including the cost of Reno/Repair.

The pregame is what most lenders or brokers do not offer because it requires more time offered to the client beyond the 9am to 5pm employee.  It's also important to add in a seasoned real estate agent, and GC.  That is usually the best "All in one" or proper network to ensure you are using less money down, Getting the Best deal, highest rents, and Maximum ARV potential.

The short cut does exist and it lies with building your team/network and Bigger Pockets help creates those connections.  If you ever want to talk REI or go over certain areas feel free to reach out or send me an email.  Always happy to help other Bigger Pockets members and help you save time and money.

Doug Clark · Answer

Hey Mark, great question and honestly, you’re already thinking about it the right way.

If you’re just starting out, I’d recommend beginning with single-family rentals before jumping into 4–10 units. They’re easier to finance, manage, and scale from. Once you’ve built up some experience and cash flow, moving into small multis becomes much smoother.

Talking to a lender early is definitely a smart move but it’s also best to have a specific property in mind when you do. That way, they can give you soft quotes and help identify which programs, rates, and lenders fit best for your scenario. It also helps you see how fast each lender can close.

At the same time, keep networking with other investors you’ll pick up a lot of real-world tips and creative funding ideas that lenders might not cover.

Jamal Reimer · Answer

Hey Mark, sounds like you’d benefit from connecting with a small-balance commercial or DSCR lender who can underwrite investor properties out-of-state.

I work on the short-term side (transactional/bridge capital for investors once they have deals under contract), but if you’d like, I can point you toward a few investor-friendly lenders who help structure 4–10-unit financing scenarios.

Mike Dymski · Answer

Good credit, lots of equity, lots of cash - normal commercial financing should not be an issue for 4-10 unit property.  Meet with commercial real estate brokers who target that size property and they will have both property opportunities and lender recommendations.

Erik Estrada · Answer

It sounds like you might want to look into a DSCR or Bridge loan. Lenders do not look at your personal income or DTI to qualify. Instead, they look at the rental income and property mortgage payment to qualify. Since you have a high credit score, you should be able to get favorable rates and terms.

Bradley Buxton · Answer

@Mark Soreco

There are many lenders who will talk about your situation and what you can do. They are professionals to be conscious of their time. A local lender is usually a good idea. If possible, get your lender and CPA on the phone at the same time. As an agent, I will also sit in on the meetings to ask the lender about different situations and possibilities. A bit like having a health coach sit in on your doctor's appointment to ask the questions you might not have thought to ask. Happy to provide a few lenders that can help with a lending strategy.

Starting point for planning a real estate investment strategy - start with lender?

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