Investing in real estate is one of the most powerful ways to build long-term wealth and generate passive income. But when it comes to financing investment properties, especially in a competitive market like Phoenix, the process can feel overwhelming — especially for new investors.
At Valley Home Buyer, we specialize in helping investors find profitable properties, secure financing, and achieve their real estate goals. In this guide, we’ll break down 8 essential things you need to know about financing investment real estate in Phoenix.
1. Understand Your Real Estate Financing Options
Before diving into a deal, make sure you know your investment property loan options. Common financing solutions include:
- Conventional mortgages
- Hard money loans
- Private money loans
- Portfolio loans
- DSCR (Debt-Service Coverage Ratio) loans
Each type has its pros and cons depending on your timeline, credit score, and investment goals. Research thoroughly or speak to an expert to decide which financing option suits your strategy.
2. Align Financing With Your Investment Strategy
Are you flipping a property for quick resale, or holding it for long-term rental income?
Your investment strategy will directly impact your financing approach. For example:
- Fix-and-flip investors often use hard money loans due to fast approvals and short terms.
- Buy-and-hold investors may prefer traditional mortgages or DSCR loans for better rates and lower long-term costs.
3. Know Your Credit Score — and Improve It If Needed
Your credit score plays a big role in determining your interest rate and loan eligibility. Before applying:
- Check your score
- Dispute any errors
- Pay down high balances
A higher score can unlock better loan terms and lower your overall borrowing costs — which directly boosts your ROI.
4. Plan Your Down Payment Ahead of Time
Unlike primary residences, investment properties usually require larger down payments — typically 15% to 25%. The exact amount depends on:
- Loan type
- Property type (single-family vs. multi-unit)
- Your creditworthiness
Planning for this upfront ensures a smoother financing process and helps you move quickly when the right deal comes along.
5. Get Pre-Approved for Investment Property Loans
Pre-approval gives you a clear understanding of your budget and makes your offers more competitive. Sellers are more likely to work with buyers who have financing ready to go — especially in hot markets like Phoenix.
Pre-approval also helps you avoid surprises during closing and allows you to act fast on great deals.
6. Calculate Cash Flow Before You Buy
Your investment should generate positive cash flow — the income left over after covering all expenses:
- Mortgage payments
- Property taxes
- Insurance
- Maintenance
- Management fees
Run the numbers carefully before you buy to make sure the property will be profitable. Don’t forget to factor in vacancy rates and potential repair costs.
7. Always Have a Contingency Plan
Unexpected expenses happen. Whether it’s a surprise repair, a tenant who breaks their lease, or market fluctuations — always be prepared.
We recommend:
- Building an emergency reserve fund (3–6 months of expenses)
- Having access to backup lines of credit or flexible financing options
Smart investors plan for the unexpected.
8. Work With a Local Real Estate Investment Expert
The best way to avoid costly mistakes is to partner with professionals who know the local market and understand investment real estate inside and out.
At Valley Home Buyer, we help investors:
- Find distressed or undervalued properties
- Navigate financing and loan options
- Develop profitable investment strategies
- Renovate and reposition properties for resale or rental
Our experienced team in Phoenix is here to help you make informed decisions and maximize your returns.
Ready to Invest in Phoenix Real Estate?
Financing investment properties doesn’t have to be complicated. With the right strategy, expert guidance, and a clear understanding of your financing options, you can confidently build your real estate portfolio and achieve long-term financial success.
Contact Valley Home Buyer today at 602-734-3662 to speak with one of our investment experts. Whether you’re just getting started or expanding your portfolio, we’ll help you find great deals and make smarter investments in Phoenix.