What it is: This is the foundational step for investors. You connect with a lender specialized in investment products (like DSCR or commercial loans) to determine your borrowing power. Unlike a standard home loan, this focuses heavily on your liquidity and experience rather than just W-2 income.

Why you do it: You get a clear picture of your financing options—whether it’s a conventional investment loan, a DSCR loan (based on rental income), or a hard money bridge loan. This proves to sellers and wholesalers that you have the capital to close, which is vital in competitive investment markets.

What it is: With your financing parameters set, you analyze properties based on numbers rather than emotion. You look for properties that meet your specific ROI (Return on Investment) or cash-flow goals.

Why you do it: Identifying properties that "pencil out" prevents you from wasting time on deals that won't generate positive cash flow or meet your debt service requirements.

***Note: This is the phase that you will contact your 1031 Exchange provider if you're using one.

What it is: You submit a purchase offer, often through an LLC. For investment deals, your offer might include specific contingencies for inspecting tenant leases or verifying rent rolls.

Why you do it: Once the seller accepts, you have an "executed contract." This allows your lender to start the specific loan file for that asset and lock in your interest rate or terms.

What it is: You send the contract to your loan officer. You will also submit your entity documents (Articles of Organization, Operating Agreement, EIN) if you are closing in an LLC name.

Why you do it: This converts your pre-qualification into a live file. The lender issues a Loan Estimate (LE) detailing your leverage (LTV), rate, and estimated closing costs, ensuring the numbers still make sense for your investment model.

What it is: The lender orders a standard appraisal to verify value, but for investors, they also order a 1007 Rent Schedule. A survey may also be ordered.

Why you do it:

Appraisal: Confirms the property is worth the purchase price.

Rent Schedule: An appraiser determines the fair market rent for the property. For DSCR loans, this number is critical because it determines if the property's income covers the debt payment.

Survey: visually defines the property lines and location of all improvements (fences, driveways, buildings). It is critical for spotting boundary disputes or easement restrictions that could limit your ability to develop or utilize the property.

Title Search: Ensures the title is clear and that there are no hidden liens that would affect your investment.

***An environmental report may also be required.

What it is: A professional underwriter reviews the asset's profitability. They calculate the DSCR (Debt Service Coverage Ratio) to ensure the rent covers the mortgage, taxes, and insurance.

Why you do it: The underwriter verifies that the property qualifies for the loan, not just you. They may ask for "conditions" like proof of insurance (specifically a landlord policy) or clarification on lease agreements.

What it is: The underwriter signs off on the appraisal, the rent schedule, and your entity docs. You receive the official "Clear to Close."

Why you do it: Your financing is secured. The lender’s closing team coordinates with the title company to prepare the final package, ensuring the property will be correctly deeded to your entity or name.

What it is: You receive your Closing Disclosure (CD) or Settlement Statement.

Why you do it: As an investor, margins matter. You review this document to ensure your cash-to-close matches your pro-forma calculations and that credits for pro-rated rents or tenant security deposits are correctly applied.

What it is: A final check of the property condition. If the property is occupied, you verify that tenants are still in place and that the unit condition matches the appraisal.

Why you do it: You ensure you aren't inheriting unexpected damages or vacancies that would immediately impact your cash flow.

What it is: You sign the final documents (often much faster for investors as there are fewer consumer disclosures). You wire your down payment and closing costs.

Why you do it: The loan funds, the deed is recorded, and you take ownership. You can now begin property management, renovations, or tenant placement to start generating returns.