Real estate investing loans   Lenders, by nature, are risk adverse. They like to make loans where they have a relative level of comfort that they will be paid back. So, getting real estate investing loans approved can be a challenge. Today, I want to share how real estate investing loans work and how to best go about getting approved for them.   More specifically, I want to talk about investing in rental real estate. Not real estate that you purchase for your own, or your businesses, use.   OO versus NOO   One note on that - any property where you occupy more than 50% of the square footage is considered owner-occupied. Anything less is called non-owner occupied. The key significance is the percentage of funding a lender will provide.    For example, on owner-occupied properties lenders will often fund up to 75-80% of the value or purchase price, whichever is less. On non-owner occupied properties that percentage falls to 65-75%. On a large loan that percentage difference can mean you are coming up with some significant cash down.   The property should stand on its own   Ok, now that we have determined we are talking about NOO properties today, let's talk about what a lender is looking at when they are evaluating real estate investing loans.   You may recall that getting approved for a loan is almost always about proving the ability to repay the loan. And the primary source of repayment is cashflow. So, in the case of rental properties, the lender is going to gauge the properties ability to make the loan payments without any assistance from you as a guarantor.    Meaning, the rental income you anticipate earning or already have in place through an existing lease, should yield a profit when compared to the loan payment and any associated expenses.    Those other expenses will include some consideration for potential vacancies (usually 5% of annual income) and a property management company (another 5-10%) if you plan to use one.   Next up   Coming up this Wednesday on the podcast I will be talking about real estate development and construction loans associated with land.