If you’re new to real estate investing, especially as a landlord, two things you need to get right early: setting rents and securing the right loan. Those two decisions shape how profitable your investment is, how attractive your loan terms are, and even whether a lender approves your deal in the first place.
This isn’t about maximizing rent or just finding “a lender.” It’s about understanding how those pieces connect, how real estate investment loans work, and why getting the numbers right matters.
Setting the Right Rent Can Make or Break Your Deal
New landlords often start by asking, “What can I get for rent?” That’s a bad place to start. The better question is, “What rent number will support my loan approval and make the property cash-flow positive?”
Lenders care about rental income – especially lenders offering DSCR loans (Debt Service Coverage Ratio loans) or hard money loans. These aren’t personal income loans. Approval hinges on whether your property can support its own debt. If your projected rent doesn’t pass that test, you won’t get approved. Or you’ll get worse terms.
Too many new investors make the mistake of assuming they’ll rent at top-of-market rates. But DSCR loan lenders don’t care about hopeful numbers. They want real, verified lease agreements or documented market comps.
What Lenders Actually Look For
Real estate investment loans – especially DSCR or hard money options – are underwritten differently than the mortgage you use to buy a primary residence. Lenders are looking at property performance, not your job or W-2 income.
Here’s what they focus on:
- Loan-to-Value (LTV) ratio: They want to see that the amount you’re borrowing isn’t too close to the value of the property.
- DSCR: For DSCR loans, lenders typically want a DSCR of 1.0 or higher. That means the rent should at least cover the mortgage payment, taxes, and insurance.
- Rent Projections: If you’re not already leasing the unit, they’ll use market rent estimates. But they’ll be conservative. Use realistic comps, not Zillow fantasies.
- Exit strategy (for hard money loans): These are short-term loans, so lenders want to know how you plan to pay them off – refinance, sell, or hold with long-term financing.
So before applying, make sure your rent assumptions are verified and make sense. Otherwise, you’ll get denied or end up with a loan that eats into your cash flow.
Common Mistakes New Landlords Make When Setting Rent
Most of the mistakes come from overconfidence or copying what other people post online. Here’s what to avoid:
- Guessing based on Craigslist listings – Active listings don’t tell you what homes actually rented for.
- Pricing too high – Trying to cover your mortgage by inflating rent usually backfires. The unit stays vacant. That costs you more than pricing it right from the start.
- Ignoring seasonal demand – Rents fluctuate based on the time of year. You’ll likely get lower rents in winter.
- Not accounting for utilities or maintenance – If you’re covering lawn care, pest control, or water, factor that into your rent calculation.
A better method is to use comps from actual leases nearby, check with property managers, or pull data from tools like Rentometer or Zillow’s “Rented” data filters – not just “For Rent.”
How Real Estate Investment Loans Work
You’re not getting a 30-year fixed-rate loan through your local bank. Real estate investment loans work differently. Lenders are evaluating the deal, not just you.
There are a few major types:
- DSCR Loans: Focused on whether your property can pay its own debt. Personal income doesn’t matter much.
- Hard Money Loans: Short-term, fast-close loans typically used for flips or BRRRR deals. These loans often require higher interest and points, but they move quickly and rely more on property value and ARV (after-repair value).
- Bridge Loans: Similar to hard money but sometimes offered by more institutional lenders. Used when you plan to refinance or sell within 12–24 months.
Hard money loan lenders aren’t all the same. Some are just private individuals. Others are companies that specialize in investor-friendly lending. They vary in terms, fees, speed, and how much guidance they give new borrowers.
New landlords often fail to realize that if they don’t bring a strong deal with accurate rent projections, the lender will either reject them or give them expensive terms that kill the profitability of the investment.
Getting Preapproved? Know Your Rent First
Don’t wait until after you have a deal under contract to figure out your rent. Do that before you even talk to a lender.
Here’s how:
- Estimate rent conservatively – Use lower-end comps, not best-case scenarios.
- Know the local vacancy rate – If everyone’s sitting on empty units for 60 days, you’ll need reserves.
- Create a basic pro forma – Calculate gross rent, subtract expenses, estimate DSCR.
Then bring that to your lender. This speeds things up and makes you look like you know what you’re doing. Some lenders even help new landlords understand how their rent numbers impact approval.
The Benefits of Partnering with a Real Estate Investment Loan Company Like Brrrr Loans
For new investors, working with a loan provider that focuses specifically on real estate investment – like Brrrr Loans – can make a noticeable difference. These companies aren’t just issuing loans; they’re evaluating the same types of deals you’re trying to make work. That means they can flag rent projections that don’t add up, help structure the loan for long-term success, and offer clarity on what rental income will get your deal funded. If you’re unsure how to price rent to help your loan odds, this blog from Brrrr Loans breaks it down clearly: Strategies for Pricing Rent to Improve Loan Approval Odds
Why Rent Pricing and Loan Approval Go Hand-in-Hand
This isn’t something people talk about enough. Your rent projections aren’t just part of your operating budget – they directly impact your ability to get a loan.
If your rent is off:
- You may not qualify for a DSCR loan at all.
- You may get a higher rate, lower LTV, or more points.
- You may underestimate vacancy losses or repairs and run out of reserves.
And lenders don’t usually correct your rent math for you. They just deny the loan – or issue one that’s worse than you expected.
Start with the rent. Make it accurate. Then shop lenders who understand real estate investing – not just mortgages. The better you get at this, the easier it is to scale.
Final Thoughts
If you’re just getting started as a landlord, skip the guesswork. Understand how your rental numbers drive your financing options. And don’t assume every lender is the same – some are built to work with new investors and will help you avoid rookie mistakes.
Setting rent and securing the right loan go together. Miss one, and the other one usually falls apart too.
