What financing do new real estate investors use for a first flip?

Most first flips use hard money or private bridge at 8.99%–13.5% interest-only, sized on LTC and ARV cap with milestone draws. Sponsors bring equity for the gap below 90% LTC, closing costs, and carry. Exit is sale within 6–12 months — not long-term bank debt.

When should a beginner use DSCR instead of hard money?

Use DSCR at 5.75%–10.5% when the property is stabilized or near-stabilized with rent that clears 1.0+ DSCR — turnkey rentals, BRRRR refi after lease-up, or portfolio acquisitions with in-place tenants. DSCR is hold debt, not rehab bridge.

Does Jaken Finance Group finance owner-occupied homes?

No. Jaken Finance Group finances non-owner-occupied investment property only — fix-and-flip, BRRRR bridge, DSCR rentals, and select commercial investor files. Primary residences and owner-occupied purchases require agency or retail channels.

Blog

Beginner's Guide to Real Estate Investment Financing

Published June 12, 2026 · Updated July 18, 2026

By Jason Taken · Principal, Jaken Finance Group

Non-owner-occupied financing map — hard money bridge 8.99%–13.5% IO, DSCR hold 5.75%–10.5%, product fit, leverage basics, and first-deal checklist.

New real estate investors face a financing landscape that looks nothing like buying a primary home. Banks anchor on W-2 income, owner-occupancy, and slow appraisals. Investment deals anchor on collateral, exit, and leverage math — priced and structured for business-purpose property held in an entity.

This beginner’s map covers the two products most non-owner-occupied investors actually use: hard money bridge at 8.99%–13.5% interest-only for acquisition, rehab, and short holds — and DSCR permanent at 5.75%–10.5% for stabilized rentals. No crowdfunding pitch decks. No agency mortgage tutorial. Just the financing stack investors deploy on first deals through portfolio scale.

Jaken Finance Group lends in all 50 states on qualified investment-property files only. Use this guide to pick the right product, understand leverage basics, and walk into pre-qual with a complete scenario.

What is a hard money loan · DSCR loans hub · Private and hard money for beginners.

Two-lane map — bridge vs hold

Lane	Product	Rate (2026)	Payment	Typical term	Best for
Bridge	Hard money / fix-and-flip	8.99%–13.5%	Interest-only	6–18 months	Flip, BRRRR rehab, auction
Hold	DSCR rental	5.75%–10.5%	P&I (30 yr common)	Long-term	Turnkey rental, BRRRR refi

Bridge is not a mortgage strategy — it is timed debt with a defined exit (sale or refi). Every IO month without sale or DSCR takeout burns spread.

DSCR is hold debt — sized on rent covering debt service, not your W-2. Qualification runs through property cash flow and LTV caps up to 85% purchase / 80% cash-out in select markets for qualified borrowers.

Most value-add investors run both lanes in sequence: bridge first, DSCR or sale second.

Lane 1 — Hard money bridge for beginners

Hard money is asset-based lending on non-owner-occupied collateral. Underwriters prioritize:

Sold comps supporting ARV
Scope + contingency with draw schedule
Entity vesting (LLC common)
Documented exit — sale pro forma or DSCR refi path

Close speed on complete files: 7–14 business days. That is why auction, off-market, and distressed acquisitions use bridge instead of banks.

What hard money funds

Strategy	Bridge role
Fix-and-flip	Acquisition + rehab draws → sell
BRRRR	Acquire + rehab → lease → refi to DSCR
Wholesale double-close	Short-term acquisition funding
Heavy value-add	Collateral-first when banks want turnkey

Leverage basics on bridge files

Three numbers appear on every rehab term sheet:

Metric	What it means
LTC	Loan ÷ all-in project cost — often up to 90%
ARV cap	Loan ÷ after-repair value — often up to 75%
As-is LTV	Acquisition advance ÷ today’s value

Funded loan = minimum of all caps. See understanding LTC and LTV vs ARV caps.

Beginner flip — simplified economics

Line	Example
Purchase + rehab all-in	$220,000
ARV	$290,000
Bridge loan (90% LTC binds)	$198,000
Sponsor equity to project	$22,000 + closing
IO at 11%	~$1,815/mo
Hold 7 months	~$12,705 carry

Exit: $290,000 − 8% sale costs = $266,800 net → minus all-in and carry → target spread before points.

First-time sponsors should model ARV −10% and +1 month carry before accepting terms.

Fix-and-flip loan requirements · Using hard money to invest.

Lane 2 — DSCR permanent for beginners

DSCR (debt service coverage ratio) loans qualify the property, not the sponsor’s W-2. Core test:

DSCR = Gross rent ÷ PITIA (principal, interest, taxes, insurance, association)

Most desks want ≥ 1.0 — rent fully covers payment. Some files require 1.1–1.25.

When beginners use DSCR

Turnkey rental with in-place lease at acquisition
BRRRR refi after rehab complete and tenant in place
Portfolio acquisition of stabilized SFR or small multi-family
Short-term rental on eligible programs with documented market rent

DSCR leverage and rates

Transaction	LTV cap (qualified, select markets)
Purchase	Up to 85%
Rate-and-term refi	Up to 85%
Cash-out refi	Up to 80%

Rates: 5.75%–10.5% P&I — lower band for strong DSCR and LTV, higher for thin coverage or cash-out.

Beginner DSCR — simplified economics

Line	Example
Purchase price	$275,000
As-is value	$270,000
Loan at 80% LTV	$216,000
Rate 7.5% P&I (30 yr)	~$1,510/mo PITIA
Gross rent	$2,050/mo
DSCR	~1.36

File clears coverage with margin. Thin-rent markets may force 75% LTV or higher rate tier.

How a DSCR loan works · DSCR vs hard money vs conventional.

BRRRR — where bridge and DSCR connect

BRRRR is the most common two-lane path for beginners who want hold exposure without paying turnkey premiums:

Buy distressed SFR in LLC
Rehab with hard money draws at 8.99%–13.5% IO
Rent — execute lease before refi application
Refinance into DSCR at 5.75%–10.5% P&I
Repeat — recycle equity to next acquisition

Bridge phase sizing: LTC + ARV cap (demystifying LTV).

Refi phase sizing: as-is LTV + DSCR — not ARV.

Failure mode: maxing bridge ARV cap with no refi cushion when appraisal or rent underperforms. Always model dual exit — sale and refi — before binding bridge.

Private money vs hard money · 100% LTC program details.

What beginners should skip (for now)

Agency owner-occupied mortgages. Different product — not investment bridge.

Crowdfunding platforms. Pool equity with platform fees, lockups, and no direct asset control — a different asset class than direct investing with hard money or DSCR.

Unsecured personal loans for down payment. Underwriters trace capital sources; undocumented debt breaks files.

Credit-card rehab. IO bridge at 8.99%–13.5% with defined exit is cheaper and auditable than revolving consumer debt at 20%+ APR.

Focus first on one strategy — flip OR BRRRR OR turnkey DSCR — and learn its leverage math cold.

Entity, insurance, and file hygiene

Investment lenders expect business-purpose structure:

Item	Beginner standard
Vesting	LLC (most desks)
Insurance	Landlord or builder-risk per phase
Scope	Line-item budget + contingency
Comps	Sold — not active listings
Exit doc	Sale pro forma or lease + DSCR worksheet
Capital paper trail	Sourced equity — no undisclosed debt

Complete files close faster. Incomplete files sit in condition queues regardless of deal quality.

Hard money application process · Red flags — lenders to avoid.

Rate bands — what to expect in 2026

Qualified non-owner-occupied files at Jaken Finance Group:

Product	Rate	Payment type
Hard money / bridge / fix-and-flip	8.99%–13.5%	Interest-only
DSCR rental	5.75%–10.5%	P&I

Bridge pricing within the band reflects leverage (LTC/ARV binding), sponsor experience, asset class, and hold timeline. DSCR pricing reflects LTV, DSCR strength, cash-out vs purchase, and property type.

Do not budget flip carry at 8.99% if your file binds at high LTC with thin ARV spread — expect mid-band or upper-band IO.

First-deal decision tree

Start
  │
  ├─ Need rehab before rent? ──YES──► Hard money bridge (8.99%–13.5% IO)
  │                                      Exit: sale OR DSCR refi
  │
  └─ NO — turnkey with lease? ──YES──► DSCR (5.75%–10.5% P&I)
         │
         └─ NO lease yet ──► Hard money bridge until stabilized

Your goal	Lead product	Exit
First flip	Hard money IO	Sale 4–9 mo
First rental (turnkey)	DSCR P&I	Hold
First BRRRR	Hard money → DSCR	Refi after lease
Auction purchase	Hard money IO	Flip or BRRRR

Pre-qual checklist — beginner submission

Strategy — flip, BRRRR, or turnkey hold
Property — address, type, non-owner-occupied confirmation
Entity — LLC name and vesting plan
Purchase — price, ARV or rent depending on lane
Scope — if rehab, line budget + contingency
Leverage math — LTC, ARV cap, or DSCR/LTV worksheet
Exit — sale timeline or lease + refi target
Equity — cash to close and carry reserve
Experience — prior deals or relevant contractor team
Contact — sponsor phone and email for term sheet

Submit scenario · Pre-qualify.

Common beginner mistakes

Treating bridge like a 30-year mortgage. IO carry does not amortize — budget monthly burn explicitly.

Ignoring binding constraint. Headline 90% LTC may fund less when ARV cap binds.

Skipping refi math on BRRRR. Bridge approval is not DSCR approval.

Thin contingency. Scope overruns stall draws and inflate out-of-pocket.

Wrong product for hold. Do not carry 11% IO indefinitely — exit to sale or DSCR on schedule.

Coverage and next steps

Jaken Finance Group finances non-owner-occupied investment property nationwide from Hoffman Estates, IL. Products include fix-and-flip, bridge, new construction, DSCR rentals, and select commercial investor programs — not primary residences.

Start with the hub pages, run leverage math on your specific address, and submit a scenario for a term sheet with rate, LTC, ARV cap, points, and documented exit requirements.