Most investing guides are written for nowhere in particular. This one is written for people buying in Connecticut, and it focuses on the part most guides skip: how each strategy actually gets financed.
AFC Mortgage Group is a direct lender based in Monroe, CT. My family has been lending since 1998. On hard money and bridge loans, we lend our own money. So when I explain how a fix and flip loan or a DSCR loan works, I'm describing what we actually do, not what a lender somewhere might do.
You can put money into stocks, bonds, savings, or real estate. Real estate is the one you can control. You pick the property, you decide what to fix, you set the rent, and you choose when to sell.
Investors usually want some mix of these:
Real estate is a business, not a side bet. Before your first deal, make sure you and your family are fully committed to the work and the risk.
There are dozens of ways to make money in real estate. Pick one, learn it well, and add others later. These are the strategies we see Connecticut investors use most, along with how each one is usually financed.
Buy and hold means buying a property and renting it out for years. You collect cash flow, the mortgage gets paid down every month, and you build equity.
The most common mistake new buy-and-hold investors make is buying a bad deal because they don't know how to evaluate one. Next come underestimating expenses, poor tenant screening, and weak management. Connecticut adds its own wrinkle: property taxes vary a lot from town to town, so the same rent can cash flow in one town and lose money in the next one over. Always run the numbers with the actual tax bill.
How it's financed: a conventional investment property mortgage or a DSCR loan. More on both below.
Learn more about buy and hold rental properties
Flipping means buying a property at a discount, improving it, and selling it for a profit. It is not passive. When you stop flipping, the income stops.
Connecticut has a lot of older housing stock, which means plenty of properties that need work. That's the opportunity. It's also the risk: older homes hide surprises behind the walls, so build a contingency into every rehab budget.
How it's financed: a fix and flip loan (hard money). See the financing section for our exact terms.
BRRRR combines flipping and buy and hold. You buy a property that needs work, rehab it, rent it, then refinance into a long-term loan to pull your cash back out and do it again.
The refinance is where most BRRRR deals succeed or stall. Many lenders make you wait months after the purchase before they'll lend on the new appraised value. We don't require seasoning on the BRRRR cash-out refinance, so you can refinance once the work is done and the property is rented.
How it's financed: a fix and flip loan to buy and rehab, then a DSCR cash-out refinance.
Connecticut cities are full of duplexes, triplexes, and fourplexes. Small multifamily lets you collect several rents under one roof and one loan, which is why it's a common first investment here.
If you live in one unit, you may qualify for owner-occupied financing with a smaller down payment than a pure investment loan (see FHA below). That's called house hacking, and it's one of the most practical ways to start.
A wholesaler puts a property under contract and sells that contract to another buyer, usually an investor, for an assignment fee. The wholesaler never owns the property, so there are no rehab costs or loans. It's popular because start-up costs are low, but it's a sales and marketing business, and your income depends on finding deals every month.
A REIT (real estate investment trust) lets you buy shares in a portfolio of properties through a brokerage account. It's hands-off, and you give up control and the upside of running your own deals.
Real estate investment groups and partnerships pool money from several people to buy larger properties. They can be a good way to learn from experienced investors. Read the operating agreement carefully and know exactly who controls decisions and how you get paid.
Don't try to do everything. Choose one strategy and one or two property types, then get good at them. Once you know your niche, you'll know which agents, contractors, and lenders to build relationships with, and you'll recognize a good deal when you see one.
A simple way to decide: if you have time and want income now, flipping. If you have a job and want long-term wealth, buy and hold or BRRRR. If you want to be completely hands-off, REITs or a well-run partnership.
You make your profit when you buy. Overpay, and no amount of renovation fixes it. Before you start shopping, write down your criteria.
Your criteria keep you focused and stop you from chasing every listing. Consider:
Specific criteria also help other people send you deals. "I'm looking for real estate" gets a polite nod. "I'm looking for a two-family in Bridgeport that needs cosmetic work" gets a phone call when one comes up.
Rules of thumb help you screen deals fast. They are not a substitute for running the full numbers.
Monthly rent should be roughly 1% of the purchase price. Many Connecticut properties won't hit this, especially in higher-priced towns. Treat it as a quick filter, not a pass or fail test.
Expect about half of the rent to go to expenses (taxes, insurance, repairs, vacancy, management), not counting the mortgage. What's left has to cover the mortgage, and anything after that is cash flow.
Flippers use this to set a maximum offer: pay no more than 70% of the after-repair value (ARV), minus repair costs. It lines up with how flip lenders think. Our fix and flip loans cap total financing at 65% of ARV, so a deal that passes the 70% rule usually fits our structure.
Do you need a lot of money to invest in real estate? No. But you do need the right loan for the strategy. Here's how the options compare.
Hard money is a short-term loan based mainly on the property and the deal, not your W-2. At AFC, we lend our own money on fix and flip loans. Our terms:
Example (hypothetical deal): You buy a house for $200,000 with a $50,000 rehab, and the after-repair value is $360,000.
Your cash in: $40,000 of the purchase price, plus points and closing costs.
Loan terms are illustrative, not a commitment to lend. AFC Mortgage Group, LLC · NMLS #2801 · Equal Housing Lender.
Hard money is a tool, not a plan. Have at least two exits before you borrow: sell, or refinance into a DSCR loan.
Private money is similar to hard money, but it usually comes from someone you already know: a friend, family member, or business contact who wants a return on their cash. Terms are whatever you negotiate. Put everything in writing, record the lien, and treat it as seriously as a bank loan. Relationships are worth more than any single deal.
If you'd rather work with a lender that funds from its own capital, see our private money loans.
A DSCR loan qualifies mainly on the property's rent, measured by the debt service coverage ratio: monthly rent divided by the full monthly payment (principal, interest, taxes, insurance, and any HOA, called PITIA).
Our DSCR terms:
Example (hypothetical): Rent is $2,400 a month and PITIA is $2,000. DSCR = 2,400 Ă· 2,000 = 1.20. That clears our 0.75 minimum with room to spare. Remember that Connecticut tax bills drive PITIA, so the town matters.
BRRRR refinance example (continuing the flip above): After the rehab, the property appraises at $360,000 and is rented. A cash-out refinance at 70% LTV is $252,000; at 75% it's $270,000. Either one pays off the $210,000 fix and flip loan and returns cash toward your next deal. With no seasoning requirement, you don't have to wait months to do it.
Loan terms are illustrative, not a commitment to lend. AFC Mortgage Group, LLC · NMLS #2801 · Equal Housing Lender.
If you have documented income and want a long-term loan on a rental, a conventional investment property mortgage is the standard option. You qualify on your personal income and debts, and the property's rent can help. As you add properties, DSCR loans often become easier because they lean on the property, not your tax returns.
A bridge loan is short-term financing that lets you buy the next property before you've sold or refinanced the last one. Investors use bridges to move fast on a purchase while equity is still tied up in another property. At AFC, bridge loans are funded from our own fund. We lend our own money, and our Approval Team makes the decision in house.
FHA loans are for people who will live in the property, so you can't use one for a pure investment. You can use one to buy a duplex, triplex, or fourplex and live in one unit, which comes with a low down payment. A 203k loan is the FHA version that rolls renovation costs into the mortgage. In Connecticut's multifamily cities, this is a real path to a first investment.
Paying cash is simple and makes your offer strong. It also ties up capital. Many investors buy with cash or a short-term loan, then refinance with a DSCR loan to get the cash back out. That's the BRRRR model.
If you have equity in your primary home, a home equity loan or line of credit can fund a down payment or rehab. It's flexible, and it puts your house on the line. Only use it with a clear plan to pay it back.
Sometimes the seller acts as the bank and you make payments to them. It usually only works when the seller owns the property free and clear. Use a Connecticut real estate attorney to paper it properly.
For apartment buildings beyond four units and other commercial property, you'll need a commercial loan. These typically have different qualifying standards, shorter terms, and pricing based on the property's income.
Yes. Some strategies take forty hours a week. Others take a few hours a month. A job is an advantage: you don't need to live off your cash flow, so you can reinvest it, and stable income makes long-term financing easier to get.
Ways to invest while keeping your job:
Don't quit your job because someone online did. Quit when your plan and your numbers say you can.
Every deal involves money. The real question is whether it has to be yours. Using other people's money (OPM) means funding deals with lenders, partners, or private investors instead of your own savings.
Ways investors put in little of their own cash:
Be realistic. Our fix and flip loans cover up to 80% of the purchase and 100% of the rehab, which means you still bring the rest of the purchase price plus points and closing costs. If someone tells you a deal needs zero dollars and zero risk, walk away.
No. Real estate builds wealth steadily, through cash flow, loan paydown, and appreciation over years. Some people make money fast, and they're the exception. It takes planning, patience, and work. There are no shortcuts and no software that does the deal for you. Learn the fundamentals, buy right, and keep going.
If you're ready to do your first deal, or your next one, talk to us before you make an offer. We'll match the loan to the strategy, run the numbers with you, and tell you straight if a deal doesn't work.
Call or text our team at (203) 452-9899.
Up to 80% of the purchase price plus up to 100% of the rehab budget, with the total loan capped at 65% of the after-repair value. Terms run 6–18 months at 10–12% with 2 points, and you need a 620+ credit score.
Funded in as few as 10 business days after approval. The fastest files are the ones with a signed contract, a rehab budget, and documents ready on day one.
660 or higher. You'll also need 20–25% down on a purchase, and the property needs a DSCR of at least 0.75, meaning rent covers at least 75% of the full monthly payment.
Not with us. There's no seasoning requirement on the BRRRR cash-out refinance. Once the rehab is done and the property is rented, you can refinance up to 70–75% of the appraised value.
A direct lender. AFC Mortgage Group has been family-owned since 1998, and on hard money and bridge loans we lend our own money. Our Approval Team makes decisions in house.
Usually it's two loans: a fix and flip loan to buy and renovate, then a DSCR cash-out refinance to hold it long term. That's the BRRRR approach, and we do both sides.
Written by Gaetano Ciambriello, CEO of AFC Mortgage Group (NMLS #1783508). AFC Mortgage Group LLC | NMLS #2801 | Monroe, CT | Equal Housing Lender. This article is educational and is not a commitment to lend. All loans are subject to credit approval and program guidelines.
Become homeowners. AFC Mortgage Group will help you navigate the loan process, secure financing, and purchase your dream home.
Tambien te ayudamos en español, escribenos a soporte@afcmtg.com
