Down payment, closing costs, reserves, and the Lineage fee. A complete cost breakdown for buying your first rental property so you know exactly what to budget before you start.
Total Cost, Not Just the Sticker Price
Most first-time investors overestimate or underestimate what they need. The total cash outlay is more than the down payment but less than you think.
Down Payment
The biggest line item. Conventional loans require 15-25% for investment properties. DSCR loans typically require 20-25%. Example: a $200K property means $40K-$60K down.
Closing Costs
- Lender origination fees (1-2%)
- Appraisal ($400-$600)
- Title insurance and search ($1,000-$2,000)
- Attorney/escrow fees
- Recording fees and transfer taxes (varies by state)
- Total estimate: 2-4% of purchase price
The Lineage Transaction Fee
$749 flat fee covering acquisition coordination, PM placement, and portfolio setup.
Reserves
Lenders require 6-12 months of mortgage payments in reserve. Plus an emergency fund for unexpected repairs. Typical recommendation: $10K-$15K per property.
Insurance
Landlord insurance (not homeowner's insurance) typically costs $1,200-$2,000 annually for a single-family rental. Lineage bundles insurance at closing.
Complete Cost Breakdown Example
For a $200K property with DSCR loan at 25% down:
- Down payment: $50,000
- Closing costs: $4,000-$8,000
- Reserves: $10,000-$15,000
- Lineage fee: $749
- Total cash needed: ~$65K-$75K
Ways to Reduce Your Upfront Costs
- Negotiate seller concessions on closing costs
- Shop lender fees across multiple DSCR lenders
- Start in lower price-point markets
The number that matters is cash-on-cash return. It's not about minimizing the outlay -- it's about maximizing the return on what you put in.