If you’ve been looking for a way to diversify your investment portfolio or create a passive side stream of income, you may have been thinking about getting a loan for a real estate investment. Real estate tends to appreciate over time and remain stable, which can make it a strong choice for long-term investing. Securing a loan to purchase a property, however, can sometimes seem like a complicated, lengthy process, especially if you’re unfamiliar with it. Thankfully, being prepared with a few key facts can make a big difference. Here are a few things you should keep in mind as you shop around for a real estate loan.

1. Your Credit History Matters

If you don’t have much of a track record as an investor or don’t have a good history of handling credit, you may have a hard time securing loans even at higher interest rates. Some lenders, for instance, require at least two years as an investor to demonstrate your creditworthiness.

2. Be Prepared For a Down Payment

Depending on the type of property you want to purchase and the sort of loan you get, you should be prepared to pay a significant down payment at closing time. Amounts can vary, but generally, a minimum of 5% down is required, and 20% down is preferred. This is because with 20% down, you can avoid having to pay for private mortgage insurance, which would be an additional expense. Keep in mind, too, that you’ll have to pay for additional closing fees as well, which can sometimes be as much as 5% of the total purchasing price.

3. You May Be Able to Finance Multiple Units

Finally, if you’re considering properties that are not single-family homes or commercial office spaces, you may be interested to know that some lenders will allow you to finance multiple units at a single time. For example, a duplex, triplex or multi-family property may be counted by some lenders as a single property, allowing you to purchase all the units with a single loan. This varies by lender, but if you can find the right lending company, you could potentially maximize return on investment while taking out the smallest possible loan amount.

Purchasing real estate can be a solid investment that may appreciate over time and even provide you with a second stream of income. Securing a loan, however, can be difficult, especially if it’s your first time going through the mortgage loan process. Thankfully, a little preparation goes a long way. Keep these key facts in mind as you shop for the perfect real estate investment and you can navigate the purchasing process with ease.