Real estate loans for repairs
If you intend to flip this property, you might consider either a construction loan or private money. A construction loan allows you to borrow from a bank against the value of the finished house a little at a time. As each stage of the construction/repairs are completed, the bank releases more funds to you. Interest accrues during the construction, but no payments need to be made until the construction/repairs are complete.  Private money works in a similar manner, but the full amount can be released to you at once so you can get the repairs done more quickly. The interest rate will be higher. If you are flipping, then this higher interest rate is simply a cost of doing business. Since it's a private loan, you ca structure the deal any way you want. Perhaps accruing interest until the property is sold and then paying it back as a single balloon payment on sale of the property. To find private money, contact a mortgage broker and tell them what you have in mind.  If you're intending to keep the property for yourself, private money is still an option. Once the repairs are complete, have the bank reassess the property value and refinance based on the new amount. Pay back the private loan with equity pulled from the house and all the shiny new repairs.
"This is a well worn path and not a bad idea.  There are quite a few pitfalls but there are a lot of resources to learn for other people's mistakes. Having a plan and doing your research should help you avoid most of them.  Here is some general advice to help get you started on the right foot.  Know the market you are investing in.  The city should have more than one major employer. The population should be rising and hopefully there are other positive economic indicators.  Check the city's and state's chamber of commerce for useful information.  You do not want to be stuck holding a bunch of upside down property in Detroit.   Accurately calculate expenses.  Set aside money for repairs.  budget 5% of the rent or 100 a month for repairs if no repairs happen that money goes into the repair fund for the future.  Set aside money for capital expenditures if the roof has a 10 years of life left in 10 years you better be ready to replace it same with any major appliances. Your area should have a baseline vacancy rate 5-8% in my area. That says out of a year your property will be vacant for around 6% of the year or 21 days for turnover. You should build that cushion into the budget as well setting aside a portion of the rent to cover that lean period. Some property management will offer ""eviction insurance"" which is basically them enforcing that savings.  Financing maybe difficult a lot of banks like to see 25% down payments on investments. You will also face higher interest rates for investment properties. Banks generally also like to see enough money to cover 6 months worth of expenses in your account for all property.  Some banks will not give financing for investment property to someone without 1-2 years of landlord experience. All in all finding money will be hard when you gets started and your terms may be less than ideal.  (hopefully make around 3 - 5k a year in profit)  If that includes loan pay-down and is not just cash-flow you are probably in the right ballpark.  I can find $100-$200 dollars cash-flow a month on single family home in my area. Once loan pay-down is included your numbers are close.  It sounds like you have a good attitude and a good plan.  A book that I really enjoyed and I think may be useful is ""Start Small, Profit Big in Real Estate"" by Jay DeCima.  I think of it as required reading for do-it-yourself real estate investors. Good luck and happy investing" There are tax strategies you could take advantage of if you own the property. Find local real estate investors that like 'buy and hold'. Additional strategy is to buy a property and sell it with owner financing (you use a Residential Mortgage Loan Officer to facilitate.) What is great is you can get a great % real return on your money without being a landlord. Similarly to buying property on your own, REITs cannot get to good returns without leveraging. If you buy an investment property 100% cash only - chances are that 10% ROI is a very very optimistic scenario. If you use leveraging (i.e.: take out a mortgage) - you're susceptible to interest rate changes. REITs invest in properties all around all the time. They invest in mortgages themselves as well (In the US, that's the only security REITs can hold without being disqualified). You can't expect all that to be cash-only, there have to be loans and financing involved. When rates go up - financing costs go up. That brings net income down. Simple math. In the US, there's an additional benefit to investing in REIT vs directly holding real estate: taxes. REITs pay dividends, which have preferential (if qualified) taxation. You'll pay capital gains taxes on the dividends if you hold the fund long enough. If you own a rental property directly, your income after all the expenses is taxed at ordinary rates, which would usually be higher. Also, as you mentioned, you can use them as margin, and they're much much more liquid than holding real estate directly. Not to mention you don't need to deal with tenants or periods where you don't have any, or if local real-estate market tanks (while REITs are usually quite diversified in kinds of real estate they hold and areas). On the other hand, if you own real estate, you can leverage it at lower rates than margin (with HELOCs etc), and it provides some safety net in case of a stock market crash (which REITs are somewhat susceptible to). You can also live in your property, if needed, which is something that's hard to do with REITs.... For nearly a decade, The LA home blog  have been brokering real estate deals across the city.  Negotiating contracts, overseeing inspections, advising on loans, renovating and staging homes to prepare for market - we have built a team that is ready for any situation. And he has to pay for it every home repair and every month the property sets empty.  His loss each month is not $250, but probably closer to $500.  In generally you need to clear at least $200 ABOVE PTI (principle, taxes and interest) to cover repair and the like to property. From your post, it sounds like your dad was forced into the land-lord business by the recession.  Unless he plans to hold the property until its rental value has increased by $500 a month, he should consider selling it and writing-off the loss.  Losing money bit by bit on a house isn't a tax write-off event.  Selling a property for less than you bought it for generally is. FYI, I got the $500/month loss by assuming that repairs/emptiness/etc will cost you about $200 a month, and added $50 for your dad's time managing the property. You submitted a claim for damage to the deck. The insurance company notified the mortgage company. Now the mortgage company wants to make sure that the collateral for the loan is still in good condition. They want you to make the repairs that you insisted needed to be done. They may even require you to use a licensed contractor before releasing the funds. Once you own the house without a mortgage, then you can decide for yourself if minor repairs need to be done. $900 seems like a fair cost of minor repair. As a landlord, I repaint and repatch the walls if there are any holes. Labor is also expensive now a days (especially here in the West Coast).   HOWEVER, this is why there is a security deposit. To make sure things like this is covered after move out. NOW, you could ask the landlord for an itemized invoice of the cost of repairs. Which then you could rationalize the costs of repairs. I usually take the security deposit, then deduct any costs that were need during repair. And give the remaining difference back to the tenant. "Unless you are investing an insignificant amount of money for the home and renovations, you need title insurance.  Without it multiple other parties can claim ownership in this property you are purchasing and investing in.  Also you can know if there are any liens against the property which can cost you a significant amount in addition to the costs you are budgeting.   For example liens against a property I bought a while back amounted to 26% of the price I paid.  In my case the seller (a bank) paid those, while in your case you may need to pay any liens as I suspect the seller has little money. That ""bone"" in your body that has you worried about this transaction is really good.  Pay attention to it."