What Kinds of Investment Loans Are Available for Real Estate Owners?

Which real estate investment loans are suitable for you? Not all real estate investors have cash on hand when starting. Therefore, most will choose an investment loan product to fund their purchase. If you’re researching investment loans for the first time, here is a brief overview of what loans might be available.


  • Commercial Loans
  • Hard Money Loans
  • Fix-and-Flip Loans
  • FHA and VA Investment Loans
  • Private Rental Loans


Commercial Loans


Commercial loans are a popular financing option for purchasing multifamily properties, hotel and motel properties, or small apartment buildings. These loans have lower rates and shorter terms than traditional bank financing and can be used to purchase and refinance these commercial properties. Commercial loans are also a good solution for investors looking to land acquisition with less than a 50% down payment.


Hard Money Loans


Hard money loans are an excellent opportunity for private real estate investors who need to borrow a lump sum of money within a shorter period of time. This complex money loan product is a viable alternative if you’re tired of dealing with traditional lenders who ask for long-term commitments. Hard money loans are more expensive than traditional mortgage products. The interest rate is between 10%-15% more than traditional mortgage products, but it still might be worth it if you’re working on an investment property that will provide you with additional cash flow.


Fix-and-Flip Loans


Get the financing you need to put your investment ideas into action quickly. Fix-and-Flip loans are easy to get and designed for real estate investors looking for flexible solutions. Some of the advantages of these rehab loans are that they can cover up to 100% of the property purchase price, be used for 100% of repair costs, and there are no loan minimums with maximum loan amounts of up to $1 million. These fix-and-flip loans can be used with single-family homes and multifamily residential properties such as condominiums, townhomes, and apartment buildings.


FHA and VA Investment Loans


FHA and VA investment loans can help make your dream of becoming a landlord a reality. In order to qualify, your investment properties must be owner-occupied, requiring you to live in the property for one year. After that first year, the property can be rented out, giving you the chance to earn money for a comfortable retirement. FHA Investment loans have low down payments, making it easier for someone with less capital to start real estate investing.


Private Rental Loans


You still have options if you don’t qualify for FHA or VA investment loans.

Private rental loans: Private money loans are short-term loans that real estate investors can use to purchase and rehab a property or refinance and rehab an existing property. Private money loans are commonly referred to as hard money loans, and lender requirements and terms vary depending on the individual lender you choose, so it is important to do your research before choosing a lender. Some benefits are:


Lower Interest Rates:


The interest rate for private money loans is often lower than for hard money loans because of the improved risk profile.


Longer Terms:


Private money lenders typically offer longer terms than hard money lenders because of their improved risk profile.


More Flexible Repayment Schedules:


You may be able to repay your loan with a balloon payment at the end of its term instead of through monthly installments.


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