Types of Loans You Can Get for Investment Properties

If you have decided to invest in property, whether it be residential or commercial real estate, it’s important to know about the different types of loans that are out there, and how they can help you depending on your needs. Knowing what type of property you want to buy is important, but you should also research the type of loan, and its terms of repayment. This can help you get started so you know what to expect. 

Using Hard Money Loans

Hard money loans can come from individuals or companies. Unlike a regular mortgage, you can usually secure these quickly, which is great for someone trying to procure property as soon as possible. There’s no need to worry about credit scores either since those are not taken into account with hard money loans.  Instead, the value of the property is the main focus. However, these loans are short-term, so you should feel confident that you can pay them up quickly.

Loans for Commercial Real Estate

If you are looking at purchasing a commercial property, it’s necessary to have not only a good credit score but also a solid business plan. Most lenders want to see how soon money will come in from the business once it has the loan to help it make necessary adjustments, such as buying more equipment. Downpayments can be 15% of the purchase price or more when it comes to these loans, so keep that in mind, too. 

Having a Fix and Flip Property Loan

Fix and flip is exactly what it sounds like: using the loan to fix up the property and then quickly flip it by selling, and hopefully bringing in more than the property was originally worth. These types of loans are secured through investment property and are a type of hard money loan. Your credit score will be examined for this type of loan, and the interest rates can be high, too, so keep these factors in mind. 

Choosing a Private Money Loan

Private money loans come from lenders who are individuals and want to invest in real estate. This is helpful for anyone who has been turned down by a bank. Rates can be lower, and there are generally fewer conditions than other types of loans. These loans are secured by a promissory note or a mortgage so that the lenders can secure the property if it is not paid off in time. 

Knowing the different types of loans and how they are used can help you make the best decision when it comes to securing help in purchasing a property.