Real Estate Investment Loan

Real estate investment loan are mortgages that can be used to buy rental properties or fixer-uppers for quick flips. These loans usually come with higher interest rates and more strict eligibility requirements than conventional mortgages.


Conventional real estate investment loans are offered by banks, credit unions, and mortgage brokers. They require a large down payment and generally carry high fees.

Commercial Loans

If you’re looking for commercial loans for investment properties, it’s important to understand what options are available to you. Fortunately, there are plenty of lenders that offer financing for commercial investments. The best option for you might depend on how much you want to invest and whether the property meets specific requirements. For example, if you’re interested in multi-family investment properties, it might make sense to choose a loan that’s cross-collateralized. This type of loan structure requires that all of the properties in the portfolio collateralize each other. This can help you avoid having to put down as much money upfront and can save you time by allowing for draws in 24 to 48 hours.

The terms of a commercial real estate loan may vary, but most are typically longer than a residential mortgage. You’ll also likely need to provide a higher down payment on a commercial property, and the fees can add up. It’s also worth mentioning that certain factors might prevent you from qualifying for a commercial property, such as tax liens or recent bankruptcies. Fortunately, business financing marketplaces like National Business Capital can connect you with lenders who are willing to work with those types of situations.

If you’re looking for a commercial investment property, start by checking the minimum qualifications for each lender and comparing interest rates, down payment requirements, and fees. Keep in mind that the loan you choose will impact your finances for years, so it’s worth taking the time to find the right one for you.

Conventional Loans

Conventional loans are what most people think of when they imagine financing real estate investment properties. These types of mortgages are financed by financial institutions and adhere to standards set by Fannie Mae and Freddie Mac, including maximum loan amounts. This financing option can be attractive to many investors because it offers a more structured process and predictable terms. However, it also comes with stricter requirements than government-insured loan types and can require a higher credit score and debt-to-income ratio (DTI) ratio to qualify.

If you’re looking to secure a conventional loan for your next property, prepare by creating a detailed rehabilitation plan. Your lender will want to see your budget, rehab costs and projected return on investment. In addition, they will typically ask you to submit personal income tax returns and pay stubs.

Another type of financing is hard money loans, which are tied to tangible assets and backed by private lenders, financing groups and investment companies. They offer flexible terms and lower interest rates than conventional loans but come with more risk. They’re often used to finance residential fix-and-flips but can also be utilized for rental portfolio, multifamily bridge and new construction loans. There is no one-size-fits-all minimum credit score requirement for hard money loans and many lenders evaluate your assets and cash flow to determine eligibility.

FHA Loans

FHA loans are a great option for home buyers who don’t qualify for conventional mortgages. They require a lower down payment and have more flexible credit requirements. However, FHA loans are designed for primary residences and may not be suitable for real estate investment purposes. But if you have a good plan and work with an experienced lender, it’s possible to use an FHA loan to buy investment properties.

One popular strategy in the residential real estate market is “house hacking.” This involves purchasing a multifamily property and living in one unit while renting out the others. This can help you offset your mortgage payment and generate a profit. However, you must be able to live in the property for at least 210 days before renting it out for income.

Additionally, you must be able to afford the monthly mortgage payments on the occupied unit as well as cover any upkeep costs that might arise. And you must meet FHA’s minimum occupancy requirement of one year.

However, if you’re not planning to occupy the property for at least a year, it’s illegal to rent it out and could be considered a form of mortgage fraud. To avoid this risk, it’s best to use a conventional, non-owner-occupied mortgage instead of an FHA loan for investment properties. This will help you avoid legal issues and ensure that your investments are profitable.

Private Money Lenders

Private money lenders are individuals or small companies that provide capital for real estate investments based on their assessment of the property’s value and the borrower’s experience. They can offer more flexibility than banks and are more likely to be able to make quick decisions about funding. Private lenders can also help investors find deals that they may not be able to pursue through traditional means.

Investors who are interested in working with private money should carefully evaluate their finances and preferred level of risk. They should also create clear guidelines for potential projects, which will help them avoid committing to too much capital. Ultimately, this approach can improve investors’ odds of success by preventing them from stretching themselves too thin or putting themselves in over their heads.

Borrowers should work with a private lender who has a good understanding of their state’s laws and regulations regarding real estate investment lending. They should also be familiar with usury rules, licensure requirements (if any) and legal limitations. Finally, investors should work with a real estate attorney who understands the unique aspects of private lending from the lender’s perspective.

For example, private lenders often require borrowers to submit a Schedule of Real Estate Owned and a personal financial statement. This information can be used to verify the borrowers’ creditworthiness and track their performance.