Traditional mortgage loans don’t cover every real estate investor’s needs. Different circumstances regarding your property and selling strategy could make finding a beneficial loan to support your investment difficult. Finding a needs-specific loan is more challenging, but it’s certainly not impossible. To learn more about the different types of loans for real estate investors, continue reading below.
Private Loans
When you opt for a private loan, you avoid the traditional credit-based system of most mortgage loan programs. Private loan lenders instead offer money with fewer formalities and fewer rigid guidelines. As a result, private loan lenders are ideal for real estate investors who were denied by banks or who have lower credit scores.
Although private loans have less attached formalities, failing to repay private loans will still cause lenders to foreclose on investment properties.
Best For:
- Investors with lower credit scores
- Investors with high-value properties
Fix-and-Flip Investment Loans
If you’re a real estate investor interested in flipping properties, then a fix-and-flip loan will be an ideal option for you. Most traditional bank loans are based on long-term investments; however, these loans aren’t always beneficial for short-term real estate investments. If you prefer to obtain your total return on an investment in a shorter period of time, fix-and-flips make this process possible.
Best For:
- House-flipping investors
- Landlords
Short-Term Bridge Loans
Another short-term loan that may benefit real estate investors is a short-term bridge loan, otherwise known as a swing loan. Short-term bridge lenders offer immediate cash flow to borrowers until borrowers eliminate their outstanding obligations. Borrowers may also use short-term bridge loans until they find more permanent financing.
Borrowers most commonly use their houses or other available equity as temporary collateral for these loans. With the help of bridge loan lenders, borrowers may purchase multiple available properties at a time and fix these homes to resell without upfront payment.
Best For:
- Investors in need of immediate cash flow
- House-flipping investors
Rental Property Loans
Closing on rental properties can be difficult when so many different buyers are flooding your area’s market. If you plan to invest in the rental investment property market, you’ll need secure financing to close on properties quickly. Asset-based rental property loans are common and ideal solutions for having financing prepared to close on rental investments. These loans will ensure that investors can close on multiple rental properties quickly and without hassle.
Best For:
- Landlords
- Single-family rentals
- House-flipping investors
With so many varying circumstances surrounding property investments, it’s essential to know all the different types of loans for real estate investors. Having a better understanding of each of these loans will prepare investors to choose the best financing options for their property investments. So, before applying for a traditional bank loan, consider reviewing these options to find the best fit for your real estate goals.
