4 Ways To Source Investment Property Loans

Posted on: February 11, 2011

Categories: Buy, Investors

Author: lbuen

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The drop of mortgage rates and the oversupply of properties in the real estate market have encouraged a number of beginning real estate investors to take a plunge into the market opportunities. Hence, many are now on a treasure hunt, not just for investment properties, but for investment property loans to finance their deals, as well. Generally, an investor can tap investment property funding from four sources.

Low and Slow Investment Property Loans From Banks

Savvy real estate investors tend to shy away from banks because they take at least 30 -45 days to approve a loan especially investment property loans. They are also more stringent in terms of credit rating and in requiring some paperwork to establish the financial stability of the borrower. The strong point about banks though is that they charge lesser interest rates than other providers of investment property loans.

If you still wish to get your investment property loans from banks, secure a pre-approved loan. In this way, you can still confidently offer to buy houses in cash, thus, knowing that you have a pre-approved loan. Buying in cash is your license to command low prices and take advantage of great deals. Not only that, with a pre-approved loan, you will also know in advance how much amount the bank can loan you. This can serve as a guide as to the price range of properties to concentrate on.

Hard and Fast Investment Property Loans From Private Lenders

Hard money lenders, also called private money lenders, are the answer to the real estate investors’s need for fast cash to fund their great deals. They are less stringent than banks in terms of paperwork and your credit score. That is why they are able to release funding in a matter of days. However, hard money lenders these days have tightened their guidelines and may also delve into your tax returns, bank statements and recent pay slips. So take extra care with your FICO score.

The price for getting investment property loans faster with these lenders are higher interest rates and some may charge hefty prepayment penalties for advance payments. So read and understand the fine print before doing anything.

Easy and Negotiable Investment Property Loans Through Seller Financing

If your credit score is not impressive, you can also source your investment property loans from your seller. Desperate sellers with properties that are hard to sell are usually amenable to this. Under this arrangement, you will pay the seller for the property you invested over an extended period. You make the payments but the loan still stays under their name until you settle the whole balance. Because the loan is between you and the seller, both private parties, the terms are flexible. Thus, sharpen your negotiating skills to haggle interest rates, loan period and the amount to be paid.

Funding From No-Time-But-Has-Cash Investor Partner

There are a number of people with deep pockets but do not have the time, inclination nor expertise to do the actual work in real estate investing. You may know some of these people. You can invite them to partner with you and share the profit (or loss) 50:50; or you can just ask them to just be a lender and maybe offer them 10 to 15 percent earnings of the amount they invested. Having them as a lender rather than a partner, will save you from the hassle of him meddling with your business decisions.

Creativity is one of the factors in the success of a real estate investor, be it in acquiring or selling properties or in looking for ways to secure property investment loans. Sourcing property investment loans is just a matter of matching your needs with what is available.

 4 Ways To Source Investment Property Loans
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One Response to “4 Ways To Source Investment Property Loans”

  1. Mike Strong says:

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