collateral to secure the financing. It’s important to note that seller financing may come with higher interest rates or other less favorable terms than traditional financing options. It’s vital for both the buyer and the seller to carefully consider the terms of any seller financing agreement before moving forward with a deal.
SUMMARY Financing options are essential to consider when
investing in real estate. Different financing options are available depending on the property type, including conventional loans, government-backed loans, private lenders, and hard money loans. Researching and comparing these options is crucial to finding the best financing option for your needs and budget. Note that the suitability of property type to loan type can vary depending on the specific lender, so it is essential to discuss your requirement in fine detail to ensure you get the best deal possible. Our team at REI News is expert in matching affordable, trusted lenders with investors based on the investment’s specific require - ments. Speak to our team today to find financing for your next real estate investment financing. •
However, they can be a good option for borrowers who need quick financing and have a clear plan to repay the loan in a short period. Mezzanine financing. Mezzanine financing in real estate is a type of hybrid financing that combines debt and equity financing. It provides a secondary layer of financing on top of a senior debt loan and is typically used to fill the gap between the borrower’s equity and the amount of financing they need to complete a project or acquisition. Private equity firms, hedge funds, or other institutional investors generally provide mezzanine financ - ing. A second lien on the property secures the loan and comes with a higher interest rate compared to senior debt loans. Eligibility criteria for mezzanine financing can vary depending on the lender and the project’s specifics. Generally, borrowers must have a strong credit score, a solid business plan, and a clear path to repaying the loan. Lenders will also typically require the borrower to have some equity in the project, because
mezzanine financing is considered a riskier investment. However, it can be a good option for borrowers who need additional funding to complete a project and have a clear plan for repaying the loan. Land loans. Land loans are used to finance the purchase of raw land. These loans have higher
interest rates and require a larger down payment than residential property loans.
Seller financing. Seller financing, also known as owner financing, is a type of financing where the seller of a property acts as the lender and provides financing to the buyer. The seller receives payments from the buyer over time rather than receiving a lump sum payment at the time of the sale. Eligibility criteria for seller financing can vary depending on the seller’s preferences and the specifics of the deal being negotiated. In general, the seller will want to ensure the buyer has a good credit history and the ability to make regular payments. The seller may also require a down payment or
Damon Riehl is the founder and CEO of Investment Property Loan Exchange. He has more than 35 years of lending experience in a broad array of asset
classes, including commercial and residential mort- gage, small business, and construction lending. Riehl held top leadership positions as head of commercial lending for Ocwen Mortgage, head of unsecured lending for Citibank, global mortgage leader for GE Capital, and head of construction products at Fannie Mae. He is a member of the Harvard Joint Centers for Housing Studies. Riehl has built six de novo lending platforms and used that knowledge to build and grow Investment Property Loan Exchange and the fintech platform LoanBidz.com.
8 :: INVESTOR REVIEW :: JUL-AUG 2023
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