FUNDING
Your Guide to Financing an Investment Proper NAVIGATE THE PRIVATE LENDING WORLD WITH THIS ARTICLE SERIES.
DAMON RIEHL
I nvesting in real estate can be a lucrative venture, offering both immediate rental income and long- term appreciation. Securing financing for an investment property can be complex, however, involving different strategies and financial products compared to primary home loans. This comprehensive guide will walk you through the steps of financing an investment property, helping you make informed decisions to maximize your returns. At Investment Property Loan Exchange, we aim to simplify the process and provide you with the best financing options available.
Investment property financing differs from traditional home loans in several key ways. Lenders view investment properties as riskier due to the potential for vacancies and variable rental income. As a result, interest rates are typically higher, and the qualification criteria are more stringent. TYPES OF INVESTMENT PROPERTY LOANS Before you begin to seek financing, you must understand the types of products available. 1. CONVENTIONAL LOANS. These are traditional mortgage loans not backed
by the government. They typically require a higher credit score and a down payment of at least 20-25%. Conventional loans offer competitive interest rates and are suitable for investors with strong credit histories. 2. HARD MONEY LOANS. These are short-term loans that private lenders provide. Investors looking to quickly purchase and renovate properties often rely on these loans. Hard money loans have higher interest rates and shorter repayment terms, but they are easier to qualify for compared to conventional loans. 3. FEDERAL HOUSING ADMINISTRATION FHA LOANS. The FHA offers
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