If you are new to real estate investing, chances are that you don’t have enough funds to purchase an investment property. However, there are plenty of loan investment options that help you in your endeavor so that you can start building your portfolio.
The investment property loans help in purchasing homes that you can rent out for side income or flip and sell for profit. Compared to traditional mortgages, these loans have more barriers including, higher interest rates. A to Z Capital, unlike others, offers you the most competitive investment rental property loans in Miami and brings you the below guide to help you in finding investment loans that you find fit.
What Is An Investment Property
It is any property through which you get to earn rental income or that you can flip and sell for a profit. It can be a condo, a home, or an apartment, whether you have lived in it or not. These properties are usually residential homes between one to four units instead of commercial properties.
What Is An Investment Property Loan
The investment property loans carry higher mortgage rates as well as stricter lending standards and higher down payment amounts. You need at least a down payment of 15 to 20% for investment property financing on a single-family home.
Types of Loans
Conventional Bank Loan
A conventional loan is one of the most common methods that investors use. Homeowners are probably aware of these types of loans. It is another term for a bank loan, whereby you need to keep in mind that the process resembles that for a loan on your primary residence. However, you should expect that the set standards will be a bit more stringent this time as you will be carrying an investment property mortgage in addition to a loan on your primary residence. The lender would want to feel confident that you are financially capable of carrying both properties.
Hard Money Loan
You will come across companies that specifically offer loans geared toward real estate investment. These loans are called hard money loans and are easier and faster to get. A to Z Capital offers you easy, swifter, and beneficial installment loans. These loans are based more on the value of the investment property rather than the investor’s financial strength or credit score.
These types of loans are more suited to investors who are planning on flipping the property rather than collecting ongoing rental income. It is a short-term loan, often around three years. A to Z Capital offers you 30 years rental loan, making it simpler for you to purchase an investment property.
Private Money Loan
A private money loan is offered by a lender who is not an industry professional. In fact, the person is an individual looking to make a good return on investment. You can find private investors through your network of friends or family to get connected with someone who travels in similar real estate investment circles. These kinds of loans are ideal for investors who are unable to qualify for a bank loan. Also, familiar ties might even get you more flexible and favorable interest rates. These loans are secured by a promissory note which states that if you do not keep up with the mortgage payment, the lender has the right to foreclose on the home.
Home Equity Loan
Lastly, if you are already a homeowner, you might be able to access investment property financing through a home equity loan. Taking out a home equity loan enables you to borrow against any existing equity that you might build up in the home. Sometimes, homeowners get to borrow up to 80% of their home’s value.
You need a verification of your home’s appraised value as well as your income and credit score to get approval for a home equity loan. Despite the given fair and competitive interest rates, if you stop making payments, the lender will have a reason to foreclose on your primary residence.
A to Z Capital offers you hard-money loans on easy terms to help you break into the real estate world with ease!