Ask millionaires all over the world and they'll tell you the same thing. Investing in property and real estate is the best way to get predictably rich.
There are a lot of lucrative real estate investments one can make. They can buy and flip office buildings, fix and flip them, purchase rental property and much more.
The problem is that all of these real estate investing strategies require a significant amount of capital. That's where investment property loans can be helpful.
Investment property loans are any kind of borrowed money that's used for the purpose of fueling real estate investments, commercial or otherwise. If you're curious to know about where these property loans can be acquired and how to increase your odds of getting them, read our rapid-fire tips below.
1. Having Good Credit Is a Big Deal
No matter where you source your investment property loans from, chances are, lenders are going to be interested in your credit. Since investment property presents a higher risk than non-investment property, you'll probably need a better credit score to secure an investment loan than you would to secure a loan on property that you plan on using personally.
You can learn about your credit score by requesting free reports, as is outlined here by the FTC.
2. Many Lenders Will Look at Cash Flow
In the investment world, in addition to credit, lenders will want to see a healthy cash flow. That means that you'll need to have a solid income in order for investors to have faith that you'll be able to repay them.
This can make getting investment loans difficult for people that earn income in hard to trace or unconventional ways.
3. Learn About Hard Money
Hard money lending is a type of loan that specializes in helping investors. These loans carry high-interest rates over short terms. They also only cover a portion of your property's cost (about 70%).
Still, since hard money is built for property investors, it's a vehicle that's worth exploring.
4. Know the Limits of Conventional Loans
Conventional, mass-consumer property loans may require you that you personally leverage a space in order to borrow money for it. There are workarounds to this caveat but ultimately, you should know that conventional loans will limit your investment maneuverability when buying an office building, a house or anything else.
5. Owner Financing Is Always an Option
The person selling you your real estate property may be willing to finance you. If they are, this arrangement could afford you wonderful flexibility since you won't be constricted by banks.
6. Sizable Down Payments Are Always Required
Any loan that's specifically targeted at investors won't be mortgage insurance eligible. That means you'll be asked to put down at least 20% on any property that you purchase.
7. Think Outside of the Box
Real estate investors have to get creative from time to time to secure the money that they need.
If you're buying a commercial office building, find a niche bank that specializes in commercial real estate financing rather than talking to conventional bankers. If you're having trouble getting loans from any kind of bank, talk to friends and family members.
There's a lot of money in the world. As a real estate investor, you have to be flexible to find it in the right properties.
Investment Property Loans Are Easy to Come By So Long As You Know Where to Look
There are a ton of ways to obtain investment property loans. With good credit, a solid income and a willingness to communicate your vision to people, we do not doubt that you'll find the money that you need in no time.
If you need more advice on how to acquire commercial property, office spaces or need insight into other real estate matters, check out more of the content in our digital publication.
