Investment property loans are available in many different types and choosing the right type of loan can multiply your real estate investment. Therefore, it is important to understand the different types of loans for investment properties. Here are some common types of land purchase loans that you must be aware of:
Conventional Mortgage Loan
This loan is provided by mortgage brokers and private banks for real estate investment properties. The procedure for obtaining this loan may vary from state to state.
Hard Money Loan
This type of loan can be obtained from companies or professional individuals who are willing to lend money for real estate investment. This loan is easier and faster to secure compared to a conventional mortgage loan. Moreover, the money lenders won’t look at the credit score of the real estate investor. Instead, they evaluate the value of the property.
Private Money Loan
This loan is offered by individuals who have extra money for lending in agreement of good return on investment of their money. These private money lenders can be anyone, your family member, friend, co-worker, etc.
It is a better investment property loan alternative, as it allows lenders to get more profit in a lump sum when they sell the investment property rather than collecting the rent checks every month. For a better investment strategy, the fix-and-flip loan is a good financing option.
Home Equity Loans
It is another great financing option for obtaining a long-term income property. It is a type of debt that allows homeowners to borrow amount against their home as security. In some cases, real estate investor can even borrow around 80% more of the home’s actual equity value.
Reference Read: Alternate Loan Options for Real Estate Investments