Financing Options For Buying An Investment Property

KEY WEST, Fla. - Nov. 21, 2022 - PRLog -- Per Gary McAdams, second-generation Florida Realtor since 2001.Your guild to everything Real Estate.

When getting into real estate property investment, there are plenty of options. Some of which will better serve your purposes than others. Overall, these financing products are a way to get into real property investment and help you start building your real estate asset portfolio.

Financing options for buying an investment property come in a number of different forms. Although there are similarities among them, each has somewhat unique traits and that's where you really need to pay attention, so you choose the one that best fits your circumstances. Here are some of the most common financing options for buying an investment property:

1. Conventional bank loans.  These are standard mortgage products and generally will offer the lowest interest rates and the most favorable terms. But, these usually require a substantial down payment and excellent credit history. Although, over the long term, these are typically the most affordable and therefore, the most profitable for property investors.
2. Private money loans.  Property investors may also be able to take advantage of what is known as a private money loan. Unlike traditional mortgage products, personal money loans are made through specialized lenders who generally do not have as stringent requirements as traditional banks. Generally, these loans are made to property investors who will rehabilitate a residential unit for resale or to rent.
3. Rehabilitation loans.  Somewhat like private money loans, rehabilitation loans are also generally made for property investment purposes but do require certain refurbishment of the property that is either held and rented or flipped.
4. Hard money loans.  Another option for property investors is a hard money loan. These are also similar to private money financing, in that they are made by specialty lenders who provide borrowers with the financing to acquire real estate. The biggest benefits of hard money loans are they usually do not have as stringent credit requirements, fund and close fast, and also have customizable terms.
5. Home equity loans.  First-time property investors can also tap into their own primary residence with a home equity product. This is generally one of the easiest ways to obtain financing, but it does put the borrower's primary property at risk and this Factor must be taken into serious consideration.

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