Real estate investors have a number of ways to get financing for their investments – but not every investor is well suited to every type of financing.
Generally, an investor can pay for real estate with:
- All cash
- Hard money
- Conventional mortgage
- 203k loans
All Cash Purchases for REIs
While many investors choose to pay all cash for an investment property, that’s just not feasible for everyone. In fact, about 76 percent of investors need to come up with some type of financing.
Hard Money Loans for REIs
Hard money loans are generally for shorter term lengths than most other types of loans are. Generally, these types of loans only take a few days to come through, unlike traditional loans that can take weeks or months. These loans are ideal when a property needs rehab work, because hard money lenders often deal with investors who flip properties.
Conventional mortgages usually require a 20 percent down payment, although some forms of loans do not. The catch with a conventional mortgage is that you will only be able to borrow as much as the house is considered worth during an appraisal. That’s not always the best scenario for buying a home that requires work.
203k Loans for Investors
An FHA 203k loan requires a down payment of 3.5 percent, but they require you to pay mortgage insurance for at least 11 years – but usually, you must pay it for the entire term of the loan. These loans usually take longer to process than conventional mortgages do, and far longer than hard money loans do.
What Type of Financing is Right for You?
If you already know that you need a hard money loan, fill out our online loan application. You can also call us at 404-814-1644 or get in touch with us online if you have questions. We’ll be glad to help.