Investment property mortgage rates are always going to be higher than conventional mortgage rates due to the increased amount of risk. The investment property mortgage rates may vary based on the specifics of the loan scenario such as length of loan, loan to value (LTV), condition and location of property and overall perceived risk of the investment. Many conventional lenders solely focus on owner occupied home mortgages and do not provide financing for investment property mortgages.
Hard money lenders are generally a better source of investment property financing as they primarily work with real estate investors and better understand their needs. Experienced and reliable hard money investment property lenders will also be able to approve the borrower and fund the loan much faster than a conventional lender such as a bank or credit union.
Quick Close with a Hard Money Investment Property Loan
Reputable hard money lenders are able to fund an investment property loan request in as few 3-5 days if the borrower needs the funds right away to close escrow. In many cases a real estate investor will choose to use hard money financing to quickly acquire an investment property and then begin looking for a longer-term, lower cost financing option. This acquisition strategy is especially beneficial during a real estate market when many buyers are competing for few properties.
Sellers are often more likely to accept an offer from a buyer with hard money financing than a buyer with conventional financing. Experienced sellers understand that hard money lenders are able to fund much faster and have fewer issues during escrow than conventional lenders. A buyer with hard money financing can even offer a shorter escrow period to entice an anxious seller to accept their offer. In some cases a seller may even accept a lower offer because it comes with a shorter escrow period and hard money financing.
Buying Rental Property
Buying a rental property is one of the most popular forms of real estate investment. Investors look to purchase an investment property with rental property loans that can be rented out for more than the monthly liabilities (principal, interest, taxes, insurance) and achieve positive cash flow. The real estate investor will also hope to benefit from appreciation while they hold the property and take advantage of tax benefits in order to maximize their profits from buying a rental property.
Loans for rental properties generally require a down payment of at least 25% from the real estate investor. 100% financing is not available. If the real estate investor has equity in another property but does not have enough cash for a down payment, the real estate investor may be able to take out a cash out refinance loan in order to raise the funds for the new purchase. The hard money lender will also want to see that the investor has cash reserves available to deal with potential tenant vacancies, repairs and any other unforeseen issues.
Refinancing Investment Property & Rental Property Loans
North Coast Financial also allows real estate investors to refinance investment property and rental property should they wish to pull equity out of their property, refinance at a lower rate or pay off a balloon payment that will soon be due.
Investment Property Rehab Loans
Investment property rehab loans (also known as fix and flip loans or rehab loans) are available for real estate investors who wish to purchase a property, quickly make any needed repairs and improvements and then sell the property immediately. Fix and hold loans are also available to investors who wish to purchase a property in need of rehab, make improvements and then hold the property as a rental.
Contact North Coast Financial now and get your investment property loan funded fast.
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