If you've always dreamed of investing in a rental property, you might be wondering how to secure financing for it. There is a range of ways to do it, and we'll detail a few for you here.
With the real estate crash firmly in our rearview mirror, housing prices are healthy and climbing steadily again. However, the days of ultra-easy financing are over thanks to regulations put in place to prevent another catastrophe in the housing market. To get funding, you may have to get a little creative. Here are four ways you can make your real estate dreams come true.
- Buy as an owner occupant. One of the easiest and least risky ways to get into the rental business is to buy as an owner occupant. To do this, you'd look for properties that would work well as a rental, but you buy it as your primary residence. You'd need to live there for the required minimum of 12 months, but while you're there, you can learn the nuances of the property, make improvements, and get it ready for tenants. With this method, you'd typically go through a bank and get a regular, longer-term mortgage. But with some experience in the business, a rental property hard money loan with slightly longer terms might work as well.
- Buy a rental property. If you just want to buy a straight-up rental property, the rigors of getting a loan go up tenfold. A typical bank will want you to have nearly spotless credit and a quite sizeable down payment. In fact, most will ask for 20 to 25 percent down, so when you add the closing costs and the funds for renovation, you'll need a hefty sum up front.
- Use a hard money loan. With a rental property hard money loan, you won't need to have the cash up front and your finances won't be scrutinized on the same level as a bank or broker. That's because hard money loans use collateral as the main decider for approval, not credit scores or down payments.
Is a hard money loan right for your rental property?
Hard money loans come through quickly and are more flexible when it comes to qualifications, so if your credit is less than stellar or you need to move quickly to secure the property, they might be right for you. Keep in mind that they also will come with higher interest rates and shorter terms (usually 1-2 years).
Where can you find a rental property loan?
If you're looking for a rental property hard money loan, you're in the right place. We specialize in hard money loans for fix and flippers, soon-to-be landlords, and anyone who has a dream to get into real estate investment.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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