11 Ways of Quickly Financing Real Estate Investments in Baltimore
When it comes to financing real estate investments fast, there are a few methods real estate investors can use. Some efficient real estate financing strategies include seller financing, hard & private money loans, P2P funding, and more. Let’s break them down below.
Main Takeaways
- There are loan and non-loan-based ways of financing real estate investments fast. For instance, some non-loan methods exist, like investor partnerships and crowdfunding. Other loan-based ones are seller financing, P2P lending, and more. Each has its pros and cons.
Table of Contents: Fast Financing for Properties in Baltimore & Beyond
- Non-loan Methods of Financing Real Estate Investments Fast
- Efficient Loan-Based Funding for a Commercial Property
Non-loan Methods of Financing Real Estate Investments Fast
Here, our Baltimore hard money lenders will delve into fast property funding methods that don’t involve loans.
Investor Partnerships
Another way of financing real estate investments is investor partnerships. With investor partnerships, you can team up with fellow investors to get the needed funding.
On one hand, this makes it so you don’t have to handle your investment alone. On the other hand, the other party will have partial ownership of that investment, such as operational and financial control, for years to come. This means you get a smaller piece of the pie. Additionally, if you find that your partner is unsavory in any way, your business could get very thorny, very quickly.
Real Estate Crowdfunding
Crowdfunding platforms let real estate investors collectively fund a property, with each one pitching a piece of the overall amount.
This method of funding for a commercial property can lessen your cost burden. Yet, it also means you have substantially less control over, and profit from, what happens to your property.
Residence-to-Rental Property Conversion
You also could rent out your current home, or parts of it, for financing real estate investments quickly.
On the plus side, this lets you use assets you already have on hand to finance your property. On the other hand, to earn funding fast, you would need to aggressively market your home to renters and demand a high rent rate. Furthermore, if you’re renting the entire place out to maximize earnings, you’d need to find another place to live.
Self-Directed IRA
You can tap into your self-directed Individual Retirement Account (IRA) to buy investment properties. With this method, you can completely write off your property’s income taxes.
However, self-directed IRAs come with many caveats.
You won’t own your property. Your IRA will. As such, all funds you earn from the property will go toward your IRA, not you directly. You will get the money back upon retirement. This may be one of the ideal real estate financing strategies. Still, if you need to earn your ROI soon, it’s not your best bet. Furthermore, you can’t deduct property-related expenses from your taxes because you don’t own the property.
Business Credit Lines
Generally speaking, business lines of credit work like a credit card, where the business gets to use a certain amount of money when you need it. You can take out money from this credit line anytime, and you only pay interest on the money you use, not the whole amount you could use.
On the other hand, a business line of credit’s interest rates can fluctuate wildly. Funding a commercial property this way can be less than ideal, as its interest rates are high to begin with. Furthermore, since funds don’t have a hard stop to them, you can risk overspending if you’re not careful.
Credit Card Stacking
Credit card stacking is one of the riskier real estate financing strategies. With credit card stacking, you strategically apply for multiple credit cards to widen your overall pool of usable credit. The plus is just that—more credit, all at once, combined with each card’s promotions and rewards.
Yet, it can be a tall ask to juggle multiple credit cards at once. In addition, you will experience multiple slews of credit card approval, APR, annual, and other fees. Furthermore, making so many applications in quick succession can impact your credit score for a while.
Efficient Loan-Based Funding for a Commercial Property
Next, we’ll explore some loan-based financial strategies for buying a property fast.
Seller Financing or Rent to Buy
With seller financing, you get a loan to buy a property from that property’s same private seller.
Private sellers could be selling hundreds of units at the same time. As such, they could have built-in, non-deposit-based systems for financing. This may help your funding process go more smoothly. Rent-to-buy strategies function similarly.
There are some negatives to these real estate financing strategies, though. First and foremost, they are less regulated, with fewer protections than traditional loans. They also can require high down payments. Worst of all, many sellers have due-on-sale clauses, which require you to pay up your loan completely immediately upon purchase.
Home Equity Loans
One of the other prominent real estate financing strategies is a home equity line of credit (HELOC). In essence, HELOCs let homeowners use their current home equity to fund their new investment property.
In terms of positives, HELOCs have years-long repayment periods. Moreover, no down payment is required because you’re using your existing equity.
As for the downsides, HELOCs will reduce your equity in your home. As such, you will have to sacrifice the equity you’ve earned until now and build it again from scratch. Also, HELOCs’ interest rates are not fixed. Due to this, they could change at any time.
Peer-to-Peer Lending
Peer-to-peer lending (P2P) is a method of financing real estate investments where private investors lend online. The goal is for both lenders and borrowers to receive better interest rates than what banks offer. This method offers businesses easier access to loans through digital platforms.
The big downside to P2P loans is that they’re not FDIC-protected. So, if the P2P platform fails, you won’t be compensated for your losses.
Private Money Loans
Then, there are private money loans. These loans are often mistaken for hard money loans. Financing real estate investments with private money loans is similar to doing so with hard money loans. That is, except for the fact that real estate investors provide them, not professional, registered lenders.
For the positives, lenders typically have informal structuring and eligibility rules. This means that you may be able to easily qualify and get flexible plans.
Conversely, these loans may require much higher down payments and interest than other loans might, with scant repayment timelines.
Hard Money Loans
Hard money loans are popular short-term real estate loans. They differ from private money loans in that only official, registered lenders offer them.
In essence, hard money loans are designed to have hyper-expedited delivery. After approval, borrowers usually receive them within days or weeks. They also have short, but reasonably paced, terms. This way, borrowers can move past the borrowing process as soon as possible.
As a bonus, hard money lenders can customize their loan terms for each borrower’s project and needs.
Of course, hard money loans can be a bad choice for the wrong borrower. For example, if a borrower does not prepare for the accelerated payoff period, they could find themselves in debt. Besides that, hard money lenders may have higher interest fees to offset the costs of expedited fund delivery.
As long as you are a responsible, organized borrower, though, this type of funding for a commercial property may optimize your project’s efficiency. It could help you score cheap deals you otherwise couldn’t.
Get Quick Property Financing in Baltimore with MHML
Many real estate financing strategies fund fast, like credit card stacking or seller financing. These different avenues give real estate investors plenty of options to choose from.
However, few choices are as fast as hard money loans. As we discussed before, you can receive hard money funding within days or weeks.
As you know, when you buy a property, every minute counts. Every moment you spend idle without funding is a moment someone else could steal your eyed property for themselves. Hard money lending can help ensure this doesn’t happen. Even better, if you’re an experienced investor with sufficient collateral and good credit, we may be able to offer you up to 100% funding. So, call us today to ensure you don’t miss out on a prime property.
