Real Estate Tips |6 min read

4 Reasons to Get an Investment Property Loan

An investment property loan can be a great way to fund the property you’re looking to close. Too many investors have had the doors to opportunity shut on them because of a lack of funding. Even when they’re so close, so tantalizingly near the finish line, they must roll back their plans. However, you don’t have to be one of these people.

You can rely on investment property loans in these times, especially hard money loans. They can aid you with much-needed money, fast.

The hard money lenders in Maryland can teach you how to use this trick to maximize your investment potential.

Table of Contents

What Is an Investment Property Loan?

An investment property loan is a loan you can buy properties with. Then, you can invest in the property as a rental for tenants and earn profits.

In general, people will use their investment property loan for homes with one to four units. With these loans, they buy the following kinds of properties:

  • Single-family homes
  • Multi-family homes, such as a duplex or triplex
  • Condominiums or townhomes
  • Manufactured homes

An investment property loan can also be a choice pick for investors looking to flip houses. Lenders provide these investment loans with the borrower’s property as collateral.

Such loans are typically short-term loans that borrowers take for months or just a few years. The loan delivery process can be much quicker than traditional loans are, too.

Why Hard Money Loans are Great for Property Investing

Hard money loans are optimal investment property loans for many reasons. Let’s explore a few below.

  • Quick Turnaround

Hard money investment property loans can offer a quick turnaround, while many other types of loans require a drawn-out approval process. For example, mortgage lenders usually have a slow, arduous approval system that involves a slew of steps. They can have stringent requirements you must fulfill, and they will take their sweet time ensuring you check these narrow boxes. Even worse, at the end of this wild goose chase, they might not even give you your long-sought-after approval.

However, many people can’t afford to waste time, so they turn to hard money lenders for an investment property loan instead.

They take advantage of this accelerated timeframe to secure funding at what is arguably the most tenuous time for real estate investors. By this, we mean the do-or-die phase when investors need to close a deal, here and now, clock ticking, only to find at the last minute that they don’t have enough funds to do it.

Hard money investment property loans prevent these investors from hanging in the lurch and letting a good deal slip away. They use these hard money loans to secure a purchase until they can attain permanent financing. Here are some other bonuses that come with investment loans.

  • Flexible Terms

Hard money property investment loans provide borrowers with more flexible terms than traditional loans. The private, independent lenders who offer these loans can have more say over their own requirements than banks shrouded in bureaucratic red tape.

Because these lenders call the shots, they can get more creative and adaptable when the situation calls for it. They can alter the term details for extenuating circumstances if they choose. Such flexibility allows borrowers to customize various loan aspects, like the fee amount and the repayment timetable.

  • The Collateral is Built Into the Loan

A key benefit of hard money loans is that their collateral lies within the property itself. So, the basis of investment property loans is the property’s value amount.

After the property valuation is completed, the approval process can commence, which usually takes just a few days. Then, without further ado, the hard money lender will provide the borrower with their requested funds.

  • Efficiency

Because hard money investment property loans require collateral that is already built-in, lenders take a shorter time to fund your loan than traditional loans do. So, you won’t have to go through as long an approval process as you would with a mortgage application. Furthermore, this process can become even more seamless once you build a relationship with a hard money lender.

All in all, going this route enables you to hop onto deals that may be otherwise out of your reach. You can be less likely to miss out on a promising property. Especially in the real estate industry, where many people may serve enticing offers on one single property, this can make all the difference.

How to Get an Investment Property Loan

You don’t have to be thrust into the deep end of lending without preparation. Here are some actionable steps you can take to jumpstart your loan process as an informed borrower.

  1. Find a Lender: Before anything else, you must find a lender that offers hard money investment property loans. Banks often do not offer these hard money loans, so it’s a good idea to go with a local hard money lender that you trust.
  2. Apply: As your next step, you should apply for the loan you want to use to buy your eyed investment property. They may ask you for personal information so that they can verify you are a legitimate entity. Furthermore, they may request details about your desired property and loan amount, so they know what to work with.
  3. Gather Your Documents: Your lender may ask for various financial documents, including tax returns and bank statements. In addition, they may want extra information available about the property, such as its current rental income.

Get the Property Appraised

Your property’s appraisal will determine how much your investment property’s value is. Furthermore, appraisals should give you a better picture of how much income similar rental properties in the area generate.

Close on the Loan

Finally, when you’ve done your due diligence, you just have the most exciting step left: to close on the loan and have it in your hands. Here, you must look over and sign the loan paperwork, hand over your down payment to the lender, and take care of closing costs.

Get an Investment Property Loan with MHML

You can use investment property loans as a tool to secure funds for investment projects when you otherwise wouldn’t be able to step up to the plate. They can allow you to expand your portfolio, as well as your brand in the cutthroat, competitive real estate industry.

If you need a lender with experience and expertise, that’s where we come in. We provide hard money loans with terms specially tailored towards your needs as a real estate investor. Furthermore, many of us on our team have been on your side of the fence before, so we know just how important and sensitive your project’s situation is. Call us today for the unparalleled customer service you need while investing.

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