Each year hundreds of thousands of new homes are sold within the United States. Whether a real estate investor is interested in purchasing a home in need of renovation or chooses to buy a vacant lot, he or she will have to decide how they are going to finance their investment. Fortunately there are a number of ways to successfully finance real estate investment.
4 Ways To Obtain Real Estate Financing
Choosing the right real estate financing solution will depend on your personal financial needs, as well as your chosen investment.
#1. Conventional Loan -- A conventional or traditional loan is typically issued from mortgage lending institutions, such as banks. While these loans are typically reliable, they can be slow to fulfill and usually span a long period of time.
#2. Secured Loan -- A secured loan is also known as a collateral loan. This type of loan will require you to leverage personal property, such as a car or existing property, in order to obtain the loan. The largest disadvantage of a secured loan is that if you default, then whatever personal property you used as collateral will be transferred to the lender. Generally speaking, if you used a highly valued piece of personal property as collateral, then you will typically receive a better interest rate. However, it is important to note that the length of the loan as well as your credit history will affect the secured loan.
#3. Hard Money Loan -- A hard money loan is one that is typically obtained from a private business or individual lender for the sole purpose of investing in residential or commercial Real Estate. Typically hard money lending options will have a few defining characteristics, including: shorter term lengths and varying interest rates. In many instances a lender won't require income verification, credit references, or a personal credit report when they issue a hard money loan. Additionally, one of the top benefits of a hard money loan is that the lender can typically provide the funds needed to complete a Real Estate transaction within a short period of time.
#4. Private Money Loan -- As the name suggests, a private money loan is similar to a hard money loan, however, it is typically given by someone who personally knows the buyer. In these instances the lender is not typically a professional lender, but rather a person that the Real Estate investor knows. Whether the private lender is a family member or a friend, it is important that the conditions of the loan are clearly defined within a legal contract.
The Bottom Line: Work With A Financial Provider You Trust
No matter what type of real estate financing you choose to obtain, it is important that you work with a team of financial providers that you trust. Walnut Street Finance, a hard money lender, is proud to have extensive experience investing in developers, builders, and real estate investors throughout the Washington, DC metro area.
We offer fast and flexible real estate financing solutions. Let us help you get started today!