No matter how the real estate market fluctuates, one thing remains the same – real estate investors need money to fund their projects. As the lending landscape has changed over the years, it has become increasingly more difficult for developers to get the money they need through traditional lenders.
A real estate acquisition loan is, conveniently enough, exactly what it sounds like it would be - a loan used to acquire property. However, there’s one pretty large caveat that goes along with real estate acquisition loans, and that is that they can only be used to acquire property. That means that if, as a developer or fix and flipper, you were hoping to take out a loan to purchase property and begin construction or renovation, this is not the loan for you - unless you’ve got other funds ready and available to get the project moving.
With any real estate transaction there can be risks and rewards, including when you work with a lender to secure the financing on your deal. With bridge loans, there can be slightly more risk involved, since the main objective is to essentially have two loans out on two properties at once. However, for developers who know their market and are confident in their development plans, the rewards can outweigh the risks and provide a means for paving a smooth path to getting their next deal lined up and ready to go.
In a perfect world, financing your investment property would be as simple as taking out your personal (or business) checkbook, writing a check, and handing it over - no heavy lifting or strings attached. Unfortunately, for most developers that isn’t usually the case - especially when they’re first getting started in the world of real estate investing and development. After all, the funds to make the purchase need to come from somewhere, and until you’ve got a few flips and sales under your belt that money simply might not be there yet. So, if you’re weighing your options about financing your investment property, let us walk you through some of the best ones.
As with most things to do with real estate, there’s a variety of terms and intricacies you need to know and understand. When you’re purchasing property with a loan it can all get a bit more complicated. This is especially true when you’re entering into the investing world as a prospective fix and flipper. For many first-timers, they assume that what they’ll need for their project is a construction loan - which on the face of it makes total sense. After all, they’ll be purchasing a property and then doing construction - why wouldn’t a construction loan be the appropriate method of funding and what is its purpose if not to fund construction?
Finding the right financing option when purchasing a real estate property can often come with some hurdles. While traditional mortgages and private lending are similar in essence, they have different lending rules. Most people are familiar with a traditional mortgage, which means they’re also no stranger to the stringent rules attached to it. With private lending as an effective alternative for an investment project, it’s no surprise that it’s gaining traction.
This post will help you understand the 4 big differences in traditional mortgages and private lending.
If you're looking to build or rehab real estate property and intend to refinance it to generate rental income or sell it for a profit, a construction loan might be the best option. Since most people can't afford to pay for the cost of a new commercial or residential project up front, the process of securing a construction loan typically begins with a lender: local credit unions or regional banks. Unlike a conventional loan, however, it’s more complicated to get the green light on your construction loan application because you’re essentially requesting to borrow money for a new build that doesn’t exist yet.
This post outlines some of the requirements you need in order to qualify for a construction loan.
There are a variety of loans available for investors looking to purchase and rehabilitate properties, but the most popular among them are fix and flip loans and construction loans. However, there are definitely differences between the two - even though they may sound similar - and each are ideally suited to specific situations. In fact, one of the biggest differences is that hard money construction loans are typically issued for properties that have yet to be built, whereas fix and flip loans are issued for properties that are already in existence and need a bit of TLC.
When it comes to financing options for flipping homes, a fix and flip loan is most likely going to be your best bet. There are, of course, a variety of financing options for borrowers and developers, but there are a number of reasons why fix and flip loans specifically are exactly what you’re looking for.
Once you’ve made the decision to begin passively investing in real estate, it’s time to decide which firm you’d like to work with. At Walnut Street Finance we make the entire process as simple and secure for our investors as possible - including the process of collecting their returns. You’re probably wondering how, exactly, we do that and what those steps are.
Once you’ve decided to make the leap into real estate investing, one of the most challenging aspects can be what type of investing to get involved with. You may choose to own various properties and take the landlord route, or purchase properties to renovate and sell. You could also choose to simply invest your funds with hard money lenders, sit back, and wait for your return checks to roll in. And all of these options are great, but they aren’t all for everyone.
Can passive real estate investments really help you retire? The answer is most definitely, but it’s not likely to become a “get rich quick” plan, unless you’ve got a substantial amount of money to invest right off the bat. To understand how passive real estate investments can help though, it’s important to take a look at what has happened in the past, and how that has informed the present in terms of investing.
When you’re searching for money to fund your development project, the options can seem endlessly confusing, if not simply endless. After all, you can choose between working with traditional banks and credit unions, a mortgage broker, a hard money lender, or – if you happen to know someone with the funds – a private lender. There are pros and cons to each option, of course, but for many developers securing a hard money loan is the quickest, simplest way of getting the funding necessary for a project. Hard money lender's like Walnut Street do have terms that differ a bit from a traditional bank or lender, but for some developers the benefits significantly outweigh the disadvantages. Let’s take a look!