It isn’t every day that you decide to take your life and your livelihood in a new direction. But, for my old friend, Bob, changing things up was long overdue. He’d been unhappy climbing the corporate ladder since he started down that path a decade ago and has talked about buying and renovating property to sell, like me, before my career even began. Taking the necessary steps to becoming a real estate investor, however, seemed to unnecessarily drag on for Bob—especially considering how passionate about real estate he’s always been.
When I questioned him about the hold up the last time we spoke, he gave me the answer I’ve gotten so many times before: money. Without access to cash to even buy that first property, he didn’t see how he could build a business at all. That’s where knowing how to get loans for real estate investing from the right lenders comes in. And, I could tell him how and where to do it.
How to Get Loans for Real Estate Investing
Worrying about finding the money to fund the purchase and renovation of investment property, as Bob is, is a common concern for new investors. It’s so common, in fact, I’ve talked and written about it a number of times. If you’re not coming from an industry where you might have had the opportunity to build up a lot of personal capital—or, at least, learn about the other options available for funding real estate deals—it’s easy to think becoming a professional investor is out of financial reach. But, it doesn’t have to be.
In fact, whenever I’m giving first-time investment property advice, I invariably include tips on how to get loans for real estate investing—whether I’m asked about funding or not. I do this because, even if you have a stash of cash from the get-go, at some point you will likely need, or want, access to more. So, it’s good to know what kind of loans to get and what you need to qualify for them. When you’re buying, rehabbing, and selling homes, you usually have to move fast, especially if you want to build your real estate investment business in a competitive city. There is no time to start fumbling for funds once you’ve found your deal.
The first thing you want to do is scratch conventional loans off your list. Traditional mortgages of 15 to 30 years won’t suit your investment timeline and the lenders who offer them rarely approve loans for fixers you won’t be living in. Even loans created for homes that need repairs, like Fannie Mae’s Homestyle loan and the Federal Housing Administration’s FHA 203(k) loan, aren’t designed for you. They’re meant for homes the owner intends to occupy. They can take a month or more to close, too. So, even if you could get one, you shouldn’t. Otherwise, you risk losing the deal to an investor who can close faster.
Your best option is to get a hard money loan. This type of loan is secured by the property itself and is most often provided by other investors or private lenders and companies. That means as long as you’ve found a great deal on a house that is likely to produce good returns, chances are strong your project will get funded. After all, these lenders have made it their business to recognize the potential in a property’s value even if, as a new investor, you pose a risk as a borrower. Should you default on the loan, they still come out ahead—with your property in hand. And, they can close fast. In fact, some of the best hard money lenders in the nation can fund a deal in a few days.
Outside of presenting a potentially great deal as collateral, it’s still a good idea to get a few other ducks in a row to ensure you get the money you need. If you have any investing or renovation experience, for example, gather this information together to prove you know what you’re doing. Proof of access to other assets that can be liquidated quickly or a personal property you don’t mind supplying as additional collateral should be collected, too. Though a hard money lender isn’t likely to require these items when determining your eligibility for a loan, it won’t hurt to present them in a real estate investor credibility kit to show you mean business. And, it could certainly help you get better rates.
You can also choose to start your real estate investing company as a part of a team whose years of experience and name will earn you credibility right out of the gate. The right team can also give you easy access to reputable lenders that offer you competitive terms—even as a new investor—there is really no reason to go it alone. I certainly didn’t, and it helped me build my business fast.
Get the Funds You Need Faster
There is just no way around it. To build a business buying, renovating, and selling property, you’ve got to have money. From your first deal to your fiftieth, your ability to find funds fast so that you can realize any returns at all is critical to succeeding as an investor. And, like Bob, I knew that before I ever started investing. In fact, had I never discovered how to get loans for real estate investors, I might have dragged my feet starting my career, too.
But, because I joined the HomeVestors® team as an independently owned and operated HomeVestors® franchisee early on, I learned more than just how to get a hard money loan. I learned that, with a trusted name like HomeVestors® behind me, hard money lenders would compete to finance my deals—even as a new investor. And, this has been made easier than ever with the new lending portal that’s a part of HomeVestors®’ proprietary software, UGVilleSM. All I have to do now to connect with great lenders who give me good rates fast is enter details about the property I’m buying into the portal. This helps me continue building on an already successful business. And, every new franchisee, like Bob, gets this opportunity, too.
Get the funds you need to start building your investing business fast. Contact HomeVestors® to gain access to some of the best lenders in the business today!
Each franchise office is independently owned and operated.