Top 5 Types of Investment Property Mortgages

Top 5 Types of Investment Property Mortgages

Excalibur Homes
Excalibur Homes

Top 5 Types of Investment Property Mortgages

Real estate investing is a popular way to earn passive income because of its efficiency. It allows equity to build on a property without putting much down in terms of personal income, as rental revenue usually covers all property expenses, plus some profit. However, before investing, you must purchase the property. If you cannot purchase the property in full, you have options. The top five types of investment property mortgages can help provide funding.

Hard Money Loans

You can obtain hard money loans from professionals specializing in lending money for real estate investment. These loans are typically faster to process than conventional loans, but rather than basing the loan on your credit score, they determine whether to grant the loan based on the property’s value. These are usually shorter loans, typically up to 3 years, with higher interest rates.

Private Money Loans

Private loans come from people who choose to invest excess personal money to receive some return on investment. They may come from family, friends, or even other investors who believe in the investment you wish to make. They often involve flexible and negotiable terms between individuals. However, they are secured with a promissory note, and these lenders can foreclose if you default.

Conventional Mortgage Loans

Conventional mortgage loans are the most common investment option. If you are prepared to purchase your first real estate investment in Nashville, this is an intelligent first step. Keep in mind that obtaining conventional mortgage loans for investment properties will vary from state to state, so consider speaking to a professional and doing your due diligence before applying. Most of the time, a 20 percent down payment is required.

Fix-and-Flip Loans

Fix-and-flip loans are perfect if you intend only to own a property short-term. They offer the ability to receive short-term loans to provide you with the ability to renovate the property and then sell it quickly, usually within the year. These loans are often easier to obtain than traditional mortgages but have higher interest rates.

Home Equity Loans

A home equity loan is the last of the top five investment property mortgages. If you already have equity on other property, you may use a home equity loan to invest. This allows you to borrow against the equity of your property to purchase a second home for investment purchases.

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