How To Get a Loan for Rental Property
A real estate investor just starting out often asks, how to get a loan for a rental property? The answer is simple: cast the net out wide and consider various options. However simple this answer may be, it is far too vague. So I will attempt to delve a bit deeper into answering this question, and explain in more detail how to get a loan for rental property.
Do you have a need for speed?
If you are purchasing new rental property and have a need to close, whether on an all cash purchase, or on a last minute wholesale deal, a hard money loan is the best option. Even if a buyer is “pre-qualified” with a financial institution, a traditional loan cannot close fast enough to mimic an all cash transaction. Only a hard money loan can close fast enough to mimic all cash, because it can close in a few days. If speed is required by a real estate investor to successfully complete a purchase transaction, a bank loan is not an option. Look for a hard money lender to finance purchases that require speed in closing.
Do you understand all of your alternatives?
If you’re trying to refinance rental property, there are many alternatives for financing. Because rental income can be proven via bank statements or tax returns, it is far easier to refinance rental property with a bank loan rather than to purchase one. Particularly if a rental property is vacant or in need of rehab. If a rental property is vacant or in distress, once again, a hard money loan may be the only option on a purchase. Once a rental property has been purchased, rehabbed, and rented, a bank loan will take out the existing hard money loan.
Are you seeking a loan for more than one property?
If you already own a portfolio and are seeking to refinance your rental property, there are rental property loans specifically for rental property portfolios. This is a loan that you would get after you’ve purchased and stabilized a portfolio of rental properties. This type of loan for rental property requires lease agreements, a rent roll, a dedicated bank account where all rental deposits should be placed, and tax returns for the business entity that holds title to the rental properties. These items are those that will be required to qualify for a bank loan to refinance rental property.
If you still want to know more about how to get a loan for rental property, or if you are seeking rental property loans, leave a comment below with your contact details. Or send us a message via our contact page, and we will respond to your questions promptly.
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