Investment Property Financing

Investment property financing is actually fairly easy. If you meet the lenders requirements, you will get the loan. However, many run into problems by applying for financing without knowing the lender's requirements.

I will state upfront that I am not an advocate for using conventional lenders to fund investment property. Particularly, deeply discounted investment property.

Conventional lenders are far too slow. Generally, it takes 60 to 90 days, or longer, for them to fund a purchase.

Deeply discounted deals require 3 weeks or less. You will be competing with investors who have cash or have obtained super fast investment property financing. Conventional lenders are just too slow.

The only exception to this rule is obtaining a line of credit or home equity line, from a conventional lender, big enough to allow for purchases of deeply discounted property. There are many investors who have this. This is like having cash.

For most investors, obtaining investment property financing will require using the following options. These are excellent alternatives and are usually the first choice of most investors:

Hard Money Lenders. Do not let the name scare you. For many investors they are their most important ally. They provide enormous flexibility in your real estate investing endeavors. Click here for a detailed discussion.

Private Money Lenders. This is actually my first choice in regard to lenders. They are even more flexible than Hard Money Lenders. Get a couple of Private Lenders in your corner and the sky is the limit to your investment property financing. Click here for details.

No Money Down Financing. This is true no money down financing. No gimmicks or complications. Follow the requirements and easily obtain it. Click here for details.

IRA and 401K Real Estate Investing. For investment property financing, this is the very best option. You simply cannot beat funding your real estate projects through your own self-directed retirement accounts. Click here for details.

The Passive Income segment has a section devoted to those who would prefer to use their IRAs or 401Ks to become lenders instead of buying real estate themselves. Either offers tremendous financial benefits if done correct.

In my opinion, the four examples above are the only way to finance real estate deals. It's the only way I fund my deals. Using conventional lenders is not the way to go, unless it's through a line of credit or equity line.

Sure you can put down 20% and wait 60 to 90 days, or longer to close a deal. However, it will not be a deeply discounted one.

The costs involved in a conventional loan are much less, than using Hard Money or Private Money. However, the money you would save is far less than the additional profits gained from a deeply discounted investment property.

Which would you prefer?

Conventional loans on 5 deals, with only $2000 in points and closing costs on each deal. The properties are worth $100,000 each. However, because of the length of time it takes to close, you could only get them for $85,000, plus closing costs. You also had to put down $17,000 (20%) on each deal.

- OR -

Hard Money or Private Money loan on 5 deals, with $10,000 in points and closing costs on each deal. The properties are also worth $100,000. However, because you can close within 3 weeks, you were able to purchase them for $60,000 including closing costs. Because you received such a great deal, your lender did not require a down payment.

Sure, you pay much more in points and closing costs for Hard Money or Private Money. However, the advantages of fast, flexible funding, far outweigh the costs. It's not even close.

That's it on investment property financing.


From Investment Property Financing to Investing in Real Estate.