5 Best Types of Loans for Real Estate Investors
When it comes to growing your real estate portfolio, loans for real estate investors are a crucial part of being able to scale your business. However, there are many loan options and companies out there that getting started can be difficult and confusing.
Fortunately, we’ve partnered up with Finance of America Commercial to talk about their different loans for real estate investors. Finance of America Commercial is dedicated to providing real estate investors with the loans they need to continue scaling their business—whether they’re flipping houses in New York or snapping up new doors in the Midwest.
5 Types of Loans for Real Estate Investors
Fix & Flip Loans
What is a fix & flip loan?
A fix & flip loan, according to Finance of America Commercial, is a rehab loan for non-owner occupied residential investment property. These loans allow investors to acquire and/or renovate multiple properties up to an approved exposure limit. If you need funding for multiple flips and renovations, this loan might be best for you.
Who can borrow for this type of loan?
An individual or entity
What are typical interest rates for a fix & flip loan?
As low as 6.75%, varies per individual property loan
How much are loans for a fix & flip loan?
$50K – $3MM for a 12 month period, although 18-month options are available (subject to loan level pricing adjustment)
What types of property types are acceptable for a fix & flip loan?
For fix & flip loans, non-owner occupied buildings are acceptable, such as:
- Attached or detached SFR
- 2-4 unit properties
- Multi-family 5-20 unit properties
- Mixed-use
- Condos
Bridge Loans
What is a bridge loan?
Bridge loans are a short-term flexible loan solution, ideal for temporarily holding assets, and can be used short-term to float the market.
Who can borrow for this type of loan?
Entity or Individual
What is the loan amount for a bridge loan?
$50K – $3MM
How long is the loan term for a bridge loan?
12 months standard, 18-month options are available (subject to loan level pricing adjustment)
What types of property types are best for a bridge loan?
Same as fix & flip (above)
New Construction Loans
What is a new construction loan?
New construction loans provide financing for the construction of non-owner occupied residential investment property. Like fix & flip loans, investors can acquire and/or construct multiple properties up to an approved exposure limit. If you need funding for urban infill, teardowns, or spec homes, this loan is ideal for you.
Who can borrow for this type of loan?
An individual or entity
How much are loans for a new construction loan?
$50K loan minimum and up to $1MM for single-units, up to $1.5MM for multi (2+) units. Loan term is a 12 month period, although 18-month options are available (subject to loan level pricing adjustment)
What types of property types are acceptable for a new construction loan?
Same as fix & flip (above)
Single Rental Loans
What is a single rental loan?
A single rental loan is for the purchase, limited cash-out, or cash-out of a single rental property. Single rental loans enable investors to purchase a new property to expand their rental portfolio. Investors use this loan to refinance a property for a better rate or take cash out to access equity.
What is special about a single rental loan?
A single rental loan is special, according to Finance of America Commercial, because it understands you’re a small, growing business. Therefore, properties are underwritten based on the rental’s cashflow—not your personal income.
Additionally, they don’t limit the number of rental properties you can own, so you have more flexibility to scale your business.
Who can borrow for this type of loan?
Entity (Single Purpose Entity) or Individual
What are typical terms for a single rental loan?
30-year fixed
How much the minimum loan amount for a single rental loan?
$75K – $2MM
What types of property types are best for a single rental loan?
Non-Owner Occupied:
- Single Family Residences (SFR)
- 2-4 unit properties
- Condos
- Townhomes
Portfolio Rental Loan
What is a portfolio rental loan?
A portfolio rental loan is designed for purchasing or refinancing a portfolio of rental properties. This enables you to refinance and acquire properties under the same transaction.
“Our Portfolio Rental Loan is designed to help rental investors unlock equity and get cash out of their existing rental investments. Consolidate multiple rental property mortgages into a single loan so you can continue to grow your portfolio.”
Finance of America Commercial
Is a portfolio loan right for my real estate portfolio?
If you answer “yes” to any of the following questions, a portfolio loan might be best for your real estate needs:
- Currently own 5 (2 for Portfolio Express) or more rent-producing doors?
- Looking to free up equity to acquire additional properties and expand your portfolio?
- Are you a long-term investor?
Who can borrow for this type of loan?
- Entity (Special Purpose Entity)
- Must be a Newly Formed LLC only, unless LLC was used exclusively for a previous FACo loan transaction
What is the term for a portfolio rental loan?
5-, 7-, or 10-year with balloon due at end of term for standard portfolio loans. Express portfolio loans offer a 30-year term.
What is the loan amount for a portfolio rental loan?
$200K – $5MM, depending on portfolio product.
What types of property types are best for a portfolio rental loan?
Non-Owner Occupied:
- Single Family Residences (SFR)
- 2-4 unit residences
- Condominiums: warrantable and non-warrantable (with reduced leverage)
- Townhomes
- Planned Urban Developments (PUD)
- Multi-family, 5-20 units
How to Get Started
When it comes to deciding the best loans for real estate investors, Finance of America Commercial can help you scale your business by figuring out which is the best loan for you.