Wednesday, 17 July 2019 13:53

How Experienced Investors Handle Use Rental Property Loans

Rental Property LoansSeasoned real-estate investors are well-versed in rental property loans. You can use the same insights to profit on income property investments. As you will discover, the success and profitability of a rental property venture is largely dependent on how it’s financed.

Varieties of Rental Property Investment

There is an impressive variety of rental property investments that allows you to explore several different markets. By investing in different sectors of the rental property market, you can build a robust and diversified portfolio. A diversified portfolio performs better when individual areas of the market are stressed and bringing in lower returns.

Here are a few major forms of rental property investment:

 

  • Vacation Rentals: These short term rental properties can be very profitable, especially in high-traffic tourist destinations.
  • Multifamily Housing: Duplexes and apartment buildings are great multifamily housing opportunities for real-estate investors.
  • Single Family Housing: Residential homes that are rented out can be a smart investment. An example of this would be renting homes near college campuses.

 

How Experienced Investors Handle Rental Property Loans for Acquisitions

Financing rental properties of any sort must be done with finesse. Getting the best deal and planning ahead are two of the biggest concerns experienced rental property investors have when raising capital.

For one thing, you need to think long term and look at the big picture. A lot of investors use blanket loans to finance the purchase of multiple rental properties at once. Blanket loans make it possible to cast a wide net and buy up large sets of properties under one loan. Another advantage is that borrowers get much lower payments through blanket loans than if you were to finance each property separately.

Applying for multiple individual loans to purchase separate rental properties is a rookie mistake that will end up costing the venture a great deal of money.

Finance Rental Properties Instead of Buying

For aspiring rental property investors with plenty of capital, it might be tempting to skip financing altogether and buy a rental property outright. While you can do anything you wish with your money, you’d be throwing a lot of it away in taxes later on.

Another reason not to put all of your cash into a rental property is that if it fails to bring in a return—that money is gone with no chance of recovery. If the property was financed under a blanket loan, however, there would be other rental properties in the deal to generate income to offset any losses.

With so many high-level real-estate investors using blanket loans, it’s imperative to consider these loans strategically. As a part of the big picture, the breadth of blanket mortgage financing is sweeping, encompassing many separate properties under the same loan.

The Short Term Vacation Home Rental Loan

Specialty financing options like short term vacation home rental loans are perfect for professional investors interested in renting out vacation homes. Banks aren’t particularly progressive in this area of finance either, so stick with a Direct Money Lender you can trust like Rental Home Financing.

A short term vacation home rental loan can go up to 30 years and is fully amortized without balloon payments.

One thing that attracts experienced investors is that you can skirt typical bank requirements like .2x DSCR (Debt-Service-Cost-Ratio) or 85-90% property based DTI (Debt-to-Income). As such, you are also free to purchase vacation homes that don’t have a history of being leased. With the freedom to buy vacant vacation properties, you can expand your portfolio and buy up the kind of properties that banks won’t let you finance.

Multifamily Blanket Mortgages

Experienced investors who look at big picture investments often gravitate to multifamily housing properties like apartment buildings. While you are not limited to apartment buildings with multifamily rental investments, the following options can be financed under a multifamily blanket mortgage:

 

  • Apartment building communities that are five units or more
  • Senior living facilities
  • Assisted living facilities
  • Student housing
  • Mixed-use properties

 

When you work with Direct Money Lenders, there are no restrictions on how many properties can be funded. Bridge loan financing is also extended to applicants.

Stated Income Loans for Rental Properties

Stated income loans are some of the most powerful and most flexible finance tools. The major advantage is that you can qualify for these loans without needing to supply any tax returns.

With no requirement for W2s, you’ll be qualified primarily on the amount of monthly income you declare in your application and your credit score. All you need is to have a minimum credit score of 650 and be free of bankruptcy for at least two years.

The Importance of Working with the Right Lender for Rental Property

Real-estate investors with experience know the value of forming long-term relationships with both clients and lenders. When you take out a blanket loan, for example, there’s a lot at stake. You are borrowing money for the purchase of not one, but multiple rental properties.

Property investors who have been in the game long enough tend to make bigger moves with bigger stakes. Finding a lender you can trust is the key to success in rental property investment. Direct Money Lenders like Rental Home Financing are respected for their integrity and commitment to customers.

Rental Home Financing Has the Options Experienced Investors Crave

When you work with Rental Home Financing, you can get the kind of loans that experienced real-estate investors routinely seek out. With financing options like blanket mortgages and short term vacation home rental loans, you can finance lucrative investments with ease.

Get in touch with the experts at Rental Home Financing and get what you need to succeed in rental property investments.

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